Geographically, the decline in unemployment has been widespread, but it still remains very high in most of the country. In April, the unemployment rate fell in 39 states and rose in three (plus DC). Relative to a year ago, the unemployment rate is down in 46 states (plus DC) and up in just three.
This is somewhat of a surprise, since the overall unemployment rate was 9.0% in April, up from 8.8% in March. The widespread declines from a year ago are not as unexpected, as the national rate was at 9.8% a year ago. The mystery deepens when one considers that the three with rising unemployment rates are not exactly population giants: Mississippi, Tennessee and Alabama.
The graph below (from this source) shows the unemployment rate in each state. The red part of the bar shows the current unemployment rate, the blue the highest rate in this cycle.
Results by State
The only state where unemployment is at its high for the cycle is Louisiana. Only six states still have double-digit unemployment (down from nine in March). The number of states with double-digit unemployment peaked at 19. Eight states are close to what could reasonably be called full employment with unemployment rates at 6% or less.
Unfortunately, lots of people live in the high unemployment states like California (11.9%) and Florida (10.8%) and not that many live in the low unemployment states like North Dakota (3.3%) and Nebraska (4.2%).
The largest drops in the unemployment rate for the month were in Nevada, down 0.7 points to 12.5%, New Mexico, down 0.5 points to 7.6%, and Oklahoma, down 0.5 points to 5.6%. Thus there does not seem to be a relationship between the level of unemployment last month and the drop in April.
The largest year-over-year declines seemed to be related to states with a lot of Auto industry exposure. Michigan has seen its rate fall 2.9 points, but it is still high at 10.2%. Nevada doesn’t have a lot of Auto industry jobs, but it has seen its unemployment rate fall 2.4 points over the last year, but at 12.5%, it is still the highest in the country.
Indiana saw a 2.3 point drop to 8.2% while Illinois was down 2.1 points year over year to 8.7%. Ohio saw a 1.8 point drop to 8.6%. The rebound at Ford (F) and General Motors (GM) has meant not just more jobs at those firms, but at the major suppliers like TRW Automotive (TRW).
States closely tied to farming generally have low unemployment rates as the effects of high crop prices ripple through those economies. States that had the biggest real-estate bubbles are generally the ones with the highest unemployment rates.
In terms of job creation, New York lead the pack in April with 45,300 jobs added, followed by Texas (23,900) and Pennsylvania (23,700). The only two states with fewer jobs in April than March (remember the unemployment rate is driven off of a separate survey than the one that counts jobs added or lost) were Michigan (-10,200) and Vermont (-2,200).
Year over year, there are no states with fewer jobs. The leader in job adds over the last year are Texas (254,400), California (144,200) and Ohio (67,000).
Widespread Declines a Mystery
The widespread declines in the unemployment rate by state are a mystery given the increase in the national rate. The state level data suggests that the job market is healthier than the 9.0% national unemployment rate would imply. Still, only 13 states have unemployment rates below 8.0%, and most of those have very small populations.
While there is widespread improvement in the unemployment rate, it is also true that there is still very widespread unemployment. It still remains our foremost economic problem, much more important than the budget deficit, particularly in the short term, and certainly a much bigger problem than inflation.
If we can bring down unemployment, not only would spending on things like extended unemployment benefits and food stamps decline, but revenues would increase. That combination would do much more to bring down the deficit than simply slashing away at spending.
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