10/26/2011
Regional employment: Looking better, but still not great
State employment data for September were released by the U.S. Bureau of Labor Statistics last week, and the report was rather positive for the Sixth District as a whole (see chart 1). Regionally, we added a net 46,800 jobs for the month, the largest increase since February 2011. All states in our region added jobs except Georgia, which saw its fifth straight monthly decline. More on that in a minute.
Florida led the region with a net increase of 23,300. Gains in leisure and hospitality and health care drove September's gains in Florida, but most other sectors also saw net increases. Over the last twelve months, the Sunshine State has added 93,500 jobs—granted, a small dent in the more than 900,000 jobs lost during the downturn, but Florida appears headed in the right direction. Also heading in the right direction is Florida's unemployment rate, which is down to 10.6 percent from its peak of 12 percent in December 2010. The total number of unemployed in Florida is down to its lowest level in two years and September saw a slight increase in the state's labor force, two more positive signs.
Louisiana also saw a solid increase in employment in September. Gains were broad-based, but the increase of 5,000 jobs in government should be interpreted cautiously as the same sector saw a similar decline in July. Stepping back from the monthly data, Louisiana has outperformed the rest of the region in terms of job gains—up 2.4 percent over the past year. In addition, the state's unemployment rate is by far the lowest in the region at 6.9 percent (see chart 2).
At the other end of the spectrum is Georgia. The Peach State lost another 7,100 jobs in September, bringing total losses over the past five months to more than 27,000. Gains in manufacturing, health care and business services were more than offset by declines in construction, leisure and hospitality, and government. In addition, Georgia's unemployment rate ticked up to 10.3 percent. The state is clearly headed in the opposite direction.
We will continue to monitor job growth and unemployment for the region and individual states.
By Mike Chriszt, an assistant vice president in the Atlanta Fed's research department
October 26, 2011 in Employment, Florida, Louisiana | Permalink
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01/05/2011
A look into 2011
January is the time when economic forecasts for the new year percolate throughout the country. The general consensus is that the U.S. economic recovery will remain on track, and the Atlanta Fed's assessment is in line with this consensus. The latest issue of the Bank's quarterly publication EconSouth reviews 2010 and comments on the outlook for 2011. Here are some highlights from the national outlook:
"While the U.S. economy has been expanding for almost a year and a half, and a number of key fundamentals such as business investment and consumer spending have picked up, the recovery has not been strong enough to meaningfully reduce the unemployment rate…
"Lingering joblessness, along with weak income growth, lower housing wealth, and tight credit, are acting as headwinds to the economic recovery…
"The U.S. economy is not all doom and gloom, however. Business investment, a particularly bright spot, grew at a 20 percent annual rate during the first three quarters of the year. This theme of improvement in some areas and ongoing weakness in others illustrates the unevenness of the recovery and heightened uncertainty about future economic prospects."
The story is much the same for the region:
"The Southeast economy in 2010 was marked by strength in some areas and continued weakness in others, with more of the same expected for 2011…
"The ailing real estate market has been a dark cloud over much of the Southeast economy. Florida's real estate market was especially hard hit, but it has also bounced back the strongest. Georgia has seen its share of real estate problems, which have hurt its banking sector. The state has the nation's most bank failures since the crisis began…
"Notwithstanding unprecedented cutbacks in production during the recession, regional vehicle manufacturing recovered in 2010. The region's production outlook is encouraging because of favorable consumer demand for products made here and additional plants that will expand production capacity in the coming year."
The issue also includes information on individual Southeast states:
"Alabama has shown some of the s strongest job growth among southeastern states, regaining in the first three quarters of 2010 about 18 percent of the jobs it lost in 2009. These job gains are reflected in one of the more dramatic drops in unemployment the region has seen since the recession. A fortunate implication of stronger job growth—and the greater spending expected to follow—is that Alabama is projecting the smallest state budget shortfall in the region for the current fiscal year. With the greatest share of pending stimulus projects among southern states, Alabama is poised for those projects to complement its current path of recovery.
"After suffering the hardest fall in real estate in the Southeast, Florida has seen the most dramatic recovery, with total residential sales through most of 2010 at 71 percent of their peak level seen in 2005. Florida is also experiencing its share of the relatively strong performance of manufacturing in 2010. Over the next few years, a drinkware manufacturer and a medical product manufacturer plan expansions there. Another boost to the state's economy in 2010 came from foreign travelers taking advantage of the weak dollar to visit the Sunshine State. On a more somber note, Florida is projecting one of the highest state budget shortfalls among southeastern states in the current fiscal year.
"Georgia holds the dubious honor of being home to the most bank failures in the United States since the banking crisis began and also faces the highest projected budget shortfall of the southeastern states for the current fiscal year. In spite of these financial challenges, farmers in the state have benefited from historically high cotton prices in 2010. In addition, biofuels have become big business in Georgia. The ready availability of privately owned forests has even attracted European manufacturing to the state to create jobs in the biofuel sector. The state has also topped others in the region in terms of tourism growth. Employment in that sector is growing at nearly twice the pace of tourism employment in the next fastest-growing state.
"With residential home sales at only 58 percent of their 2006 peak, Louisiana has the slowest-recovering real estate market among states in the region. On the upside, through the first three quarters of 2010, Louisiana regained the greatest percentage of jobs lost during 2009 (39 percent) and continues to enjoy the lowest unemployment rate among southeastern states. In addition, the announcement of a new facility producing electric and hybrid boats and other recreation vehicles in the state will further boost the region's growing green manufacturing sector. In spite of weak economic conditions, New Orleans once again saw record-breaking attendance at its many festivals and celebrations, including Mardi Gras.
"Mississippi has been slow in regaining jobs. Through the first three quarters of 2010, the state has regained only 7 percent of jobs lost in 2009. Only Georgia recovered a smaller share of lost jobs (less than 1 percent). On the other hand, Mississippi manufacturing is jumping on the green machine with the announcement of a start-up firm planning to manufacture energy-saving electrochromic windows and, over the next few years, the arrival of three biofuel plants.
"Tennessee is looking forward to when Volkswagen's automaking plant in Chattanooga begins production in 2011. The addition of the Leaf electric vehicle from Nissan, whose Smyrna manufacturing plant will be under construction through 2012, will add to the state's history of innovative automaking endeavors. The Volunteer State has enjoyed the fastest growth among southeastern states in personal income in 2010, resulting in one of the smallest projected shortfalls in state budgets in the region for the current fiscal year. The state is also one of the three leaders in the United States for clean technology jobs: 2010 saw the addition of hundreds of solar manufacturing jobs in Tennessee, and increased manufacturing of electric car–charging stations could produce further jobs in coming years. On the downside, flooding in 2010 devastated tourism in Nashville during the traditionally busy summer months."
By Michael Chriszt
Assistant vice president in the Atlanta Fed research department
January 5, 2011 in Alabama, Florida, Georgia, Louisiana, Mississippi, Outlook, Southeast, Tennessee | Permalink
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07/28/2010
Regional labor markets continue struggle
Similar to the national employment report for June, the regional employment report showed a loss in payroll employment for the month. According to the U.S. Bureau of Labor Statistics' establishment survey, the Sixth District lost 26,800 jobs in June after adding 77,400 jobs in May (see chart 1). Job losses in most District states were affected by the end of Census-related temporary jobs. For the United States as a whole, 125,000 jobs were shed in June, reflecting the end of 225,000 temporary Census jobs. Private payrolls in the District have increased over the past few months, albeit at a slow pace. In June, the District added only about 17,000 private jobs.
Looking at another labor market indicator, we also see a slight improvement in the sluggish labor market. In the U.S. Bureau of Labor Statistics household survey, June's unemployment rate decreased in all District states except for Louisiana, where it increased slightly that month. Despite the easing of the unemployment rate, all states in the District have unemployment rates above the national rate of 9.5 percent with the exception of Louisiana, which has an unemployment rate of 7 percent. Much of the decrease in the unemployment rate during the past few months is attributed to a decrease in labor force participation.
To gauge employment's short-term trend versus its long-term trend, employment momentum can be examined through the use of bubble charts (see chart 3).
The employment momentum chart simultaneously plots both short- and long-term employment trends as well as states' total employment share. The vertical (Y) axis measures short-term trends (three-month average annualized percent change). The horizontal (X) axis measures long-term trends (year-over-year percent change). The size of each state's bubble reflects its relative share of total employment among the six measured states.
The position of a state's bubble in a quadrant—the intersection of the state's short- and long-term plot—reflects its employment momentum by using four quadrants that indicate certain situations:
Quadrant 1: Both short- and long-term employment growth are positive. (The higher in the right-hand corner of the chart a state's bubble appears, the stronger the state's employment momentum.)
Quadrant 2: Short-term growth is negative, but long-term growth is positive. (Recent data point to slipping employment momentum.)
Quadrant 3: Both short- and long-term employment growth are negative. (The lower in the left-hand corner of the chart a state's bubble appears, the weaker the state's employment momentum.)
Quadrant 4: Short-term growth is positive, but long-term growth is negative. (Recent data point to improving employment momentum.)
In June, the employment momentum of the Sixth District states is positioned in the improving quadrant, so although long-term growth is still negative, short-term growth is positive. Some states were even entering the expanding quadrant in June. If we take a look back to where the Sixth District was in January (see chart 4), all District states were in the contracting quadrant with both short- and long-term employment growth negative. Although these indicators point to improvement, they show that the labor market in the Sixth District still has a ways to go before getting back to where it was prerecession, with state bubbles in the expanding quadrant and lower unemployment rates.
By Sandra Kollen, a senior economic analyst in the Atlanta Fed's research department
July 28, 2010 in Louisiana, Recession, Unemployment | Permalink
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06/30/2010
The Gulf spill's employment effect: Early evidence
In an attempt to gauge the oil spill's impact on employment, we've been tracking initial unemployment insurance claims for the coastal regions of Louisiana. Looking at weekly initial unemployment insurance claims, which are first-time applications for unemployment insurance, provides an indication of week-by-week changes in employment for coastal Louisiana parishes and is thus a high-frequency view of employment trends. We developed two measures: one for all coastal parishes, and another that includes Jefferson and Lafayette parishes. Jefferson extends to the coast, but the vast majority of employment in this parish is located in the suburbs of New Orleans, and Lafayette Parish is home to many people employed in oil and gas drilling and related services. Neither measure includes Orleans Parish.
For the Louisiana coastal regions, there was little immediate effect on initial claims data after the spill on April 20, which is not particularly surprising since the true extent of the spill remained unknown at the time. Late May saw the beginning of an increase in claims. This trend was short lived, however, as an equally marked decrease in new claims followed. In addition, BP's hiring of some out-of-work fishermen and others to assist in the clean-up has likely offset some of the job losses.
We are also looking at data about initial unemployment claims by industry, which are available on a monthly basis. Through May, the job losses do not seem to be centered in any particular region or industry in Louisiana. This situation may change as time goes on, and weekly initial claims will be a good indicator to watch.
The Atlanta Fed will continue to watch employment indicators for the coastal regions of Louisiana and the Gulf. More detailed job analysis will be available in late July when the U.S. Bureau of Labor Statistics releases June state- and metro-level employment data.
By Brian Goodman, an intern in the Atlanta Fed research department
June 30, 2010 in Employment, Louisiana, Oil | Permalink
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06/17/2010
Let's focus on what we do know
The Wall Street Journal's Real Time Economics blog quotes recent analysis from J.P. Morgan Chase in its post, Oil Spill May End Up Lifting GDP Slightly.
" 'The spill clearly implies a lot of economic hardship in some locations, but given what we know today, the magnitude of these setbacks looks dwarfed by the scale of the US macroeconomy,’ said chief U.S. economist Michael Feroli. If anything, he added, U.S. GDP could gain slightly from it….
"Commercial fishing in the Gulf is also likely to suffer, but that's only about 0.005% of U.S. GDP. The impact on tourism is the hardest to measure, although it's fair to expect that many hotel workers who lose their jobs will find it hard to get new ones. Still, cleaning up the spill will likely be enough to slightly offset the negative impact of all this on GDP, J.P. Morgan said. The bank cites estimates of 4,000 unemployed people hired for the cleanup efforts, which some reports have said could be worth between $3 and $6 billion."
Another point brought up by several analysts is that the size of the U.S. economy requires that a disaster would have to be massive to have an impact on national economic performance. Earthquakes, hurricanes (including Katrina), and other disasters simply did not have a significant impact on short-term national economic growth.
Smartly, the Real Time Economics post also notes that the J.P. Morgan commentary points out that:
"[G]ross domestic product measures are often not a good guide to an economy's well being."
It is also important to note that this story continues to unfold. We simply do not know what the long-term implications of the oil spill will be or what potential changes in the regulatory environment could have on future energy extraction—not only in the Gulf but also nationally.
Analysts will continue to strive to put a number tag on the oil spill, both in terms of the impact on the macroeconomy and in terms of the regional economic impact. The truth of the matter is that what we do know is still far less than what we don't know.
By Michael Chriszt, an assistant vice president in the Atlanta Fed’s research department
June 17, 2010 in GDP, Louisiana, Oil Spill | Permalink
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06/02/2010
A regional event, for now
In the short term, the Gulf oil spill has largely been a regional economic event. Gulf area aquaculture and tourism businesses have been affected, but for the spill to have national implications, the energy and transportation sectors would have to be interrupted. So far, energy production has not been disrupted and shipping facilities remain open and are operating normally.
Any interruption in oil production, imports or both would have a significant impact on supply. According to the U.S. Department of Energy, Louisiana produces 1.4 million barrels per day of crude oil (2010 average to date), accounting for 27 percent of all U.S. crude oil production. Each day, 6.1 million barrels of crude oil and petroleum products (2010 average to date) enter the country through the Gulf Coast, accounting for 48 percent of all U.S. crude and petroleum product imports.
An extension of the moratorium on new deepwater drilling has not affected prices. However, David Kotok of Cumberland Advisors pointed out in Part 6 of his "Oil Slickonomics" commentary that the longer-term implications of the oil spill hold important price influences.
"Our expectation is that the oil business is about to enter a period of intense scrutiny and regulation worldwide. It will confront higher cost structures and much more inspection and regulation. This will eventually be reflected in higher oil prices."
According to data from the Port of New Orleans, the Mississippi River remains open to maritime traffic, and no ship calls have been canceled because of the spill. Port statistics show that about 500 million tons of cargo passes through the Mississippi each year, and more than 6,000 ocean vessels annually move through New Orleans on the Mississippi River. Any disruption to these facilities would have an impact beyond the port as the flow of goods reaches well beyond Louisiana.
Of course, the longer the spill goes unabated, the greater the chances that the oil production and imports could be affected and port activity could be influenced. The opportunity for the oil slick to spread throughout the Gulf also increases daily, as do the chances that it may move out of the Gulf and up the East Coast. In terms of the geography affected by such events, the regional nature of the Gulf oil spill will become more national in proportion.
By Michael Chriszt, assistant vice president in the Atlanta Fed’s research department
June 2, 2010 in Alabama, Energy, Florida, Local Economic Analysis and Research Network (LEARN), Louisiana, Mississippi, Oil | Permalink
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05/05/2010
Spillonomics
Estimating the economic impact of the Gulf oil spill is a largely speculative exercise at this point. The variables are significant—how much has been spilled and how much more is coming? Where will it come ashore? How long will it take to clean up? The list goes on.
What we do know is that the fishing, recreation, and tourism sectors in the Gulf are already feeling the effects. The extent of the impact depends on the duration of the spill—the longer it continues, the worse the impact. That's a pretty easy call.
Some of the projections are nightmarish. David Kotok of Cumberland Advisors paints a dire picture, writing that "Three scenarios lie ahead. They rank as bad, worse, and ugliest (the latter being catastrophic and unprecedented). There is no 'good' here."
Jonah Goldberg in USA Today suggests that we keep the oil spill in perspective. "But it's worth remembering that the damage from previous, and much larger, spills wasn't nearly so lasting as people had feared."
Nobody is downplaying the event and its impact on the environment, nor should we forget about the 11 people who lost their lives in the tragedy. What we will do going forward is keep up with current events and attempt to measure their potential impact based on confirmed information we gather. Here are some sources of information that we are tracking to keep up to date with the economic impact of the spill.
The U.S. Department of the Interior's Mineral Management Service along with other agencies has created a Web page dedicated to the Gulf of Mexico Oil Spill Response that features regular updates, maps, and fact sheets. You can also register to receive e-mail notification of updates. Here are some others we are tracking:
The White House has a regular blog on the spill as well as containment efforts.
The National Oceanic and Atmospheric Administration is providing coordinated scientific weather and biological response services to federal, state, and local organizations.
The Wall Street Journal is also providing regular updates and coverage.
By Michael Chriszt, assistant vice president in the Atlanta Fed's research department
May 5, 2010 in Energy, Louisiana, Oil | Permalink
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09/16/2009
Comparing recessions in the Southeast (part two)
Last week we looked at how employment levels in the Sixth District states during the current downturn compared with previous deep recessions. Basically, we are trying to determine if the current downturn is deeper and/or longer than past recessions in terms of its effects on nonfarm payroll employment. In last week's post, we showed that the current decline in nonfarm payroll employment has been deeper than the employment declines in the 74–75 and 81–82 recessions. In addition, the current downturn has lasted longer. This week we will see if that holds true for individual states in the region.
For this analysis, we use data from the U.S. Bureau of Labor Statistics, indexing total employment in each state of the Sixth District to a beginning value of 100. We start the time series six months prior to the peak in regional employment, with zero representing the month when employment levels peaked.
For Alabama, the current downturn in employment is a bit deeper than the 74–75 and 81–82 periods, but the decline appears to be leveling off. Employment took 18 months to return to the previous peak in the 74–75 period, and 26 months in the 81–82 episode. Currently, Alabama is 19 months past peak employment. The state has lost 105,000 jobs since the last peak, meaning that if it does not add that many jobs during the next seven months (which would bring the index level back to 100 in the chart) the current employment downturn will be the longest as well.
Florida's employment decline is already longer and deeper than previous experiences. The state is 28 months into the downturn whereas previous declines lasted 16 and 18 months, and the index number is well below the 74–75 trough.
Georgia's current experience looks much like that of the 74–75 downturn. The current index number is a bit below that trough reached in 1975, making the current decline the deepest for Georgia. Whether or not this current episode becomes the longest downturn remains to be seen; it took Georgia 35 months to return to its previous peak in the 1970s episode, and we are in the 19th month of decline for the current period. The state would have to add more than 250,000 jobs during the next 16 months for this current period not to become the longest employment downturn.
Comparisons for Louisiana are difficult because of the unique nature of its economy. The employment downturn in the 1980s lasted from late 1981 until mid-1993—138 months—in large part because of the structural decline in energy-related employment. Another factor making comparisons tricky for Louisiana is that employment levels in the current period have been supported by ongoing rebuilding efforts and repopulation in the wake of Hurricane Katrina.
Looking at Mississippi, it's tempting to conclude that the current downturn in employment will not be the deepest or the longest. Employment appears to be stabilizing one-and-a-half years into the decline and at a level above the 74–75 and 81–82 episodes.
In Tennessee, employment hit the previous low point reached in the 74–75 downturn. However, the uptick seen in the most recent month (July) is tied to a large increase in government employment associated with federal stimulus spending, so we cannot read too much into this as a sign of leveling off. Regardless, the state would still have to add more than 140,000 jobs during the next eight months for the current downturn not to become the longest.
For most states in the region, the current period is or most likely will represent the longest and deepest employment downturn when compared with previous post-war declines. We will continue to monitor employment trends in the Southeast coming out of this recession and keep you posted on significant developments.
By Michael Chriszt, an assistant vice president in the Atlanta Fed's research department
September 16, 2009 in Alabama, Employment, Florida, Georgia, Louisiana, Mississippi, Recession, Southeast, Tennessee | Permalink
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