By Steve Matthews
March 10 (Bloomberg) -- Arizona, California, Florida and
Nevada -- the states that were most hurt in the real estate
collapse over the past five years -- are now leading the U.S.
labor market expansion.
The four states
added 222,100 jobs from August through
December, accounting for 28 percent of the increase in U.S.
in that period, according to Labor Department
figures. Their outperformance may continue, say economists at
Moody’s Analytics Inc. and IHS Global Insight.
Households in the “sand states,” whose homes have lost on
average half of their value since the 2006 peak in the housing
bubble, are healing after cutting debt and bolstering their net
worth, said Jan Hatzius
, chief economist at Goldman Sachs Group
Inc., yesterday in an interview in New York. Their stabilization
may signal a broader improvement by U.S. consumers that supports
a faster expansion in employment growth.
“There has been a whole lot of balance sheet
improvement,” said James Paulsen
, who helps oversee more than
$330 billion as chief investment strategist in Minneapolis for
Wells Capital Management. “Even the places that were ground
zero for the 2008 financial crisis are coming back to life.
Things are starting to pop a little again.”
Voters’ perception of improving local economies would
benefit President Barack Obama
’s re-election campaign, said
Kathleen Hall Jamieson
, a communication professor at the
University of Pennsylvania’s Annenberg School for Communication
in Philadelphia. “The underlying question is how does this feel
in the community where you live,” she said.
Gains in computer systems design, food services and
drinking establishments, and manufacturing contributed to a
227,000 increase in U.S. payrolls in February, Labor Department
figures showed yesterday. Job growth over the last six months
was the strongest since 2006. The jobless rate held at 8.3
The broadening national recovery is helping local
industries, including gambling in Nevada, tourism in Florida and
Arizona, and social networking in California.
“The states that were most affected by the bursting of the
housing bubble -- California, Florida, Nevada, Arizona -- have
started to do better than the national average,” Hatzius said
in an interview on Bloomberg Television’s “InsideTrack” with
. “There has been a shift. I think it says the
balance sheet damage that was really responsible for the
weakness is really beginning to be repaired.”
Ramar Way says he had a six-month-old and four other
children under 10 when he started collecting unemployment
benefits two years ago in Florida, where the maximum weekly
check is $275, fifth-lowest among U.S. states, according to the
National Employment Law Project.
In January, he was hired to run a front-end loader as part
of a Port of Miami expansion project, making $18.62 an hour.
“I’m so happy,” Way, 39, said in an interview. “This really
helps me out.”
While the four states all have higher unemployment than the
U.S. average, they will make quicker progress in reducing it
this year, forecasts Moody’s Analytics Inc. in West Chester,
Pennsylvania. California may drop to 9.8 percent from 11.2
percent in December, Florida to 8.9 percent from 9.9 percent,
Nevada to 12.5 percent from 13 percent and Arizona to 8.5
percent from 9 percent, according to Moody’s. The national
jobless rate is forecast to be 8.2 percent at year’s end,
Florida and Nevada are both swing states in the
presidential campaign, and Nevada is also a critical contest in
the struggle for control of the Senate. Obama campaign officials
are targeting Arizona, which has a growing Hispanic population
sympathetic to Democrats.
Florida, with its 29 electoral votes accounting for more
than a tenth of the 270 needed to win the presidency, has swung
between Republicans and Democrats to side with the winning
candidate in the past four presidential elections. Nevada, which
Obama narrowly carried in 2008, has supported the winner in
every election since 1976. The Senate election in Nevada is one
of 10 in the country rated a “toss-up” by the nonpartisan Cook
Household wealth in the U.S. climbed from October through
December for the first time in three quarters, the Federal
Reserve said March 8. Household debt rose at a 0.3 percent
annual rate last quarter, the first increase in more than three
years, the report showed. Consumers’ ratio of debt payments to
disposable income in the third quarter was the lowest since
1994, a separate Fed report found.
Price declines have reduced net worth of homeowners in
states where housing boomed from 2002 to 2006. The states with
the largest average home price declines from their peaks to
January 2012 have been Nevada, 60 percent; Arizona, 51 percent;
Florida, 49 percent; and California, 44 percent, according to
CoreLogic, a provider of real estate information.
While home prices have continued to fall, residential
investment, including homebuilding as well as renovations,
contributed to U.S. economic growth in the fourth quarter,
government figures show. It subtracted from growth from 2006 to
“Housing is no longer a drag on the economy and is turning
into a slight positive,” said Mark Vitner
, a senior economist
at Wells Fargo Securities LLC in Charlotte, North Carolina.
California is gaining from “the social networking boom and
growth in smart-phones and tablet PCs,” while in Florida,
“tourism has been exceptionally strong.”
Tech Companies Expanding
Technology companies are scooping up commercial real estate
in the Financial District and South of Market areas of San
Francisco to accommodate their expanding workforce. LinkedIn
Corp., the biggest professional-networking website,
Salesforce.com Inc., the largest maker of online customer-
management software and Macys.com, the retailer’s e-commerce
division, were among technology companies that leased more than
1 million square feet of office space in the city in January and
February, according to a press release from Mayor Edwin Lee
“It is a complete war for talent every single day,” Mike
Guerchon, senior vice president of global employee services at
Riverbed Technology Inc., the San Francisco-based maker of
computer-networking products, said in a March 8 telephone
interview. “What our recruiters tell me is that every engineer
that we’re talking to has three or four other offers from other
Skilled workers are also in demand in Florida, where the
unemployment rate has declined from a year earlier.
“We’re getting encouraging indicators that the job market
is starting to open up,” said Bennett Mazor, 47, a staffing
consultant for TransHire, a Fort Lauderdale-based recruiter. The
company finds engineers, web designers and other workers for a
range of companies including banks, manufacturers and others in
the travel industry.
Las Vegas Strip casino gambling revenue rose 3.6 percent in
December, bringing the full-year gain to 5.1 percent for a
second annual increase as a recovery in the biggest U.S. betting
“The bulk of the strength in Nevada has come from leisure
and hospitality,” said Daniel White, a Moody’s economist. “As
the national recovery improves, more vacationers are returning
and spending money in Vegas.”
That’s helping Heather Parks, who said her information-
technology consultancy, Healliam Inc., is having to turn away
customers now after weathering a “huge dry spell” last summer.
Most of her customers are casinos, and her business, which she
founded in 2010, has benefited from the trend of outsourcing
technology work, she said by telephone
Arizona started to outpace the U.S. economy in last year’s
second half, said Daniel Culbertson, a Moody’s economist.
“Healthcare, education, and professional services have been
particularly strong,” he said.
Isaiah Lopez, 28, says he lost his job in May at Wells
Fargo & Co.’s unit that processed second mortgages. He said he
sent out 500 resumes over six months and had about 50 interviews
until he was picked up by a staffing company and placed at
American Express Co. at the end of October on a one-year
contract without any benefits.
As a single father of three with $100,000 in student loan
debt for his undergraduate and MBA degrees, Lopez said he was
willing to take any job that came his way. “I needed to get a
job just to sustain myself and my kids,” he said.
Larry Storjohann, 54, the corporate general manager at
Earnhardt Auto Group in Chandler, Arizona, said his company
didn’t hire anyone at its dealerships for almost two years from
November 2007 to November 2009. Automotive sales have started to
improve, with the company’s sales growing 10 percent from 2010
to 2011. The company has hired 30-40 new employees recently at
its 16 stores.
“We’ve hired sales people,” he said. “We’ve hired
support staff. We’ve hired staff in the detail areas. We are
hiring and it seems like, knock on wood, the economy is
continuing to inch up.”
For Related News and Information:
Bloomberg Economic Evaluation of States Index: BEES
U.S. economic snapshot: ESNP US
Business loans: .BIZLOAN F GP 01/01/2005
Federal Reserve rates, links and news on Bloomberg: FED
Fed balance-sheet figures: ALLX FARW
Fed regional banks: FRBM
European credit crisis: CRIS
Worldwide credit-crunch portal: WWCC
Top economy stories: TOP ECO
--With assistance from Mike Dorning in Washington, Amanda J.
Crawford in Phoenix, James Nash and Alison Vekshin in San
Francisco, Michael C. Bender in Tallahassee, Erik Schatzker and
Kristen Boatright in New York. Editors: Gail DeGeorge
To contact the reporters on this story:
Steve Matthews in Atlanta at +1-404-507-1310 or
To contact the editors responsible for this story:
Chris Wellisz at +1-202-624-1862 or