2021 U.S. Prosperity Index shows the key to unlocking greater prosperity lies in the potential for improvement in every state and county.

The U.S. is well positioned to rebuild strongly post-pandemic but needs to address long-term issues impacting prosperity as well as effects of Covid

  • The United States remains one of the most prosperous nations globally and is well-positioned to prosper in the future, according to our new report.
  • The 2021 U.S Prosperity Index reveals that Covid-19, and the state-level restrictions imposed, led to U.S. prosperity weakening between 2020-2021.
  • However, prosperity had been rising continuously for more than a decade prior to the coronavirus crisis as a result of long-term improvements across many aspects of society.
  • The report also highlights several pre-pandemic challenges that were already acting as a brake on U.S. prosperity, some of which have been exacerbated by the pandemic, which must also be addressed to build a more prosperous America.

Published this week, the Legatum Institute’s 2021 United States Prosperity Index report highlights that the U.S. ranks 18th out of 167 nations worldwide for prosperity, having increased its prosperity year on year prior to the pandemic, providing a strong base from which it can further build an inclusive society with an open economy and empowered people. It notes that the key to unlocking greater prosperity lies in the potential for improvement in every state and county.

The Index provides a framework to assess the direct and indirect impacts of the Covid-19 pandemic. In addition to the physical and mental health impacts, it highlights that many other aspects of prosperity have deteriorated over the past year, including:

  • Education: As their schools closed, millions of American pupils were unable to access a normal education, affecting their future life chances and potential productivity. On average, a 5-to-11-year-old pupil lost 54 days of teaching in 2020.
  • Living Conditions: The U.S.’s poverty rate rose from 15% in February 2020 to 16.7% in September, and figures from the Department of Housing and Urban Development show that more than 550,000 Americans were homeless in 2020 – the equivalent of the population of Wyoming.
  • Economic Quality: As restaurants, bars, and non-essential retail were shutdown, the unemployment rate spiked sharply upwards in April 2020 and, although it has fallen back since, there were still 8 million fewer jobs in April 2021 than in February 2020.
  • Safety and Security: Rates of identity theft significantly increased from around 150 per 100,000 population pre-pandemic to nearly 400, with some states experiencing rates in excess of 1,000 per 100,000 population.

Shaun Flanagan, Director of Impact and Partnerships at the Legatum Institute and lead author of the United States Prosperity Index report, commented: “The effects of the coronavirus, and the choices made to contain it, continue to highlight the holistic nature of genuine prosperity, testing the United States’ institutional, economic, and social resilience. The direct and indirect impacts of Covid-19 have not just affected the mental and physical health of Americans, but also their jobs, their education, and other aspects of social wellbeing.

“Following the recently announced $1.9 trillion American Rescue Plan, the U.S. Prosperity Index will be an invaluable tool for leaders at the state and local level, allowing them to identify the specific actions needed to reset and rebuild in a way that will increase prosperity for all Americans.”

However, while the pandemic has caused challenges across different aspects of American society, the Index demonstrates that the U.S.’s prosperity was at its highest ever level prior to Covid-19, following long-term improvements in many areas.

The economy had responded strongly following the global financial crisis, enjoying the longest period of growth in its history. Productivity and competitiveness had steadily increased since 2011, and the latest 10-year trend data available showed the per-capita value of exported goods and non-manufactured goods increasing by over 10% and 60% respectively.

There had been an increase in the skills of the adult population as more people became more educated. An additional 18 million Americans were degree educated in 2019 than in 2009 and nearly 90% had a high school diploma, up from 85% in 2009. The report expresses optimism that this increase in adult skills is likely to have a positive impact on prosperity as people are able to earn more for the number of hours worked.

Americans had also become healthier over the last decade, as rates of smoking and alcohol and pain-reliever abuse had all fallen, and the country had seen a reduction in burglary, larceny, and motor vehicle theft.

However, the Index also highlights several issues that were acting as a brake on U.S. prosperity even before Covid-19, and which must not be ignored if the country is to fully realize its potential.

There had been a rise in mass killings and injuries over the previous decade, with more than half of the 50 states experiencing at least one mass shooting in every year since 2013, contributing to the U.S. ranking 66th for safety and security globally. Ensuring that individuals and communities are safe and secure will be fundamental to the future prosperity of America, as peaceful societies are the cornerstone of a thriving nation.

Although Americans were smoking and drinking less prior to the pandemic, compared to a decade ago, high and increasing rates of obesity continue to impact the overall health of Americans. Notably, over 40% of adult Americans are now identified as obese, up from 33% in 2008 – resulting in the U.S. ranking 59th globally for health – a warning sign for the future prosperity of the nation.

Mental health had been deteriorating year-on-year since 2016, with a well-documented increase in the number of ‘deaths of despair’, and this has been further exacerbated by the pandemic.

In addition, America’s social networks are weaker now than they were in 2011. Just over half the population say that they talk frequently with neighbors, compared to two thirds a decade ago. At the start of the pandemic, two in three Americans were not friends with their neighbors; while one in three Americans reported not having a community to which they belong. In the report’s Rebuilding U.S. social capital in a polarized era essay, Tim Dixon, co-founder of the international More in Common initiative, highlights opportunities for America to rebuild its social networks, including by creating stronger shared identities and increasing connections across lines of difference to facilitate a more nuanced understanding of the ‘other’.

As the nation looks forward, the U.S. Prosperity Index report emphasizes how the nation can draw inspiration and courage from how it has overcome significant challenges in the past and the strong foundation it has on which to rebuild.

The country ranks 10th in the world for its investment environment – businesses have good access to capital from domestic and international sources, and there are strong property rights and protections in place for investors. The business environment in the U.S. actively supports startups, promotes competition and expansion, and encourages innovation and ideation, which results in a very strong global ranking of 4th for its enterprise conditions. There has been a strong resurgence in new business applications, post-pandemic, which were 20% higher in 2020 than in 2019, and represented the highest annual figure on record, signaling hope for the nation’s post-pandemic economic recovery as it emerges from Covid-19.

Dr. Stephen Brien, Director of Policy at the Legatum Institute, added: “Although prosperity is about so much more than economic wealth, our work has shown that without an open and competitive economy it is very challenging to create lasting social and economic wellbeing where individuals, communities, and businesses are empowered to reach their full potential.

 “As such, harnessing the entrepreneurial spirit that is so central to the American Dream will be key to improving the prosperity of the nation. Given the strength of the American business environment, the United States is in a strong position from which it can recover and emerge more prosperous following the fallout from Covid-19.

 “Looking at the road ahead, building on the nation’s strengths and mitigating its weaknesses will be vital to creating a more prosperous America. To achieve this ambition, it is essential to fully understand the opportunities and challenges that exist across the nation, both at a local, state, and federal level; and across its institutions, economy, and wellbeing of its people.

 “As the United States looks to reset and rebuild post-pandemic, the U.S. Prosperity Index acts as a guide, reminding leaders across America of what builds and protects prosperity in the most challenging of times. By learning from, and developing upon, the strengths of other areas, it is our hope that every state and county can create pathways from poverty to prosperity and nurture an environment in which everyone can reach their full potential.”


For more information please visit