Given all the buzz surrounding Rick Perry and the jobs “miracle” in Texas, Goldman has come out with a very interesting note on why some states have boomed during the great recession, while others have gotten unusually clobbered.
Before going further though, this whole talk of the Texas miracle is hotly debated. However everyone’s been reading this post from Political maths, which argues that the jobs numbers really do stand up to scrutiny (sorry Democrats). Whether Perry deserves any credit for Texas staying strong is of course, hotly debated.
Back to the Goldman report, analyst Zach Pandl susses out the 9 outlier states.
(For some reason the following chart was formatted in this weird split way. Our apologies).
Photo: Goldman Sachs
So as you can see: Texas, Alaska, DC, and North Dakota have all been positive outliers.
California, Michigan, Florida, Arizona, and Nevada have all been negative outliers.
So what are some common threads?
Goldman cites three big themes, all of which are fairly intuitive.
- Mortgage lending: States with the most mortgages-per-capita with a high percentage of ARMs (adjustable rate mortgages) obviously did horribly. Arizona, Nevada, and California, we’re looking at you.
- Oil. If you’ve got it, you’re in good shape.
- A high volume of professional services: Though not all captured on the above chart, states with a high level of tech, architectural, legal, and accounting services all have held up relatively well.
For the national economy we see two main lessons. First, because housing and mortgage credit are central to the weakness around the country, these issues should probably continue to receive attention from policymakers. Second, because the outperformance of a few states is closely related to natural resource exposure it is not easily replicable elsewhere.