Richard Barrington: Job Growth: A Study in Contrasts

On June 1, the latest window into the national employment situation will open when the Bureau of Labor Statistics releases its May report on job growth. In the meantime, the BLS’s latest look at regional employment has provided some insight into where conditions are getting better — and where they are getting worse.

The insights in the report indicate not only where jobs are plentiful, but also where banking conditions may be getting better or worse. In fact, the potential link between employment and banking conditions, such as rates on savings accounts and the availability of mortgages may be especially strong when viewed on a local level.

Employment contrasts

After a promising start to the year, the U.S. has now seen two disappointing employment reports. The net number of new jobs nationally slumped from 259,000 in February to 154,000 in March and then 115,000 in April.

A state-by-state breakdown of job growth shows that this is not indicative of a universal weakening in the job market. Instead, there are sharp contrasts from one region to the next.

For example, three states — Nevada, Rhode Island and California — are still wrestling with double-digit unemployment rates. California, at least, is still adding jobs at a reasonably healthy clip, joining Texas and New York as the only three states to have added more than 100,000 jobs in the past year.

In terms of more recent trends, Indiana was the big employment gainer in April, adding a net total of 17,100 jobs for the month. This contrasts with Maryland, which lost 6,000 jobs during the same month — the most of any state in the union.

The connection to banking

Generally speaking, employment may be the most important indicator of the economy’s health right now. With the government swamped by debt, there is little hope that additional fiscal stimulus will spark the economy. Individuals also are grappling with high debt levels, so it will take more than consumer confidence to fuel a sustainable economic recovery. Only putting more people back to work can provide the type of broad-based income boost that the economy needs.

From a jobs perspective, employment trends are especially significant on a local level. After all, most people don’t look for jobs nationally — they tend to focus on their local area. State-by-state employment trends help people know whether conditions in their area are getting better, or if they should consider relocating.

State-by-state job trends can also tell you something about local banking conditions. A healthy job market is key to supporting a healthy housing market, which in turn is likely to mean mortgages are easier to obtain. Also, job growth indicates business expansion, which creates the type of thriving lending environment that gives banks the incentive to offer higher interest rates on savings accounts.

On a state-by-state basis, recent employment trends have been a study in contrast. The good news, though, is that there are still more states where jobs are growing rather than shrinking.

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Job growth: A study in contrasts

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