State Unemployment: A Sum-of-the-Parts BS Detector
We line up the state unemployment rates from the lowest to highest and pose a few simple questions on the highly politicized economic themes.
These 50 circles add up to a good economy by my math.
Get the state leaders on the phone. We can help them.
We look at the unemployment rate for the 50 states and District of Columbia. We aim to shed some light on how many partisans describe the national economy in one room and talk about their own state economy in another.
Question: If so many states have strong economies, great employment, and state and local spending has been one of the big contributors to GDP 2023-2024 and the same in payroll growth (Payroll May 2024: The Wave Continues 6-7-24), then why doesn’t the roll-up of states celebrating their strong state economies and record numbers add up to a good national economy?
The fact that some brag (loudly) about their strong state performance (see Employment: Real Numbers vs. Fictitious Dystopian Hellscapes 3-9-24) makes it all the more dishonest and unprincipled that so many describe the national economy as one step away from an extended sprawl of Hoovervilles.
The national political scene just took a deeper dive into the cruel, unseemly and dysfunctional this week as it keeps setting the bar higher for how to be scummy.
On one side, we had Trump the Deranged, Delusional, Convicted Criminal Dissembler and one-man Tailhook Convention get free reign to lie repeatedly and ignore almost all questions and topics. On the other side, we had Biden the Doddering Decrepit Diehard staring at the screen with his mouth open toggling back and forth from no sound to broken sentences. It was grim. Great jobs by the advisers on prep!
Meanwhile two “journalists” (or more like talking head appointees) played solitaire and made sure their makeup did not smudge. Overall, the debate was not a great moment in US political discourse. The candidates made Ronald Reagan on his worst day look like the Chair of the Economics Department at Stanford.
Facts and concepts still matter, so we look at State Unemployment
However one may feel about either (or both) of these candidates, it is important to frame how policies have worked (or not) in the context of a range of inputs, including the economy, industries, the consumer, household health, and the state of the sovereign – as in leveraged and running an other-worldly deficit. It is too bad Trump was not forced to answer questions and simply delivered a Fox Floor Show. Biden seemed to have few answers at all.
What Trump the “stable genius” says or the old guy does not say is mostly drama and not on-the-ground results. Most voters don’t fact check, and they live by the visceral and the rules of “the clan” (in some cases that starts with a “K”), but facts are not a bad starting point for less captive thinkers on the independent side.
The facts are that Biden policies have translated into solid economic performance that stack up better than Trump’s one term from myriad angles (employment, fixed investment, GDP growth, etc.). (See Tale of the Tape in GDP: Trump vs. Biden 12-4-23). The big exception has been inflation, which we write about in other commentaries. There is a lot to debate on the inflation topic (FOMC, fiscal actions, supplier chains, tariffs, trade policy, etc.), but that complexity was not in evidence from anyone in this horrid debate. Biden’s relative lack of functionality tended to overshadow Trump’s gross and willful ignorance.
Most of us traditionally hate mixing politics with business. It is a “Wall Street career no-no” for sure, but researching the moving parts means looking at policy risks and recognizing facts for what they are and trying to use rational concepts to interpret them.
Our view now is that there is no hiding from the reality of “politics=policy” these days. We see trade wars being treated like a board game rather than something that can bring waves of knock-on effects on the economy. We have seen UST default threats used for fund-raising efforts and personal exposure ammo.
Rolling up the picture of state economies…
For this commentary, we update the state-by-state employment rates to inject some reality into how those 50 states roll up to a national economic story line. The “end of the economy is nigh” types in Congress and the partisan town criers who talk about the “failed country” and “failed leadership” often tend to skip over the facts of their local economies and how well many are doing (see Employment: Real Numbers vs. Fictitious Dystopian Hellscapes 3-10-24).
The above chart lines up the state unemployment rates in descending order. In the upper right box, we give some national level history across Obama’s 1st term, Obama 2nd term, then Trump, and then Biden. The summary is easy enough:
Bush/4Q08: Bush Term 2 ended with chaos and a systemic bank crisis and unemployment closed his 2nd term at 7.3%. The banks, housing, autos, ABS, funding markets, and consumer health were in flames as Obama took the helm in Jan 2009. Risk aversion trauma was everywhere.
Obama I: The first term saw the worst of the crisis in the “real economy” after the bank bailouts and credit contraction was underway. The recovery of employment was slow and brutal to a 7.9% rate at the end of Obama’s 1st term after auto bankruptcies and widespread industry restructurings (autos, construction, housing, etc.). The systemic whipsaw and Eurozone crisis during the summer and fall of 2011 did not help. From start to finish, Obama’s 1st term added +0.6% to the unemployment rate.
Obama II: The economic expansion got back on a roll with a higher rate of job recovery and rising risk appetites throwing the credit markets wide open by 2012. Obama’s second term shaved 3.2 points off the unemployment rate in the recovery and added jobs at a 4-year average annual rate that exceeded the first 3 years of Trump before the COVID crunch came.
Trump: Trump started with a 4.7% rate, saw strong average annual job growth but lower annual growth in payroll than Obama’s 2nd term for the first 3 years of Trump to 2019. The first 3 years of Trump saw the unemployment rate reduced by 1.1 points to 3.6% by Dec 2019. Again, that was before COVID. The pandemic brought massive fallout and notably in services, and the Trump term ended 2020 with unemployment at 6.7% or 3.1% higher from the end of 2019.
Biden: Biden has overseen a reduction in unemployment of 2.7 points to 4.0% as of the end of May 2024. That is modestly off the multidecade record lows in Biden’s term achieved multiple times including in 2023. Trump’s accusation that most of that payroll growth was just rebound jobs is a partial truth (a good day for Trump getting a “partial truth”) but the growth in so many categories can be linked to much more than that. In other words, it was a partial truth with “majority false” that can be traced to occupations (see Payroll May 2024: The Wave Continues 6-7-24).
We understand there is more to life than employment stats, but the unemployment rates are a good proxy for “living, eating, and paying bills” even if not a great proxy for how you feel. So many Governors and national leaders from the above states serving in Washington praise their home state economic performance that the state level metrics are very relevant. After all, 50 states make a country. It is just simple math.
Low unemployment and high payrolls across so many states means low unemployment and high payrolls nationally. Seems obvious right? Some states clearly are struggling from legacy problems and urban challenges, but the overwhelming majority are posting strong numbers and showing rising state outlays and investment as well as hiring.
The media should start paying closer attention to the conflicting accounts (notably in the booming states) between how those state leaders describe their success locally and how they talk about the disastrous national economy for political reasons. Reconciling their home court versions from the national platform statements is sometimes funny as cynical as it may be. We spend time surfing for the statements and press releases. Some of the noisiest Biden bashers come from booming economies (it must be the “other guy’s” lousy economy). Note the Dakotas especially.
Interestingly, some of the most vocal bragging from Governors and leaders of states came in 2022 when the tightening cycle was intensifying, and inflation crossed the 9% line (almost triple current levels).
Softball media mavens…
The “mainstream media” (as typically defined by the right) does have a tendency to opt for softball questions while pretending they are Nolan Ryan delivering one high and inside. On the other hand, the Fox types just sit in the bleachers and “do the wave” for their guy. They don’t even play softball. They often provide the answer in the question.
I dream of the day when someone in the media will ask “So what is unemployment in your state?” Not sure I ever heard that one on national news asked of someone who just finished bemoaning the abysmal, deathly state of the US economy. We looked at two sets of books from many state leaders in an earlier employment commentary. It is just a painful lack of basic factual honesty. If you can ignore elections, then you can ignore economic data. It gets easy after a while.
As you look at the employment rates in the attached charts, it is worth remembering to “start at the state level and count to 50.” That is basically a national economic picture for jobs.
A few questions worth asking someone about their home state economy include:
Is your state economy good or bad? Is your state GDP higher or lower in 2024? Since 2021? Since 2019?
State and local investment and consumption was one of the better drivers of recent GDP growth. Did your state invest more and did government budgets consume more as well? How did the budget rise? Income taxes? Real estate taxes? Sales taxes? Did higher tax revenues come with higher economic activity?
Have you seen construction activity increase in your state and more construction jobs created since 2021? What type of projects? Was there Federal money? Did you turn down Federal money?
Has your state and local government hired more people and grown their payrolls since early 2021? How did they do it if the economy was not good?
Have you had state and local layoffs in 2024?
Many on the right say that the payroll increases are tied to the employment of undocumented migrants who are here illegally. Is that the case in your state? Can you give me some numbers?
Does your state receive more in Federal dollars than it pays in Federal income taxes? How about on an ex-defense basis?
Have you ever given thought to whether your state is a net receiver or a net donor of Federal income taxes? Do you even know? Do you feel like you are mooching off the net income tax donor states, for example some of those states that have higher unemployment than yours?
In the above chart, we reorder the state unemployment rates into 3 buckets – red states, swing states (purple) and blue states. Those colors can be debated, but we tried to look at recent polls and prior election results.
We came up with 8 purple that can be challenged, but that does not change the unemployment rate. The famous 5 swing states that determined the last election (WI, MI, PA, GA, AZ) are still in the purple bucket. We added in Virginia (VA) as a swing based on polls. We were surprised to see the Maine (ME) poll trends, but they are not a sure thing for Democrats. Maine had long been a classic old school Republican state, but the MAGA crowd is growing in New England. Nevada is like two states in one with Las Vegas and “the rest” and it was hit hard by COVID. They don’t have Harry Reid filling up buses and tapping the unions as well as he did in the “old days.”
Just scanning the red, purple and blue state unemployment is a simple exercise. People can see the very healthy employment profile in some of the states with some of the most rabid story tellers of the “US Depression” themes. We see 10 red states at 3.0% or below. We see 6 blue states at 3.0% or below. That is a lot of states beyond full employment. In the “old days” full employment used to be in the 4.5% to 5.0% range at the national level.
The economy fact dodge…
The problem in part is the hard-core red state politicians avoid CNN and MSNBC. In other words, they can’t be pressed on the inconsistency even if the questioner did some more complete homework. State politicians or national leaders can always dial into Fox where facts and concepts are not contagious.
That is how people like Senator Katie Britt after the State of the Union can describe the book of economic revelations on a national scale and then return to her home state with its smoking hot economy and expanding industrial base. With 2.0% rates, the Dakotas are a whole new bucket of shameless and got even worse with two Governors originally in the Trump VP sweepstakes.
Even if the state officials had the nerve to journey to a news channel at least resembling journalism, that would be CNN since MSNBC is a no-fly zone for many on the right. Being openly revealed as fact-free and concept-anorexic is not something most would be willing to risk, so the gross inconsistencies tend to not get much focus by “busting them” on air.
The “don’t think, just repeat” school is a more efficient use of time, so the strategy is just to join the wave of those pursuing the “lie-exaggerate-repeat” cycle. The ability to admit to a sum-of-states formula for national economic health would preclude them from bragging about their own states’ performance in a national forum when they get pressed for details.
In most cases, these states do in fact have plenty to brag about, but they want to try to keep the truth localized and run a separate set of books for the national economy. The healthy economic backdrop by definition shows up in their pitch books to build new facilities or relocation actions.
We can always ask questions of states like South Dakota with the low tick of 2.0% unemployment: “With your unemployment rates so low, do you fill the jobs with undocumented migrants that were released from asylums and prisons before crossing from Mexico? A migrant of that profile is more likely to end up in the gravel pit next to “Cricket” than get a job.
We assume much of the inconsistency between the stated views of the local economy vs. the national roll-up of those economies is just a case of “All is fair in love, war, politics, power-seeking, and Christian Extremism” (notably the dominion crowd that still defends slavery). After all, the end justifies the means?! Some call it dishonesty. Some call it unethical. I call it slimy.
Was it over for the Democrats when the GOP bombed Pearl Harbor? Hell no!
The election battle and political ugliness will go ballistic from this point and notably after so many are calling for Biden to “head to the old folks home.” It is policy and execution that flows into the trenches, however, and the record of Biden at least deserves some objective focus. More than a few (including me) bought into the “bridge” theme of his 2020 victory (as in “bridge” to the next generation of leaders). Many of us were thinking Brooklyn Bridge, but he apparently was thinking Chesapeake Bay Bridge. As we go to print, Biden is not backing down.