Widespread Unemployment Declines

Geographically, the decline in unemployment has been widespread, but it still remains very high in most of the country. In March, the unemployment rate fell in 34 states and rose in seven. Relative to a year ago, the unemployment rate is down in 44 states and up in just five. The overall unemployment rate was 8.8% in March, down from 8.9% in February and 9.7% a year ago.

The graph below (from this source) shows the unemployment rate in each state. The red part of the bar shows the current unemployment rate, the blue the highest rate in this cycle. The only two states where unemployment is at its high for the cycle are Idaho and Louisiana.

Nine states still have double-digit unemployment, and only five are close to what could reasonably be called full employment with unemployment rates below 6%. Unfortunately, lots of people live in the high-unemployment states like California (12.0%) and Florida (11.1%), and not that many live in the low-unemployment states like North Dakota (3.5%) and Nebraska (4.2%).

The drop in unemployment has been particularly steep in those states with a high exposure to the Auto industry. Ford (F) and General Motors (GM) are selling more cars than a year ago, although still far from the levels they were selling before the Great Recession hit. That has raised employment not only at those firms, but at the parts makers like TRW Automotive (TRW) and Lear (LEA).

States closely tied to farming generally have low unemployment rates as the effects of high crop prices ripple through those economies. States that had the biggest real estate bubbles, are generally the ones with the highest unemployment rates.

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About Dirk van Dijk 112 Articles

Affiliation: Zacks Investment Research

Dirk van Dijk, CFA is the Chief Equity Strategist for Zacks.com. With more than 25 years investment experience he has become a popular commentator appearing in the Wall Street Journal and on CNBC. Dirk is also the Editor in charge of the market beating Zacks Strategic Investor service.

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