U.S. Economy is Just Bumping Along the Bottom

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The U.S. economy may technically have emerged from recession, but in most parts of the country, it's still just bumping along the bottom.

Just one state, Georgia, moved from the "moderating recession" to "recovery" category, according to the most recent data available in August from msnbc.com’s Adversity Index, which was developed with Moody's Analytics. That means the economy in those states are growing again but still haven't expanded to levels seen before the recession hit. Just one state, North Dakota, moved from recovery to expansion.

As the strength of the national recovery weakened in the second half of the year, conditions worsened in eight metro areas that slipped back into recession. Eight more fell into a category that puts them "at risk" of recession. In nine metro areas, improved economic conditions moved them into the recovery category.

Until the national economy shows convincing signs of stronger growth, many regions will continue to struggle, according to Andrew Gledhill, an economist at Moody's Analytics.

"You're going to see some metro areas come in and some come back out of recovery," he said. "But we don't expect the overall recovery to take off until 2011."

As the mid-term election campaign wraps up, the weak economy is one of the biggest issues facing voters headed to the polls Tuesday.

High unemployment, a rising pace of home foreclosures, stagant wages and a housing market in the deepest trough in decades have helped convinced some 60 percent of likely voters that the country is headed in the wrong direction, according to the latest NBC/WSJ poll. Of those, more than 70 percent want to see Congress controlled by Republicans; just 19 percent of them want to see Democrats running Congress.

The uneven recovery from the worst recession in 60 years has also created big variations in local job markets, where national statistics mask a wide range of employment levels from one city or state to the next.

In areas hardest hit by the collapse of the housing industry, unemployment rates are substantially higher than average. The highest unemployment rates in the country, as of August — the latest data available — were in El Centro, Calif., and Yuma, Ariz., where three out of ten workers were out of a job. Statewide, the hardest hit are Nevada (where the jobless rate was a 14.4 percent), Michigan (13 percent), California, (12.4 percent) and Florida (11.9 percent.)

Those states are also deep in the throes of the mortgage mess. Falling home prices also continue to weigh on regional job markets — especially where families who owe the bank more than their home is worth can't afford to pay off the difference and move to another part of the country where employment prospects are better.

In contrast, areas that largely missed the housing boom, especially in the Midwest, have been spared the rise in unemployment that followed the bust. Regional economies that rely heavily on other industries, like agriculture or energy, are enjoying much higher levels of employment. The lowest unemployment rates in the country are in North Dakota (3.7 percent) South Dakota (4.4 percent) and Nebraska (4.6 percent).

At the metro level, of the 384 areas tracked by the Adversity Index, only five are in full-blown economic expansion, including College Station, Tex., home of Texas A&M University. Other college towns enjoying relatively strong job markets are Ithaca N.Y., Iowa City, Iowa, Jonesboro, Ark., and Morgantown, W.V.

The short list of cities with expanding economies also includes three metro areas that benefit from the presence of a relatively stable employer, the federal government: Jacksonville, N.C., home of Camp Lejune; Kennewick, Wash., site of the Hanford nuclear processing facility; and Lawton, Okla., near Ft. Sill.

But as states struggle to close large budget gaps brought on by the recession, the government has become a less reliable employer. Since mid-2008, a total of 400,000 state and local government jobs have been cut.

"That's is a drop of about 2 percent from the peak, and the count is still rising," said Geldhill. "Not since the early 1980s have there been cuts this steep."

Recent monthly jobs data have also been hurt by the expiration of hundreds of thousands of temporary Census jobs, which had boosted employment figures earlier this year. That's prompted many economists to focus on the private sector, which hasn't created enough jobs to make a dent in the unemployment rate.

Since hitting bottom late last year, private industry has added just 1 percent to the job numbers. That compares with a drop of more than 7 percent in private payrolls through the recession.

In metro areas considered "in recovery" by the Adversity Index, the private sector has recouped fewer than one in five lost jobs, according to Gedlhill.

"The private sector has yet to really take off," he said. "We dropped a long way and have barely made a dent into these large losses."

There have been a few hopeful signs of improvement. One job category that has picked up is temporary workers. If the economy continues to improve, some of those jobs could be made permanent.

"Often when businesses are just starting to recover, they're a lot more comfortable hiring temporary workers," said Gledhill. "So when people talk about leading indicators, temporary help is usually one of those leading indicators."

‘Play’ the index
The Adversity Index was created by msnbc.com and Moody's Analytics to track the economic fortunes of states and metro areas. Each month, the Adversity Index uses the latest data to label each area in one of four categories: expanding, in recovery, at risk of recession or in recession.

You can follow the fortunes of each metro area in the nation on our interactive map, which gives details for each metro area and state for the past 15 years. Here are several ways to explore this month's Adversity Index:

  • Our interactive map shows the economic health of every state and metro area. You can "play" the map on this page to watch the economy's ups and downs over 15 years, or select any state to see data for each metro area for each month.
  • The updated index will be published every month at adversity.msnbc.com, where you can read all the articles in this series. There is a lag of about six weeks.
  • An explainer tells how the Adversity Index assesses the economy. Many areas include multiple counties, and many cross state lines.
  • This list shows which counties are within each metro area.
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