(Bloomberg News) The states that were most hurt in the real estate collapse over the past five years -- Arizona, California, Florida and Nevada -- are now leading the U.S. labor market expansion.
The four states added 222,100 jobs from August through December, accounting for 28 percent of the increase in U.S. employment in that period, according to Labor Department figures. Their outperformance may continue, say economists at Moody's Analytics Inc. and IHS Global Insight.
Households in the four "sand states," whose homes have lost on average half of their value since the 2006 peak in the housing bubble, are healing after cutting debt and bolstering their net worth, said Jan Hatzius, chief economist at Goldman Sachs Group Inc. in New York. Their stabilization may signal a broader improvement by U.S. consumers that supports a faster expansion in employment growth.
"There has been a whole lot of balance sheet improvement," said James Paulsen, who helps oversee more than $330 billion as chief investment strategist in Minneapolis for Wells Capital Management. "Even the places that were ground zero for the 2008 financial crisis are coming back to life. Things are starting to pop a little again."
Voters' perception of improving local economies would benefit President Barack Obama's re-election campaign, said Kathleen Hall Jamieson, a communication professor at the University of Pennsylvania's Annenberg School for Communication in Philadelphia. "The underlying question is how does this feel in the community where you live," she said.
Gains in computer systems design, food services and drinking establishments, and manufacturing contributed to a 227,000 increase in U.S. payrolls in February, Labor Department figures showed today. Job growth over the last six months was the strongest since 2006. The jobless rate held at 8.3 percent.
The broadening national recovery is helping local industries, including gambling in Nevada, tourism in Florida and Arizona, and social networking in California.
"The states that were most affected by the bursting of the housing bubble -- California, Florida, Nevada, Arizona -- have started to do better than the national average," Hatzius said today in an interview on Bloomberg Television's "InsideTrack" with Erik Schatzker. "There has been a shift. I think it says the balance sheet damage that was really responsible for the weakness is really beginning to be repaired."
Collecting Unemployment
Ramar Way says he had a six-month-old and four other children under 10 when he started collecting unemployment benefits two years ago in Florida, where the maximum weekly check is $275, fifth-lowest among U.S. states, according to the National Employment Law Project.