By MARTIN CRUTSINGER and ?MIKE SCHNEIDER
Lower unemployment and bankruptcies helped reduce the nation’s economic stress in January compared with a year earlier, according to The Associated Press’ monthly analysis. Still, the figures show the economy has yet to regain full health.
Midwestern and Southeastern states posted the strongest gains year over year, thanks to increased manufacturing, the AP’s Economic Stress Index shows.
Stress declined in January in 34 states and in more than two-thirds of the nation’s 3,141 counties. Year-to-year, unemployment was lower in nearly three-quarters of counties. And bankruptcies and foreclosures declined in nearly half.
Counties whose health improved most in the past 12 months tend to have heavy concentrations of workers in manufacturing, temporary, technical, professional and retail jobs. By contrast, counties with many people employed in construction, utilities and real estate suffered the sharpest increases in stress, according to the AP analysis.
The AP’s index calculates a score from 1 to 100 based on unemployment, foreclosure and bankruptcy rates. A higher score signals more economic stress.
The average county’s stress score in January was 11.2. It was 11.9 in January 2010. And it was 10.4 in December. Under a rough rule of thumb, a county is considered stressed when its score exceeds 11.
The national economy has come far in the past year. But it hasn’t fully recovered from the recession that ended in June 2009 — the worst downturn since the Great Depression. A little more than half the nation’s counties, and just under half the states, were deemed stressed in January 2011.
More than 90 percent of counties endured more hardship in January than in December. So did every state but Florida, Nevada and South Carolina. Foreclosures and bankruptcies rose in more than a third of counties. And unemployment rates jumped in more than 90 percent of them.
Still, unlike the national figures, county unemployment rates aren’t adjusted to account for seasonal trends. That makes the data more volatile from month to month.
And it means January tends to have higher unemployment than other months. The year’s start is when jobs in agriculture, construction and tourism tend to dry up. And layoffs follow temporary holiday hiring in November and December.
Many economists predict the economy will strengthen in coming months as people spend more, bolstered by a cut in Social Security taxes. Rising demand could encourage businesses to add workers, leading to more spending. Some analysts estimate job growth will average 200,000 jobs a month for the rest of the year, better than the average of about 150,000 over the past three months.
“I do think the economy will steadily gain traction this year and next,” said Mark Zandi, chief economist at Moody’s Analytics.
Still, threats remain, from a jump in oil prices to instability in Libya to economic consequences of Japan’s earthquake and nuclear disaster.
Nevada again had by far the worst Stress score: 21.41. It posted the worst results in all three index categories: A seasonally-adjusted unemployment rate of 14.2 percent, a foreclosure rate of 6.5 percent and a bankruptcy rate of 2.7 percent.
After Nevada, the next-most-stressed states in January were California (16.72), Florida (16.36), Arizona (15.27) and Michigan (14.86). Michigan returned to the list after being displaced by Georgia in December.
Of those, only Nevada and Florida saw month-to-month improvement. But all except Arizona were healthier than they were a year ago.
Because of tourism, Nevada and Florida fared slightly better in January. The hotel occupancy rate in Las Vegas rose 6.6 percent from December and nearly 8 percent year over year. The number of visitors to Florida rose more than 5 percent in the October-December quarter of 2010.
Osceola County, Fla., a hard-hit suburb of Orlando, had a Stress score of 19.6 in January, making it the 41st most-stressed county. But the county has been helped by the opening of a Harry Potter attraction at Universal Orlando that’s boosted tourism.
Tourism tax dollars have risen 12 to 14 percent over last year, said Fred Hawkins Jr. of the Osceola County Board of Commissioners.
“It’s one of the better indicators that we’ve had here locally in a while,” Hawkins said.
Still, Osceola’s troubles, along with similarly situated counties in Florida, Nevada, Arizona and California, run deep. No one’s paying taxes on nearly one-fifth of real estate properties.
In January, the county’s non-seasonally adjusted unemployment rate was 12.7 percent. The foreclosure rate was 5.7 percent, the nation’s seventh worst.
“The two major industries in our community are tourism and construction,” Hawkins said. “In tourism, when those service industry jobs start to fall, then construction goes with it.”
The healthiest states in January were in the Plains and New England: North Dakota (5.24), Nebraska (5.85), South Dakota (6.19), Vermont (6.87) and New Hampshire (7.77).
The most stressed counties with populations of at least 25,000 residents were Imperial County, Calif., (29.32); Lyon County, Nev., (27.79); Merced County, Calif. (26.25); Yuba County, Calif. (25.71); and San Benito, Calif. (25.46). All but Yuba were better off than a year ago.
The healthiest counties according to the Stress Index were Ellis County, Kan. (4.16); Buffalo County, Neb. (4.3); Ford County, Kan. (4.63); Arlington County, Va. (4.79); and Brown County, S.D. (4.79). Except for Ford County, all five were better off than they were a year ago.