Yesterday, Bloomberg.com posted an important item on individual American states where new data indicate a recession has already arrived or is rapidly approaching. Not surprisingly, the slump-ridden states are all energy dependent, and therefore suffering the impact of price collapses on this front: Alaska, North Dakota, West Virginia, and Wyoming. Two of the three states on the watch list – Louisiana and Oklahoma – are in the same category, and a downturn reportedly is also coming in New Mexico.
These findings made me wonder what the official economic growth data say about how individual states have fared since the Great Recession began, more than nine years ago, and more recently, as the entire national economy has slowed significantly. Some of the results suggest that the nation’s economic weakness is considerably more widespread.
It’s important to note that these findings aren’t strictly comparable with those reported by Bloomberg for two big reasons. First, the government data I’ll cite measure only changes in real economic output, whereas the analysis cited by Bloomberg also include jobs statistics. Second, these data take us only through the second quarter of last year, whereas the Bloomberg numbers are more up to date. Still, the Commerce Department figures described here show at the least how uneven the nation’s economic recovery has been – and how the picture can change importantly based on how “recession” is defined.
In the most widely used sense of the term – two consecutive quarters of declining activity in a wide range of indicators – the Great Recession began in December, 2007. To match up with the government data, let’s call it the fourth quarter of that year. According to these figures, at least through the middle of last year, that downturn never ended for six states: Arizona, Connecticut, Florida, Maine, Mississippi, and Nevada. Sharp-eyed readers will draw one major conclusion from this list: All except the two New England states were absolutely crushed by the housing crisis.
Evidence that the U.S. economy did take a turn for the better once that recession officially ended – in the second quarter of 2009 – can be seen in the state-level growth data, too: Since then, only Alaska and Maine have seen their gross state output contract. Closer to the present day, the government figures make clear the costs of this latest energy price plunge: From the fourth quarter of 2014 through the second quarter of last year, only energy-rich North Dakota, West Virginia, and Wyoming experienced that two-straight-quarter output shrinkage that approximates the standard recession definition.
But as faithful RealityChek readers know, there’s another use of the word that should be considered: A technical recession arguably has occurred when real output is down on net for two quarters or more. And this definition of recession reveals no fewer than 13 states with recently recessed economies. In addition to energy-heavy North Dakota, West Virginia, and Wyoming, they include Indiana, Iowa, Kansas, Maine, Nebraska, New Hampshire, New Mexico, South Dakota, Vermont, and Wisconsin.
The geography savvy won’t be surprised to learn that the Commerce Department figures also make clear that the entire region defined as the Great Plains was in technical recession during this period. But political junkies will surely notice that early presidential caucus/primary states Iowa and New Hampshire show up, too. Think that’s had anything to do with the success of outsider candidates?
The next state-level growth data – adding the third quarter of 2015 – is set to come out March 6. We know that inflation-adjusted growth nation-wide slowed on an annualized basis all the way from 3.90 percent in the second quarter to two percent in the third. And by the fourth quarter, the rate had slipped to a negligible 0.7 percent. So don’t be surprised if many more caucus and primary states keep showing up on one of these recession lists – and if voters view this economic listlessness as one more reason to get angrier.