Where the Recession is Still Felt
The recession may be over but don’t tell that to the residents of Nevada and Michigan.
Foreclosures are rampant in these two states, unemployment remains frozen in double digits and residents here are generally saddled with debt well above the national average, making these two of the least fiscally healthy states in the country, according to MainStreet’s bi-annual analysis of state-by-state economic data.
Nevada, more than most states, felt the full force of the housing industry’s collapse leading up to the recession, while Michigan’s economy suffered a major blow from the struggles of the auto industry. While both have shown modest improvements throughout the economic recovery, Michigan’s 10.3% unemployment and the fact that one in every 103 Nevada homes is in foreclosure show just how far these states have to go toward a full recovery.
The recession’s aftermath can be felt in the U.S. as a whole, though to a lesser degree. Unemployment sits at 9.2%, one in every 605 homes was in foreclosure as of May and the average person had $24,810 in non-mortgage debt, or roughly 60% of that individual’s income.
Those numbers don’t exactly inspire confidence, but for some states, particularly in the Great Plains and the Northeast, the recession is truly becoming a thing of the past.
States like North Dakota and Nebraska have unemployment rates that are less than half the national average, while Vermont has a foreclosure rate that is the envy of the rest of the country, in part because these states were insulated from the worst of the housing crisis and the ensuing economic downturn. Meanwhile, residents in New York and Connecticut have extremely low debt to income ratios, due mostly to the fact that their incomes are well above average.
In short, consumers in these states have an easier time finding work, accrue less debt and are less likely to lose their homes than the country as a whole, all of which earn these states a high ranking on our Happiness Index.
How the Happiness Index Works
Every few months, MainStreet analyzes and ranks the financial health of the 50 states and District of Columbia based on three key economic factors: foreclosure rates, unemployment rates and the total non-mortgage debt per capita. The result is the Happiness Index, a report that provides a snapshot of the economic challenges facing consumers in each state.
MainStreet used the most recent unemployment data from the Bureau of Labor Statistics and the most recent foreclosure data from RealtyTrac, both of which were from May of this year. In addition, we used Experian’s May data on non-mortgage debt per capita, which includes debt from credit cards, auto loans and more, and paired this with the average personal income by state, based on the Bureau of Economic Analysis’s data from the first quarter of 2010. We then weighed each of these three factors equally to come up with the final rankings.
To put these numbers in context, we have also included the rankings from the previous Happiness Index, released in December 2010, which run from one to 51, with the lower numbers being better. In this way, we can see which states have improved the most, and which are still facing a bleak economic reality.
Here are the 10 states that currently have the best overall economic environment followed by the 10 states with the worst.
9th Happiest (Tied): Pennsylvania
Pennsylvania has been one of the big success stories this year so far, according to the newest Happiness Index data. In just the seven months ending in May of this year, the state’s unemployment rate dropped by more than 1 percentage point, and the foreclosure rate plummeted from 1 in every 969 homes to about half that many. The debt to income ratio also improved slightly by about 2%, helping this state jump into the top 10.
2010 Rank: 20th
Non-Mortgage Debt as % of Annual Income: 59.8%
Unemployment Rate: 7.4%
Foreclosure Rate (1 foreclosure per # of households): 1,849
Photo Credit: Tony the Misfit
9th Happiest (Tied): Massachusetts
Massachusetts’ economic situation has changed little in the previous seven months. Between November 2010 and May of this year, the state’s unemployment rate improved slightly by 0.6 percentage points, but its foreclosure rate worsened a bit from 1 in every 1,222 homes to 1 in every 1,124. Its debt to income ratio is essentially unchanged.
2010 Rank: 9th
Non-Mortgage Debt as % of Annual Income: 46.9%
Unemployment Rate: 7.6%
Foreclosure Rate (1 foreclosure per # of households): 1,124
Photo Credit: Getty
8th Happiest: Maryland
Maryland continues to rank among the most fiscally healthy states, thanks to its low unemployment rate and debt to income ratio. However, the state’s foreclosure rate slipped somewhat during this seven-month period, dropping from 1 in every 1,685 homes in November to 1 in every 1,301 homes in May.
2010 Rank: 6th
Non-Mortgage Debt as % of Annual Income: 52.4%
Unemployment Rate: 6.8%
Foreclosure Rate (1 foreclosure per # of households): 1,301
Photo Credit: scaramouche
7th Happiest: New Hampshire
New Hampshire is blessed with the third lowest unemployment rate in the country, and one of the lowest debt to income ratios to boot. The only blight on the state’s current economy is its foreclosure rate, which dropped below one in 1,000 during the previous seven months.
2010 Rank: 5th
Non-Mortgage Debt as % of Annual Income: 53.2%
Unemployment Rate: 4.8%
Foreclosure Rate (1 foreclosure per # of households): 930
Photo Credit: Leventhal Map Center
6th Happiest: New York
Unemployment has hovered around the 8% mark in New York for much of the year, better than the national average, but still higher than all the other states in the top 10. However, what the state lacks in employment opportunities, it makes up for with an incredibly low foreclosure rate and minimal personal debt.
2010 Rank: 7th
Non-Mortgage Debt as % of Annual Income: 49.4%
Unemployment Rate: 7.9%
Foreclosure Rate (1 foreclosure per # of households): 3,367
Photo Credit: Getty
5th Happiest: South Dakota
South Dakota, like much of the Midwest, was spared the worst of the housing crisis and the turbulent labor market that followed. While many states saw their unemployment rates hit double digits and have one in every few hundred homes foreclosed on, South Dakota has coasted along with dreamy economic numbers.
2010 Rank: 8th
Non-Mortgage Debt as % of Annual Income: 62.5%
Unemployment Rate: 4.8%
Foreclosure Rate (1 foreclosure per # of households): 3,974
Photo Credit: Mykl Roventine
4th Happiest: Wyoming
After claiming the top spot on the Happiness Index at the end of last year, Wyoming slipped back a bit, though it still ended up in the top five. Though the state’s unemployment rate improved somewhat, dropping from 6.6% in November to 6% in May, its foreclosure rate worsened. In November, just 1 in every 2,800 homes was in foreclosure.
2010 Rank: 1st
Non-Mortgage Debt as % of Annual Income: 55.6%
Unemployment Rate: 6%
Foreclosure Rate (1 foreclosure per # of households): 2,331
Photo Credit: whatleydude
3rd Happiest: Nebraska
Nebraska held onto the top spot through several consecutive cycles of the Happiness Index, before losing out to Wyoming in December. The state has since slipped one more spot though the three financial markers have held remarkably steady this year.
2010 Rank: 2nd
Non-Mortgage Debt as % of Annual Income: 59.5%
Unemployment Rate: 4.1%
Foreclosure Rate (1 foreclosure per # of households): 2,788
Photo Credit: Kables
The Happiest (Tied): Vermont
Vermont’s economic situation has long stood out from the rest of the country’s and only continues to improve. The state’s foreclosure rate is by far the lowest nationwide, and it has the sixth lowest unemployment rate overall. During this seven-month period, Vermont’s unemployment rate improved by .3 percentage points, its debt to income ratio improved by more than 3 percentage points, and as if its foreclosure rate weren’t low enough already, it dropped further from 1 in 31,262 in November to 1 in 39,281 in May.
All of that was enough to finally land Vermont the top spot on the Happiness Index, though it will have to share that honor with the next state on our list.
2010 Rank: 3rd
Non-Mortgage Debt as % of Annual Income: 60.1%
Unemployment Rate: 5.4%
Foreclosure Rate (1 foreclosure per # of households): 39,281
Photo Credit: Bruce Tuten
The Happiest (Tied): North Dakota
One can’t help but pine for the days when America’s economy more closely mirrored the current situation in North Dakota. This state has the lowest unemployment rate and the second lowest foreclosure rate. In fact, North Dakota’s economy is one of the only ones in the nation to be expanding beyond pre-recession levels, which is why its unemployment rate dropped from 3.8% to 3.2% in the previous seven months. At that rate, there might not be any unemployed people left in the state by the next time we do this list.
2010 Rank: 4th
Non-Mortgage Debt as % of Annual Income: 61.2%
Unemployment Rate: 3.2%
Foreclosure Rate (1 foreclosure per # of households): 9,589
Photo Credit: afiler
10th Least Happy: Alabama
While Alabama’s foreclosure rate has improved somewhat in recent months, residents continue to be saddled with one of the highest debt to income ratios in the country, and the state’s unemployment rate has actually worsened by more than half a percentage point.
2010 Rank (Out of 51): 38th
Non-Mortgage Debt as % of Annual Income: 73.1%
Unemployment Rate: 9.6%
Foreclosure Rate (1 foreclosure per # of households): 1,433
Photo Credit: Southernpixel
9th Least Happy: Utah
Utah’s economic situation has shown faint signs of recovery, but there is still a long road ahead. The state has the fourth highest foreclosure rate in the country and the seventh highest debt to income ratio.
2010 Rank: 42nd
Non-Mortgage Debt as % of Annual Income: 71.6%
Unemployment Rate: 7.3%
Foreclosure Rate (1 foreclosure per # of households): 365
Photo Credit: Pink Sherbet Photography
8th Least Happy: California
California was hit harder than most by the housing crisis – not to mention its government’s budget nightmare. The state currently has the second highest unemployment rate in the country and the third highest foreclosure rate, each of which are little improved from seven months prior. The only area where California excels is in its average debt to income ratio, which ranks among the 10 best nationwide.
2010 Rank: 39th
Non-Mortgage Debt as % of Annual Income: 54.9%
Unemployment Rate: 11.7%
Foreclosure Rate (1 foreclosure per # of households): 259
Photo Credit: worldsurfer
7th Least Happy: Florida
As bad as the fiscal situation is in Florida, the state’s economy has shown some substantial signs of improvement. In just seven months, the unemployment rate dropped by 1.4 percentage points and the foreclosure rate has been almost halved, dropping from 1 in 267 homes in November to 1 in 461 homes. It’s not a pretty picture, but the economy is certainly on the right track.
2010 Rank: 45th
Non-Mortgage Debt as % of Annual Income: 63.1%
Unemployment Rate: 10.6%
Foreclosure Rate (1 foreclosure per # of households): 461
Photo Credit: Karen Horton
6th Least Happy: Arizona
Arizona’s economy, on the other hand, appears to be stuck. The unemployment rate improved by just .3 percentage points and the foreclosure rate actually worsened slightly, rising from 1 in 262 homes to 1 in 210.
2010 Rank: 48th
Non-Mortgage Debt as % of Annual Income: 71.3%
Unemployment Rate: 9.1%
Foreclosure Rate (1 foreclosure per # of households): 210
Photo Credit: Ken Lund
5th Least Happy: South Carolina
South Carolina had the unfortunate honor of ranking as the least fiscally happy state in the country on our previous Happiness Index, and continues to place among the bottom five. During this seven-month period, each of the three economic markers improved in South Carolina, but the state still has double digit unemployment and a debt to income ratio and foreclosure rate that are well above the national average.
2010 Rank: 51st
Non-Mortgage Debt as % of Annual Income: 72.5%
Unemployment Rate: 10%
Foreclosure Rate (1 foreclosure per # of households): 730
Photo Credit: Shoshanah
4th Least Happy: Georgia
Georgia’s unemployment rate has hovered around 10% throughout this year and the state’s foreclosure rate is now the fifth highest in the country. Its debt to income ratio remained essentially unchanged and ranked as the 10th highest of any state.
2010 Rank: 50th
Non-Mortgage Debt as % of Annual Income: 70.6%
Unemployment Rate: 9.8%
Foreclosure Rate (1 foreclosure per # of households): 387
Photo Credit: totalAldo
2nd Least Happy (Tied): Idaho
Idaho has little to show this year so far in the way of economic progress. The state’s unemployment rate was unchanged between November and May, and the average debt to income ratio actually increased by about 1 percentage point, making it the third highest nationwide. The foreclosure rate improved slightly, but is still the sixth highest in the country.
2010 Rank: 47th
Non-Mortgage Debt as % of Annual Income: 77.1%
Unemployment Rate: 9.4%
Foreclosure Rate (1 foreclosure per # of households): 460
Photo Credit: amanderson2
2nd Least Happy (Tied): Michigan
Much has been written about the resurgence of the auto industry in Detroit and the surrounding regions, but any recovery is slow coming in Michigan overall. Though the unemployment rate improved by about 1 percentage point during this seven-month period, it is still the fifth worst in the nation, and the state’s foreclosure rate remained essentially unchanged.
2010 Rank: 49th
Non-Mortgage Debt as % of Annual Income: 66.6%
Unemployment Rate: 10.3%
Foreclosure Rate (1 foreclosure per # of households): 311
Photo Credit: jimmywayne
The Least Happy: Nevada
Of all the states, Nevada may have the longest road ahead. This state has the highest unemployment rate and by far the highest foreclosure rate, and its debt to income ratio is well above average. To be fair, Nevada arguably had the most to overcome, with an unemployment rate above 14% at one point and a foreclosure rate of more than 1 in 100. Unfortunately, even now, the state’s unemployment rate is stuck above 12% and its foreclosure rate is little changed at 1 in 103. More than any other state, Nevada seems in danger of being left in the dust by the economic recovery.
2010 Rank: 46th
Non-Mortgage Debt as % of Annual Income: 67.1%
Unemployment Rate: 12.1%
Foreclosure Rate (1 foreclosure per # of households): 103
Photo Credit: matze_ott
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