STATE of mind !

Even as the national economy manages to stay above water, the local picture is more complex. A number of states are starting to bounce back while other local economies remain under duress. Compared to a year ago, the employment picture has gotten even worse in 26 states, while conditions have stayed the same or improved in the other states. For many distressed states and cities, conditions may soon improve, while in other areas, conditions may worsen yet further.

To get a sense of the relative levels of distress, we can look at recently-released state unemployment rates.

State August 2009 unemployment rate Year-to-Year Change

Nevada 14.3% +1.8%
Michigan 13.1% -1.2%
California 12.4% +0.4%
Rhode Island 11.8% +0.1%
Florida 11.7% +0.7%
South Carolina 11.0% -1.1%
Oregon 10.6% -0.6%
Indiana 10.2% -0.1%
Illinois 10.1% -0.5%
Ohio 10.1% -0.6%
Georgia 10.0% +0.0%
Mississippi 10.0% +0.2%
Source: Labor Department

These 12 states have double-digit unemployment rates, and only Michigan and South Carolina have made any real progress. Michigan has been very aggressive in attracting new industries such as advanced batteries, and is also benefiting from a modest rebound in auto production. Many of those new jobs have not yet come online as factories are only being built, but Michigan could benefit from a virtuous cycle where each new job creates ancillary employment in businesses that service employees of those new factories.

Four out of 10 states with the highest unemployment rates reside in our nation's Rust Belt (Michigan, Indiana, Illinois and Ohio). And the only real panacea for these states is a rebound in the industrial sector. Yet that's not likely to take place unless the United States can materially boost exports. And much of that is dependent on a weaker dollar, which would also boost domestic consumption as imports become relatively more expensive.

Yet in places like Nevada and Florida, no clear panacea exists. Nevada's building boom was so extensive that it will take a very long time for economic activity to rebound. Las Vegas, the heart of the Nevada economy, will never again see the day when it only had to worry about Atlantic City for a gambler's dollars. Casinos have been built in so many states that the industry is over-saturated.


What NOW !

KINGDOM!