Posted by: Josh Lehner | July 28, 2016

U.S. Regional Job Growth Update, July 2016

Job growth nationwide so far in 2016 is a bit lower than in 2015 but essentially remains on par with recent years overall. However, our office, in addition to the Liscio Report, is hearing increasing chatter among some of our counterparts nationwide about disappointing revenue collections for both withholdings out of paychecks and also retail sales. These data series are very important; they are as real-time as it gets and not subject to revisions barring a banking/accounting error at the Department of Revenue. However they are incredibly noisy.

The question becomes is there a more pronounced economic slowdown taking place or are the disappointing revenues more a function of forecast errors? Below I provide a tl;dr summary for jobs and wages across the country. Sales taxes are a different animal that faces fundamental base erosion in addition to online competition and thus I will demur for the time being. See here for previous thoughts on sales vs income taxes and the impact of aging on revenues. Full slides at the end.

Summary of Key Findings

  • The Oil Patch slowdown is very real.
    • Job growth has slowed considerably in both the West North Central and West South Central regions.
    • Big oil metros are slowing too. Houston has decelerated from about 4% y/y to less than 1%. Oklahoma City has gone from 2% to 1%. Yet the impact is not everywhere. Dallas and Denver continue to see strong gains.
    • Rural counties in the Oil Patch are contracting. Job losses of 2% y/y to end 2015.
  • All other regions are seeing steady job gains, which are typically as strong as those seen during the housing boom, if not stronger
    • Exception is the Mountain division which is both outperforming the nation today and still below its mid-2000s pace.
    • South Atlantic and Pacific divisions are accelerating. Population growth has returned. Housing has turned from drag to driver. This acceleration is offsetting other weaknesses.
  • Nation’s biggest metropolitan areas still driving growth and outperforming rural areas in addition to small and medium sized cities.
    • The typical large metro is growing faster today than during the housing boom.
    • Large metros overall adding jobs nearly on par with the late 1990s growth.
    • Most big cities seeing steady gains in recent years. Some acceleration in places like St. Louis and Philadelphia are offsetting the slowdown in Houston and Oklahoma City overall.
    • Rural America outside of the oil patch counties continues to add jobs, albeit around 0.5% annually so far in recovery.
    • The growth rate differential today between the biggest metros and rural areas is the largest seen since the 1990 recession or the mid-1980s commodity bust.
  • Average wage growth is picking up.
    • However, only East North Central and Pacific wages are growing today about as quickly as during the mid-2000s, in nominal terms.
    • All other regions’ average wages, while improving, are increasing at a slower pace than last expansion, in nominal terms.
    • In real terms, New England, East North Central, West North Central and Pacific divisions seeing stronger average wage gains today.

Please browse our slides of updated regional comparisons our office tracks on a fairly regular basis. This work helps us place Oregon’s performance in perspective across the nation. One of the biggest benefits when it comes to regional economies and tax revenue is knowing what are national or macro trends seen everywhere and what are state-specific trends or issues. Will provide an update to state level Total Employment Gap work next week.


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