These States Already May Be in Recession

Douglas A. McIntyre

The fact that there are 50 states in America means that there are 50 different economic outcomes. Just because the entire country has low unemployment, high consumer confidence and rising gross domestic product does not mean certain states are not already suffering downturns in their economies. Some states already may have fallen into recession.

The Brookings Institution took data produced and analyzed by an expert at the Federal Reserve that takes into account changes in unemployment over a 12-month period. The most recent analysis ended with July’s jobless numbers. The calculation is actually fairly simple. If the unemployment rate in a state based on a three-month average reaches 0.5% for the minimum over the previous 12 months, it signals a possible recession. That means the calculation only involves three numbers.

Research nonprofit Pew Charitable Trusts took the state recessions data one step further, stating, “Using that standard, there is a 50% chance that Minnesota and North Carolina are currently in a recession.” The calculation for North Carolina shows how different a state economy can be from the entire country. The unemployment rate was 4.2% in July. That is up from 3.7% in December. The July rate is also well above the month’s national rate.

Even without complex calculations, it is easy to see which states may be trouble spots when looking at just unemployment. The jobless rate in Alaska, at 6.3%, is the highest in the country. The last time the national unemployment rate was that high was in 2014, when America was still digging its way out of the Great Recession. The unemployment rates also are unusually high in Mississippi (5.1%), Arizona (4.9%) and New Mexico (4.9%).

Tip O’Neill, the Speaker of the House of Representatives from 1977 to 1987, used to say, “all politics are local.” The same can be said of economies. There eventually will be a nationwide recession. It may have started already at the state level.

For people who want to know job prospects in their state, 24/7 Wall St. has done an analysis of cities adding the most jobs in each state.