In an economic news release published earlier today, the Bureau of Labor Statistics reported that unemployment fell in 45 states in January 2012. In January, unemployment was down again in California—10.9% in January compared to 11.1% in December 2011 and 12.1% in January 2011. This marks the sixth straight month that unemployment has fallen in the state; a promising sign after years of economic stagnation. In an earlier post we noted how important the California economy is to the United States on the whole. As we explained in that post, the reason we focus on California is that California is responsible for a full 12% of the country’s Gross Domestic product, the largest contributor of all the states and what happens in California gives economists a good idea where the country is headed as a whole.
Last month, we saw positive signs in California’s unemployment rate and this month, as we anticipated, the positive news has spread to 44 other states. Perhaps the best news in this report is that there are signs of improvement in states where the employment situation had been abysmal through much of the recession. For example, in Nevada unemployment was down to 12.7% in January 2012 from 13% in December 2011 and down from 13.8% in January 2012; Mississippi down to 9.9% from 10.4% the month before and 10.5% in January 2012; and, finally, Michigan, the poster child for the recession, was down 0.3% from December 2011 landing at 9% in January 2011 down nearly 2% from January 2011’s 10.9% rate. Taken together, these numbers show that the recovery that is underway is not a regional phenomenon, but truly occurring across the country.
While GDP growth is a good indicator that The Great Recession is finally over, other measures, such as the number of mass layoffs, have been mixed. In December 2011, there were 1,384 mass layoff events (an increase of 52 events over November 2011) affecting 145,648 workers. However, the annual numbers for 2011 as a whole show a more positive story, with the lowest number of events (18,521) since 2007. Similarly, the Bureau of Labor Statistics (BLS) reported that median weekly earnings for full-time workers increased during the fourth quarter of 2011 by 1.6% over the same period in 2010 (a positive sign), but in urban areas, this increase was not enough to keep up with the inflation rate of 3.3% during the fourth quarter of 2011 (a not so positive sign).
So where does this leave us? Unfortunately, eschewing speculation and using only facts, it is hard to say as our table below shows.
Next week, BLS will be reporting January 2012 unemployment rates and BEA will be reporting December 2011 personal income and outlays. These are two additional important measures of the economy that can help us better understand whether there is cause for celebration. We will be watching them so we can provide our readers with more facts on whether the economy is indeed improving.