Economic Strength - Nevada vs. North Dakota

 Regional economic strength is partly a matter of luck and partly the result of  bad policies.


The economic data on Nevada and North Dakota illustrate extremes of luck and bad policies. 

Nevada is suffering greatly from high unemployment and high job loss. North Dakota is at the other extreme, with much lower unemployment than other states and high job growth. The numbers are collected conveniently by the Joint Economic Committee in its state-by-state survey of jobs and unemployment (see summary chart on p. 106). The numbers on which the survey is based are from the monthly reports of the Bureau of Labor Statistics.

State	Unemployment, August 2012	Job Growth or Loss since Recession Began
Best: North Dakota	3.0%	+16.7%
Average: USA	8.1%	-3.4%
Worst: Nevada	12.1%	-12.6%

North Dakota is lucky in finding oil. Nevada is partly to blame for its lax mortgage policies that meant it was badly hit by the housing collapse.

An enterprising reporter or regional economist could surely find other contrasts that would help fill out the picture. A Business Week article in 2011 that headlines the contrast doesn't go much beyond the oil vs. housing explanation.

REAL ESTATE | Bottom-Fishing

Jan. 24, 2012–The state unemployment numbers for December, released today, show some numbers significantly lower than one year ago. Six states that have unemployment rates above the national average showed changes in their unemployment rates of 1.2 percentage points or higher. See Table C at www.bls.gov, today's press release.

States with above-average unemployment and statistically significant unemployment-rate changes,  Dec. 2011 vs. Dec. 2010. Ranked by change in unemployment.

-----------------------------------------------------------

                                |    Rate   | Over-the-year 

             State              |  December |   change(p)

                                |  2011(p)  |               

-----------------------------------------------------------

Nevada .........................|    12.6   |      -2.3     

Florida ........................|     9.9   |      -2.1     

Michigan .......................|     9.3   |      -1.8     

South Carolina .................|     9.5   |      -1.4     

California .....................|    11.1   |      -1.4     

Kentucky .......................|     9.1   |      -1.2     

-----------------------------------------------------------

   p = preliminary. Data are seasonally adjusted.

If one were bottom-fishing for real estate bargains based on state averages, these states would be worth investigating because a substantial drop in unemployment is by itself a highly favorable economic indicator.

However, where unemployment rates are still in double digits, as in Nevada and California, recovery is further away. 

California, Florida and Nevada were (along with Arizona) hit especially hard by a decline is housing prices. Michigan was affected more by the downturn in the auto industry.

Naturally, state averages are just a first step in an analysis. Within a large state, indicators can vary widely. County data, for example, show that California's Silicon Valley (Santa Clara County) is recovering faster than the state as a whole.