US Jobs Gap / States are closely mirroring the nation in terms of pace of recovery

The U.S. economy lost more than 8 million jobs between January 2008 and February 2010. In contrast with earlier recessions, employment declines were seen across almost all states. The extent varied: In this recession, states with big housing busts generally saw steeper job losses, especially in construction, while some states also had severe job losses driven by manufacturing declines. One feature of this employment recovery is that it’s actually been quite uniform across states—and much more uniform than in earlier recoveries. With few exceptions, states appear to be marching in lockstep.

Jason Bram and James Orr look at where individual states now stand in terms of the employment recovery and note some commonalities. Somewhat surprisingly, in contrast with past cycles a state’s job-growth performance in the recovery to date appears largely uncorrelated to its rate of job loss in the 2008 downturn. They also show how there’s been less dispersion across states in the current employment recovery than in past cycles, and discuss possible contributing factors.

The following charts illustrate the relationship between a state’s job loss and the extent of its bounce-back. We plot the percentage decline in jobs from each state’s employment peak to trough in the 2008 and 1990 recessions on the x-axis and the percentage increase in jobs in its ensuing recovery (through March 2013 and through June 1994, respectively) on the y-axis.

The chart depicting the 2008 recession shows little relationship between the extent of state declines in employment and the extent of the bounce-back. The job-growth rates in the ensuing recovery are clustered in a fairly tight range around the 4.8 percent U.S. average, suggesting that states are closely mirroring the nation in terms of pace of recovery. A formal measure of the variation of job growth gives the same result: The employment-weighted standard deviation of job-growth rates across states was 2.62 percent in recession and 1.91 percent in recovery—thus, the greater dispersion horizontally than vertically.

In contrast, the general upward-sloping pattern of dots depicting the 1990 recession indicates that the hardest-hit states tended to be the slowest ones to bounce back (lower-left part of the chart). Conversely, the states most resilient to the downturn grew the fastest during the ensuing recovery (upper-right).

Chosen excerpts by Job Market Monitor

via States Are Recovering Lost Jobs at Surprisingly Similar Rates – Liberty Street Economics.