December State Employment: Not as Bad as it Looks

While data volatility makes month-to-month movements less than meaningful, the results from the last three months provide a much clearer picture. With few exceptions, job losses have slowed significantly compared with the beginning of 2009, and the number of employment gainers has risen from 1 state early in the year to 11 by the end. Of particular note is the reversal of fortune for long-suffering Michigan (decimated by an 800,000-job decline in the 2000s) and housing-ravaged Arizona. The economy is still struggling to find its footing and significant job gains are a ways off, but the late-2009 employment growth in these states (minuscule as it is compared with recent losses) offers some cause for optimism.

While better days are ahead, the December results capped off a horrible 2009, in which more than 4 million jobs were lost. Only the District of Columbia managed to gain employment over the course of the year (up 0.9% y/y), as increased government spending spurred activity in and around the nation's capital (Virginia and Maryland, while losing jobs, still finished in the top 10). At the other end of the spectrum, a fall in energy and commodity prices torpedoed Wyoming's once high-flying economy, causing employment to plummet 6.8%, the worst in the country. Meanwhile, the housing collapse continued to punish Nevada (down 6.6%) and Arizona (down 4.8%), while manufacturing's woes kept hitting Michigan (down 5.1%).

Looking ahead, we expect a bumpy year for job growth in most states in 2010. While gains will return this year, they will generally be tepid—the vast majority of states will not see significant increases in employment until 2011.

by Dave Iaia