Double-Digit Double-Jeopardy: Double Digit State Unemployment May 2010

The latest Regional and State Employment and Unemployment report showed that in May 17 states and the District of Columbia were experiencing double digit unemployment with a median unemployment rate of 10.8%.

Nevada showed the highest unemployment rate at 14.0% followed by Michigan at 13.6% and California at 12.4%.

State of the Union: Coincident Indexes for the 50 States January 2010

The latest “Coincident Indexes for the 50 States” release from the Federal Reserve Bank of Philadelphia indicated overall weakness in economic activity in January with 23 states showing declines, 19 showing increases and 8 remaining unchanged.

That compares slightly more favorably to the latest three month results of 31 declining states, 15 increasing and four unchanged.

The worst showing was West Virginia with a month-to-month decline of 1.39% and a decline of 13.43% on a year-over-year basis.

The best, yet very volatile showing was from Louisiana which increased 0.66% on a month-to-month basis but still remained 2.33% below the level seen in January 2009.

The national index indicated that economic activity increased 0.08% since December 2009 but remained 2.82% below the level seen in January 2009.

The coincident indices are formulated from four state level indicators (nonfarm payrolls, unemployment rate, average hours worked in manufacturing and wages and salary disbursements deflated by the CPI) giving essentially a time-series summary of the current general economic conditions of each state.

Double-Digit Double-Jeopardy

Today’s Regional and State Employment and Unemployment report showed that in January 15 states and the District of Columbia were experiencing double digit unemployment with a median unemployment rate of 11.2%.

Michigan remained the state with the highest unemployment rate at 14.3% followed by Nevada at 13.0% and Rhode Island at 12.7%.

As you can see from the chart below, since late 2008 states registering double digit unemployment rates have been rising steadily.

Sinking Ships – MA vs. RI November 2009

Subtitle: MA Unemployment … Peaking out or About to Pick Up!

As I had noted in my original post, historically it has been very unusual for there to be more than a 1.5% difference (either more or less) between the unemployment rates if Massachusetts and Rhode Island.

Recently though, we have seen a historically unusual spread between Rhode Island’s high rate and Massachusetts’ far lower rate.

In fact, the latest 3.9% spread nearly exceeds ALL spreads seen in at least 40 years.

This indicates that either Rhode Island’s current rate would need to fall dramatically or the Massachusetts rate would need to increase sharply…. My sense, especially in light of the financial turmoil seen since September 2008, is that Mass will be continually playing catch-up.

The latest regional unemployment report shows that, in November, the Rhode Island unemployment rate declined to 12.7% while the Massachusetts rate declined slightly to 8.8%.

Massachusetts is still experiencing large year-over-year increases to unemployment jumping 44.26% on a year-over-year basis continuing to indicate that Mass is slogging through a period of serious job weakness.

Green Shoots Starting to Wither… Soon To Die

It was such a pleasant spring too… wet mild weather… just perfect for growing “real” crops … Bulls hoped their green would grow too… now though, it looks as if the “Green Shoots” may start to spontaneously shrivel… a casualty of the overarching climate of economic decline.

Things were looking so good too… You had the Philly Fed Business Outlook Survey make a strong showing… the Conference Board’s Index of Leading Economic Indicators seemed to signal recovery… although… these indicators all signaled recovery in 2001 as well… and look how far that “recovery” got us.

Another interesting report came out on Friday as well… the Regional and State Unemployment Report showing one state with over 14% unemployment (Michigan at 14.1% unemployment and increase of 1.2% since just last month) three states with over 12%, and 13 states over 10%.

Further, 27 states experienced a notable re-acceleration to unemployment jumping anywhere from .05% to 1.2% since just last month.

This brings us one step closer to the ultimate “Prime Bomb” detonation… the point at which the level of unemployment is BOTH uncomfortably high causing systemic vicious cycling feedback effects (I would argue we are at that point now) AND obviously beyond a point at which the government can appear to have any form of control over.

Currently, the populous has almost innate or inherent confidence in the governing elite… they appear to have “fixed” the financial system and the stock market so why not the job market?

Yet, even with all the multi-trillion dollar government meddling, the job market is getting worse.

This is not a new trend…. We had a “jobless recovery” for the first half of this decade… followed by an historic decline (which destroyed all the jobs created in the jobless recovery leaving us now at payroll levels below that of early 2000… with over 20 million more work age population today) that continues to this day.

As more states push closer to the 15% unemployment level and the current crop of 12-14% unemployment states push on closer to 20%, there will be a point at which there is a clear realization that the “unemployment problem” (as they called it back in the 30s) is beyond the control of current government policy.

This will obviously bring new policies as well as a notable loss of confidence.

As I have pointed out in prior posts, mid-July is the next typical seasonally point for mass-layoff events so look for this recent unemployment re-acceleration to express itself through the summer and, if the economic climate of the second half is particularly week, merge again with the larger typical mass-layoff period of mid January.

In the near term we should be focused on a significant change in outlook for the second half of 2009 as there is clear realization that the “Green Shoots” are dead and the decline will drag on much longer.

The following chart (click for super-dynamic zoom-able version) shows what has to be the starkest evidence that our economy has not only been weak for roughly a decade but further looks to be on course for a protracted bout of nationwide systemic double-digit unemployment.