Economy Watch: Most States See Unemployment Rate Drops Since Last Year
- Jun 23, 2014
The Bureau of Labor Statistics reported on Friday that 20 states had unemployment rate decreases in May compared with April, 16 states suffered increases and 14 states and the District of Columbia experienced no change. Forty-nine states and D.C. saw unemployment rate decreases from a year earlier; only New Mexico saw an increase, and that was 0.1 percentage point.
In May, five states had especially large month-over-month unemployment rate declines: Illinois and Massachusetts (down 0.4 percentage points each) and California, Montana, and Utah (down 0.2 percentages point each). Georgia and Virginia suffered the only significant monthly rate increases (up 0.3 and 0.2 percentage points, respectively).
Rhode Island remained the unemployment champ of the nation, an unwanted distinction it took from Nevada some time ago, with 8.2 percent unemployment (and in fact it’s currently the only state with a rate of over 8 percent). Energy-booming North Dakota again had the lowest jobless rate, 2.6 percent. All together, 21 states enjoyed unemployment rates significantly lower than the U.S. figure of 6.3 percent, eight states and D.C. had higher rates, and 21 states had rates not much different from that of the nation.
In May, the largest month-over-month increases in employment occurred in Texas (adding 56,400 jobs), Pennsylvania (up 24,700 jobs) and New York (up 23,400), according to the BLS. The largest month-over-month decrease in employment occurred in Florida (which lost a new of 17,900 jobs), followed by Arizona (down 8,400 jobs) and Illinois (down 2,600).
Household debt-to-income ratio drops to new lows
The Federal Reserve reported on Friday that the U.S. household debt service ratio (DSR) hit a record low in the first quarter of 2014: 9.94 percent. DSR is the ratio of total required household debt payments to total disposable income. Back in pre-recession 2007, the ratio was at its all-time (since 1980) highs above 13 percent, but it’s been dropping steadily as Americans deleverage in the wake of the recession.
The DSR is divided into two parts. The Mortgage DSR is total quarterly required mortgage payments divided by total quarterly disposable personal income, while the Consumer DSR is scheduled consumer debt payments divided by total disposable personal income (again on a quarterly basis). The two added together form the total DSR.
In Q1 2014, the mortgage DSR was 4.78 percent, while the Consumer DSR was 5.17 percent. Those figures are historically low as well. In the Q1 2007, for instance, the mortgage DSR was 6.98 percent and the Consumer DSR stood at 5.9 percent.
According to the Fed, the DSR is important because when a too-large share of household income is devoted to debt repayment, households have less to spend on other goods and services. Also, households stuck with high debt levels relative to income tend to default when visited with an unanticipated misfortune, such as job loss or major illness. When household debt ratios are high and unemployment is rising, lenders tend to limit the availability of credit, and that too slows down consumer spending.
Wall Street had a small positive day on Friday, with the Dow Jones Industrial Average up 25.62 points, or 0.15 percent. The S&P 500 gained 0.17 percent and the Nasdaq advanced 0.2 percent.