State-level warning: New data shows pockets of weakness in labor market
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Unemployment rates have risen in some of America's most populous and politically important states — a sign there are more pockets of weakness in the labor market than national figures suggest.
Why it matters: Instead of the coast-to-coast job boom that shaped the pandemic recovery, the job market now looks more uneven, with parts of the country missing the plentiful job opportunities available in other states.
What they're saying: "We actually don't have one labor market; we have a whole collection of labor markets," says Indeed economist Nick Bunker.
- While the national unemployment rate is low, there are notable regional variations, he adds.
Driving the news: The unemployment rates in 28 states, including three of the six most populous, were higher in February than a year earlier by a statistically significant amount. The highest-population state, California, now has the highest unemployment rate, at 5.3%. Nevada is close behind, at 5.2%.
- Just three states had lower jobless rates at the end of that period, while unemployment held steady in the other states, according to federal data released Friday.
- Two swing states — expected to be decisive in this year's presidential election — saw statistically significant upward moves: Arizona and Wisconsin each saw 0.4 percentage point rises over the last 12 months.
- Robust national job growth numbers also mask a geographical split: Half of the country saw job growth over the year, while payrolls were flat in the other 25 states.
Yes, but: Many states where the jobless rate has risen still have low unemployment by historical standards. The rate in New Hampshire, for example, is a mere 2.6% — which only looks high compared to the 1.9% notched a year earlier.
Zoom in: California's labor market took a hit from weakness in the tech sector, where an industry slowdown pushed big companies to lay off thousands of workers.
- Earlier this month, the state government flagged that job growth has been significantly weaker than previously estimated by the Bureau of Labor Statistics.
- In a stunning revision, official payroll data showed the state added just 50,000 jobs between September 2022 and September 2023 — not the roughly 325,000 initially estimated from monthly survey data.
- "In most years, the annual correction is small and does not materially affect our interpretation of the state's labor markets," California's legislative analyst office wrote.
- "One important exception is that revisions tend to be more meaningful during economic downturns, with monthly survey estimates often overstating the number of jobs."
