Economic Resurgence in Middle America
|Economic Resurgence in Middle America
The unemployment rate in the US continues to fall, and states in the Midwest and South have outpaced the rest of the country so far in 2017. What’s driving Economic Resurgence in Middle America and significant job creation in these regions?
Jim Glassman, Head Economist, Commercial Banking
We received permission from J.P. Morgan, the original publisher of this article, to publish it in our blog for the Tecma Group of Companies.
August 16, 2017
Unemployment is plummeting in the American heartland. Nine states have seen their headline unemployment rate fall by a full percentage point or more in 2017, and none of them are traditional coastal powerhouses. Instead, the country’s most rapidly improving labor markets are found primarily in the Midwest and South: Wisconsin, Illinois, Indiana, Michigan, Tennessee, Alabama, North Carolina, West Virginia and Wyoming. Many of these states have often been written off as economic under-performers, so why this Economic Resurgence in Middle America
While regulatory changes may have contributed to an uptick in domestic mining activity—as seen West Virginia and Wyoming—the strengthening global energy market is playing a larger role in boosting employment and capital spending across the US. Exports of coal and petroleum products are up 70 percent this year, returning to levels last seen in 2014 when oil prices were above $100 per barrel. The US energy sector’s ability to compete in the global market when oil is below $50 per barrel is a sign of the maturation of horizontal drilling technology.
The falling breakeven price for energy exploration should bring sustained employment gains for oil patch communities. Drilling for oil and gas is driving job creation and capital investment throughout much of the nation’s interior. Energy bellwether states like Texas have seen layoffs fall near historic lows as activity in the shale fields picks up.
Sharing the Wealth
Ultimately, the heartland’s job gains may simply reflect the tightening labor market nationwide. No single region is pulling far ahead of the national trend. Unemployment may have fallen four times faster in Alabama than in New York this year, but the two states have nearly identical headline unemployment rates, at 4.6 percent and 4.5 percent, respectively.
Trends in state labor markets are relatively synchronized, meaning the recovery’s job gains are being evenly spread throughout the US. With its current resurgence, the heartland is making up lost ground.
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