States Gaining in Economic Health as Manufacturing Grows
The economic health of 27 U.S. states showed signs of improvement as a four-year high in industrial production spurred gains in the so-called Rust Belt region, where manufacturing accounts for a larger share of jobs.
Michigan, Ohio, Indiana and Illinois, contiguous Midwestern states that are home to 13 percent of Americans, posted four of the eight biggest gains for the three months ending in September, compared to the previous quarter, according to the Bloomberg Economic Evaluation of States Index.
“We’re seeing the resurgence of U.S. manufacturing,” said Robert Dye, chief economist at Comerica Inc. (CMA) in Dallas. “It’s a potential bright spot and it’s one of the good news stories that’s still out there for the U.S. economy.”
The 13 percent average share of manufacturing employment in the four states compares with the 8.9 percent level for the U.S. as a whole. The Federal Reserve’s gauge of industrial production at factories, mines and utilities rose in July to 97.9, the most since June 2008, seven months into the longest and deepest U.S. recession since the Great Depression. The pace of auto sales jumped to a four-year high in September.
The BEES Index is based on the performance of local-company shares, tax collections, home prices, mortgage delinquencies, job growth and personal income, giving equal weight to each component. It is intended to indicate the direction of each economy, rather than absolute health, so a state that’s quickly rebounding will receive a higher rank than one with a steady but slower pace of growth.
Automakers sold cars and light trucks in the U.S. at an annualized rate of 14.9 million, after seasonal adjustments, in September, according to Autodata Corp. That pace, at the time the highest since March 2008, was topped by November’s 15.5 million rate. Researcher LMC Automotive raised its 2012 North American production estimate to 15.3 million, from 15 million, citing strong demand in the first three quarters.
Automakers including Ford Motor Co. (F) and Chrysler Group LLC are hiring workers and adding shifts in Midwest plants. Ford has said it’s expanding annual production capacity by 400,000 units this year, which includes additional crews in two factories in Michigan and Illinois. Chrysler completed the addition of 1,800 workers in Belvidere, Illinois, where it builds the new Dodge Dart compact.
Elsewhere in the U.S., the BEES index showed that California, the most-populous state, with 38 million residents, posted gains for its $1.96 trillion economy. The District of Columbia also improved. North Dakota had the biggest gain.
Vermont was the only state where equities retreated from a year earlier, slumping 59 percent compared with a 30 percent advance for the Standard & Poor’s 500 Index during the same period. Green Mountain Coffee Roasters Inc. (GMCR), the Waterbury-based maker of Keurig brewers and single-serve pods, led the six- member gauge lower with a 74 percent decline. David Einhorn, who helps oversee $7.7 billion as president of Greenlight Capital Inc., suggested this year that investors speculate on a drop in the shares.
Florida, whose more than 19 million residents make it the fourth-largest U.S. state, and Arizona switched to positive economic health from negative in the third quarter.
Florida, New York
Florida lost 925,000 jobs from March 2007 to December 2009. Since then, 221,000 jobs have been added to payrolls, U.S. Labor Department data show. The state is poised to overtake New York in population sometime this decade. Florida had 19,317,568 residents to New York’s 19,570,261 on July 1, a difference of 252,693, the Census Bureau said yesterday. The difference was 419,354 a year ago.
Florida’s percentage of mortgage payments delinquent by more than 90 days or in the process of foreclosure decreased to 16.8 percent in the third quarter from 17.5 in the prior quarter. While the level has fallen since March 2010, it remains the highest percentage among all states.
Sunshine State home prices rose 2 percent in the third quarter after falling in the first half of this year. Still, they remain 42 percent below their peak in December 2006.
“They’re bouncing off a really low floor because they had such a steep housing correction relative to the rest of the country,” said Beata Caranci, who tracks the U.S. as deputy chief economist at TD Economics in Toronto. “Now you have that rebound in combination with population growth.”