Only nine states still had expanding economies in November, measured on a three month moving average basis. This list will get shorter by the beginning of 2009. Only Louisiana and the District of Columbia recorded in job gains in December.

The data do not yet include the full impact of the credit freeze initiated recession or the plunge in oil and other commodity prices. Virginia and Texas were the only large states still expanding in November but Texas has since been hit with large manufacturing layoffs and delays or cancellations of energy related investment projects. Employment and royalty income from the states’ oil and gas fields has also turned sharply lower.

Virginias’ expansion is largely overflow from the District of Columbia. It is based on still expanding federal government employment and the progressively larger number of people required to lobby for special interests that want government favors. Obama’s’ actions to expand the federal bureaucracy will keep Virginias’ recession relatively mild.

The state economic growth indexes are calculated by the Philadelphia Federal Reserve Bank from state employment and income data and are benchmarked to approximately track national GDP growth.

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Ranking States by Recent Economic Performance – Nov 2008

The states with the deepest economic declines in the last three months are in the Pacific Northwest: Washington, Oregon and Idaho. These states are suffering from a depressed timber business, reduced trade with Asia, fewer Canadian visitors with the now depreciated Canadian dollar, declining semiconductor industry employment and widespread layoffs in the increasingly significant manufacturing sectors. All of these depressing factors will continue for at least a few more months. Already these states have begun to trim public spending and raise taxes or fees.

Many state and local government have already begun interim budget cuts in response to declining tax receipts. Most states will need to do this soon. Education construction starts have been stalled for three months through December at a depressed level compared to the prior year. Job site construction spending has been directly impacted so far only in a few states with declining economies for many months but projects are being pulled from the 2009 start schedule in many states. Some of these may be reversed late in 2009 if subsidies to civil construction are included in the planned second economic stimulus package in Washington.