Economic Update – Unemployment Creeps Up in Every State But One
- Mar 12, 2009
The U.S. Department of Labor released state-by-state unemployment numbers on Wednesday, and fully 49 of the 50 states experienced higher unemployment in January compared with December. The sole exception was Louisiana, which fell from 5.5 percent to 5.1 percent. Continuing revitalization of the state, which began in the aftermath of Hurricane Katrina, gets the credit for those positive numbers.Michigan, hub of the auto industry, still has the highest unemployment rate: 11.6 percent. South Carolina, Rhode Island and California are next, all with rates above 10 percent (the national average is currently 8.1 percent). Wyoming, whose economy is driven by mineral extraction, agriculture and tourism, has the lowest at 3.7 percent. Other low unemployment states include Nebraska and the two Dakotas.What are states to do in the face of rising unemployment? They would be wise to maximize their use of federal stimulus funding, Robert N. Campbell III, vice chairman and U.S. state government leader of Deloitte, told CPN. But it will only go so far. “The stimulus may provide a needed boost, but it isn’t a solution to the deeper, more fundamental issues state governments face,” he said.State governments should not ignore the longer-term structural budget issues, Campbell added. Rather than depend upon stimulus funding to fix their budget crises, the smarter state governments will instead use this time to redouble their efforts to make their programs work more effectively, he said. Campbell also stressed that stimulus money should be used in a fiscally responsible way. Not, for example, to create any new programs that will require further funding down the road. It could be that Freddie Mac was tired of being the little brother of Fannie Mae, and wanted some attention as a big money-loser too. If so, Wednesday was its day, with Freddie Mac reporting a loss of $23.9 billion for the fourth quarter of 2008, and a $50.1 billion loss for all of last year, compared with a $3.1 billion loss in 2007. According to calculations made by the Wall Street Journal, Freddie Mac’s losses in the last two years exceeded all the money the company made from 1971, the year after it was founded, to 2006.An assortment of retailers reported quarterly returns on Wednesday. Men’s Wearhouse said that its profits were down near 90 percent in the fourth quarter of 2008 compared with a year earlier, and that same-store sales fell 9.9 percent in the same period. The company plans to continue its buy-one-get-one (BOGO) free marketing strategy, however, to move suits.American Eagle Outfitters Inc. reported a 77 percent drop in profits for the quarter ended January 31 compared with the fourth quarter of 2007, and its same-store sales were down 16 percent. Staples Inc. reported that profits were down 14 percent for the fourth quarter of 2008, with a 13 percent drop in same-store sales compared with last year. On Wall Street, the indices bounded around a lot on Wednesday, but–remarkably–remained positive for a second day in a row. The Dow Jones Industrial Average gained a minuscule 3.91 points, or 0.06 percent (but a gain is a gain), while the S&P 500 was up 0.24 percent and the Nasdaq was up 0.98 percent, perhaps cheered by news that Bill Gates, according to Forbes, is once again the world’s richest man.