May Unemployment By State: Uneven Improvement

By admin_45 in Blog

The May 2020 US state-level unemployment data was out on Friday; here are 3 observations using Google Public Data graphs to show recent trends:

#1: COVID’s effect on the US labor market varies widely state-by-state, hitting some regions especially hard while leaving others relatively unscathed.

• The 5 hardest hit states are Nevada (25.3% May unemployment), Hawaii (22.6%), Michigan (21.2%), Rhode Island (16.3%) and Massachusetts (16.3%).
• The 5 states with the lowest May unemployment: Nebraska (5.2%), Utah (8.5%), Wyoming (8.8%), Arizona (8.9%), and DC (8.9%).
• The averages: 20.3% unemployment for the 5 worst, 8.1% for the 5 best, and 13.3% for the country as a whole.
• Consider Nevada’s experience now to the Great Recession, when unemployment peaked at 13.7% in September 2010. That was 44% higher than the national rate at the time. Now, it is 90% above the national average.

Takeaway: The COVID Crisis has been far more damaging to select states than the national data shows, and those regional imbalances far exceed the Great Recession.

#2: Just 5 states make up 40% of America’s GDP; here are their recent/current unemployment rates versus the national jobless rate:

• California: down 0.1 points in May to 16.3% from 16.4% in April
• Illinois: down 2.0 points in May to 15.2% from 17.2% in April
• New York: down 0.8 points in May to 14.5% from 15.3% in April
• Florida: up 0.7 points in May to 14.5% from 13.8% in April
• Texas: down 0.5 points in May to 13.0% from 13.5% in April

Takeaway: aside from Illinois the top 5 GDP-producing states all underperformed May’s national drop in unemployment to 13.3% from 14.7% in April and except from Texas all show higher unemployment rates than the US as a whole. Also, all were running much closer to the national average pre-COVID Crisis, as the following chart shows:

#3: For those readers interested in what this may mean to the 2020 presidential election, here is the May data for 6 swing states:

• Three states show May unemployment below national levels, but all still quite high:
  
  Wisconsin: 12.0%, down from 13.6% in April
  North Carolina: 12.9%, even with April
  Pennsylvania: 13.1%, down from 16.1% in April
• In the 3 other states, unemployment is above national levels but trending down in 2 regions:
  
  Ohio: 13.7%, down from 17.6% in April
  Florida: 14.5%, up from 14.0% in April
  Michigan: 21.2%, down from 24.0% in April

Takeaway: we (and a lot of other market watchers) will be paying close attention to the state-level joblessness data as we get closer to November. To the degree to which pocketbook issues inform voter preferences, local economic conditions will matter. And, as we’ve seen in the other points above, state-level labor markets can vary widely from the national data.