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Analysis: Economic Stress Dips to 16-Month Low

Tuesday, 09 Nov 2010 11:22 AM

 

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The nation's economic stress fell in September to a 16-month low, thanks to more hiring in New England, fewer foreclosures in the mid-Atlantic and declining bankruptcy filings in the Southeast, according to The Associated Press' monthly analysis of conditions around the country.

Eighty percent of the nation's 3,141 counties enjoyed some month-over-month easing of economic pain, the AP's Economic Stress Index shows. So did all but six states: Alaska, Colorado, Kansas, Mississippi, Nebraska and Nevada.

Counties with high concentrations of farming, mining, information technology and professional jobs suffered less hardship in September. By contrast, those with heavy proportions of workers in retail and real estate endured more stress.

The AP's index calculates a score for each county and state from 1 to 100 based on unemployment, foreclosure and bankruptcy rates. A higher score indicates more economic stress. Under a rough rule of thumb, a county is considered stressed when its score exceeds 11.

The average county's Stress score in September was 10, down from 10.3 in August. The last time the average was that low was in May 2009. Just over one-third of counties were deemed stressed in September, down from 40 percent in August.

Once again, Nevada had by far the worst Stress score: 21.93. It was followed by California with 16.15. Florida (15.86) overtook Michigan for the third spot. Michigan (15.76) and Arizona (14.9) rounded out the top five.

North Dakota remained the economically healthiest state with a score of 3.75. Next came South Dakota (4.78), Nebraska (5.73) and Vermont (5.89). New Hampshire leapfrogged over Wyoming for the No. 5 spot with a score of 6.79.

Hopeful signs have emerged that the lower stress in some sections of the country in September broadened to other areas in October. On Friday, the government said the economy added a surprisingly strong 151,000 jobs last month. That isn't enough to drive down unemployment. But it suggested the economy is making steady progress.

Also last week, the Federal Reserve announced a plan to try to invigorate the economy by buying $600 billion more in Treasury bonds. The purchases are intended to force interest rates even lower and start a chain reaction that generates more jobs.

Sung Won Sohn, an economics professor at the Martin Smith School of Business at California State University, noted that not only were a solid number of jobs created in October but people worked longer hours. Those people will have more income to spend during the holiday shopping season.

Nigel Gault, chief U.S. economist at IHS Global Insight, said that if the good news continues, economists will raise their expectations for growth.

"The economy seems to be picking up momentum," Gault said.

A glaring exception to the lower distress in much of the country in September was Nevada. It led the nation in unemployment with a 14.4 percent rate and also was No. 1 in foreclosures: Six percent of homes there were in some stage of the foreclosure process in September.

Nevada was the leader in bankruptcy filings, too, with nearly 3 percent of its taxpayers in the bankruptcy process.

Still, some hints suggest the worst is nearing an end in Nevada. Gaming revenue has enjoyed a small upswing. And while Nevada's housing market shows no signs of picking up, prices are starting to stabilize, said Stephen Brown, an economist at the University of Nevada, Las Vegas.

Even as the national unemployment rate remained at 9.6 percent in September, New England states benefited from more hiring. Except for Rhode Island (Stress score: 12.08), New England has been recovering from the recession better than much of the nation.

The region has an educated work force in professional and high-tech jobs, it avoided the real estate boom and bust and it's home to a high-end manufacturing sector. Manufacturers in New England export electronic parts and biomedical products to developing nations like China, India and Brazil, said Ross Gittell, an economist at the University of New Hampshire.

"New England is outperforming the rest of the country in many respects," Gittell said.

Jeffrey Carr, a private economist in Vermont, noted that tourism also has bounced back in New England, and the stabilization of financial markets has boosted the region's financial services sector.

The mid-Atlantic states of New Jersey, Maryland, Delaware and New York led the nation in declining foreclosure rates in September. The mid-Atlantic never suffered from the housing crisis as some other regions did and doesn't face the same high hurdles to recovery.

The Southeastern states of Tennessee, Kentucky and West Virginia, plus Nevada, saw the sharpest month-to-month declines in bankruptcy filings in September. Those states are among the leaders in bankruptcy filings.

The most-stressed counties with populations of at least 25,000 were Imperial County, Calif. (34.04); Yuma County, Ariz. (29.22); Lyon County, Nev. (26.21); Nye County, Nev. (25.56); and Yuba County, Calif. (24.33).

The least-stressed were Ward County, N.D. (2.95); Burleigh County, N.D. (3.52); Brown County, S.D. (3.78); Brookings County, S.D. (3.86); and Sioux County, Iowa (4.04).

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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