State recession recoveries
Date posted: July 30, 2012
Economies vary from state to state, and so it should not be surprising that states have progressed at different rates in the recovery from the recession. N.C. State University economist Mike Walden takes a look at what factors seem to be related to states’ progress.
“An analysis of all 50 state economies in terms of their progress from the bottom of the recession, which occurred for the employment market at the beginning of 2010, shows that three factors have been key in determining which states are growing faster, which are slower:
“One, states that have more of their economic base in manufacturing have actually been doing better. This is because the manufacturing sector over the last couple of years has really boomed. Exports have gone up, and that has helped states that have a big commitment, if you will, to manufacturing.
“Secondly, states that have had fewer households move to them from other states have actually rebounded faster. That should make sense in that households moving into a state, not all of them get jobs. A lot of them go on unemployment. So, that would hold back those kinds of states.
“And then thirdly — and this is very controversial, a lot of discussion over this — but the analysis seems to indicate that states that did not increase their tax rates early in the recession have actually rebounded faster.
“Now in terms of North Carolina, we’ve actually seen a bigger relative decline in our unemployment rate than other states. It’s still higher than the national average, but we have peaked out much, much higher.
“And I think what has really helped North Carolina has been our commitment to manufacturing. We have about 23 percent of our economic output in manufacturing compared to 13 percent for the nation. So that has helped North Carolina rebound in terms of that factor a little bit quicker.”
Category: Economic Perspective