Oil futures fell sharply Tuesday morning following news of a ceasefire agreement between the United States and Iran brokered by Pakistan, dropping from roughly $110 a barrel to approximately $72.50, a move that economist Steve Moore told Dan Proft on Chicago’s Morning Answer could represent a significant economic turning point if the agreement holds. The market rally accompanying the ceasefire announcement, he said, reflects the straightforward calculus that an open Strait of Hormuz is the single most important variable for both global oil prices and the American economic outlook for the remainder of the year.
Before getting to the Iran news, however, Proft and Moore worked through a substantial body of new data from Moore’s Vote With Your Feet project at Unleash Prosperity documenting the accelerating fiscal divergence between red and blue states. The data tells a story Moore described as the biggest ongoing economic story in America, one unfolding week by week with consequences that are fundamentally reshaping which regions of the country generate wealth, attract talent, and produce growth.
The headline finding from the project is that the Southeast, including Texas, has surpassed the Northeast as the largest GDP-producing region in the United States. Moore said this is the first time in two hundred and fifty years of American economic history that the northeastern corridor, encompassing Boston, New York, Philadelphia, and Washington, has not led the country in output. The shift reflects decades of accumulated consequences from high taxes, heavy regulation, forced union policies, and hostile business environments in states like New York, Illinois, and California, which have driven businesses and high-income residents to Florida, Texas, Tennessee, Utah, and the Carolinas.
The adjusted gross income migration data illustrates the scale of the damage. Between 2012 and 2023, Illinois lost a cumulative $321 billion in adjusted gross income to out-migration. California, with four times Illinois’s population, lost $382 billion over the same period, meaning that on a per capita basis Illinois’s hemorrhage is actually worse than California’s. Florida, by contrast, gained more than one trillion dollars in adjusted gross income during the same decade. Moore said the contrast could not be more stark or more damning, and that the failure of blue state political leaders to adjust course in response to these numbers reflects a political dynamic in which the departure of productive, higher-income residents actually reinforces the governing coalition that drove them away.
Moore highlighted Washington State as a cautionary tale for any remaining blue state that had managed to avoid the worst outcomes by maintaining competitive tax policy. Washington was one of nine states with no income tax, and the absence of that tax was directly connected to the founding and growth of Amazon, Microsoft, and Starbucks in the Seattle area. The state recently passed a ten percent income tax on millionaires, and Moore said Microsoft has already begun moving facilities out of Washington state in response, a process he predicted will start slowly and then accelerate dramatically, following the same pattern seen in every other state that has targeted high earners with punitive rates.
He also flagged the emerging trend of wealth tax proposals spreading across blue states, with at least seven states now considering some form of wealth tax in addition to high income taxes. Moore said the pattern is historically consistent and economically predictable: wealth taxes and high income taxes do not redistribute income, they redistribute people, and the people who leave take their economic activity, their philanthropy, their investment capital, and the jobs they create with them. He noted that just the threat of a California wealth tax that has not yet passed caused five of the state’s wealthiest residents to relocate within the past three months.
On education spending, Moore pointed to data showing that blue states spend approximately fifty percent more per pupil than red states while producing test scores that are essentially identical. He said the spending differential flows largely to teachers unions rather than to classroom instruction, and that Illinois is among the most egregious examples of a state where union power has captured both the city school system and the broader state education budget without producing any measurable improvement in student outcomes.
He pushed back on a strain of populist conservative commentary he associated with what he called national conservatives, who argue that the middle class has made no economic progress over the past several decades and that wealth is concentrating entirely at the top. Moore called this claim flatly false, citing data showing that the average middle-class American family has roughly thirty-five percent higher living standards today than when Ronald Reagan took office. He acknowledged that the middle class is in a sense shrinking, but said the shrinkage is almost entirely explained by upward mobility into the upper middle class and upper income brackets rather than by downward movement into poverty. The narrative of a stagnant or declining middle class, he said, borrows more from Bernie Sanders than from any honest reading of the economic data.