So in the context of today’s jobs report, it’s worth giving some consideration to where, geographically, the economy is improving. And though it’s based on older data, there is a new study out from Goldman Sachs suggesting it’s in the states hardest his by the Great Recession in the first place:
A new report by two Goldman Sachs (GS) economists uncovers a surprising bit of data from the economic recovery. Job growth in the four “sand states” (Arizona, California, Florida, and Nevada) is now outpacing the rest of the country. Meaning the states that got hit hardest by the Great Recession are now recovering fastest.
What makes this even more impressive (and counter-intuitive) is that the quicker pace of sand state job growth is mainly due to improvements outside their bread-and-butter sector—the construction industry. In 2011, non-farm payrolls, excluding construction, grew by 1.7 percent in the four sand states, compared with just 1.1 percent in the 46 other states. However slight, the difference does represent a break from the traditional recovery narrative.
Some of this might be what statisticians call “regression toward the mean,” and baseball writer Bill James (in the context of predicting the future performance with teams who showed dramatic improvement or deterioration in a single year) called the “Plexiglass Principle.” But the rebound in the hardest-hit states hasn’t been identical.
California’s job market is improving fastest among the four states and…Nevada is the laggard. That’s not surprising, since California’s economy is much more diverse than Nevada’s two-trick economic pony of gaming revenue and construction activity. Though it has come down from its peak of 14.9 percent, Nevada’s unemployment rate remains the country’s highest, at 12.6 percent. In the last four months of 2011, California’s jobless rate fell an entire percentage point, from 12.1 to 11.1 percent.
Unemployment peaked in Arizona at 10.4 percent in December 2009 and has since dropped to 8.7 percent. Florida was among the last states to see its unemployment rate peak. It hit 12 percent in December 2010. Since then, Florida’s recovery has been among the fastest in the country. The state added 13,000 private-sector jobs in 2011, according to Mark Wilson, president of the Florida Chamber of Commerce. The state’s jobless rate finished 2011 below 10 percent.
As with the national economy, recovery in these states (two or three of which happen to be 2012 battleground states) will have political implications, but there will also be a lot of people trying to compete for credit. AZ, FL and NV all have conservative Republican governors who will want to claim their toadying to “job creators” did the trick. But without question, a better economy tends to help an incumbent president, regardless of party or ideology, so keeping an eye on certain states remains a very good idea.