All states remain in recession through April (latest data) and likely will through the spring although a few small plains states reported employment rises in May. The recession is deepening only in both the oil & gas districts of the gulf coast and in the financial and intellectual capital centers in the Northeast. The year/year decline in the economic growth index lessened in every region but the Gulf Coast. The recession arrived late in both these regions so this is not a sign that the recession will be more severe than in other parts of the country.

The slower decline in the economic growth index is most noticeable in the states where the recession began first with the collapsing housing market. The decline in California and Florida is now only half of the pace of the decline in the states dominated by the auto industry, other heavy manufacturing or financial industries. The recession will continue ebbing in the auto states with the factory callbacks in the early summer expected to be larger than the tail end of the permanent facility shutdowns and layoffs in the industry.

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.

The economic growth indexes will give a better reading that jobs data of how the recessions ends and turns to recovery region by region. In the industrial Midwest the job gain in manufacturing in the next few months will overestimate the strength of the regional economy. A lot of workers will be coming back at a lower wage or higher health insurance employee contribution. In the Northeast the recession continues to deepen even though job losses suggest a much milder recession. A relatively large share of professional workers in this region remain employed but have taken sharp income cuts through reduced bonuses, capital gains, profit sharing or commissions. The economic growth index has declined about as much in New York state as it has in the hardest hit manufacturing, housing of forest product dominated states.

Income in the huge California economy is holding up better than in most states. The 8.0% decline in economic growth in California in the last three months is less than Illinois (-9.9%), Maryland (-9.2%) or North Carolina (-10.5%). Nonetheless, public construction is at risk from California’s huge budgeted spending cutbacks from many years of overspending.

State Economic Activity Index Ann. % change – last 3 months
Mid Atlantic	-12.40%		Rocky Mountain	-9.10%
Great Lakes	-7.70%		South Atlantic	-8.40%
Pacific	-12.00%		Plains	-7.70%
New England	-8.60%		Gulf Coast	-5.20%

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Ranking States by Recent Economic Performance – April 2009