WASHINGTON – Economic stress declined in the nation's most troubled areas in February as unemployment stabilized and the pace of foreclosures eased, according to The Associated Press' monthly analysis of conditions in more than 3,100 U.S. counties.
After peaking in January, economic stress dipped in February in half the states and half the 3,141 counties.
"We are not out of the woods yet, and there are still a lot of things that could go wrong, but things are improving," said David Wyss, chief economist at Standard & Poor's in New York.
The AP's Economic Stress Index found the average county's score in February was 11.8. That was down slightly from January's reading of 11.9, the highest average county score since the AP started publishing the index nearly a year ago. The reading in December was 10.8, the previous high.
The index calculates a score from 1 to 100 based on a county's unemployment, foreclosure and bankruptcy rates. A higher score indicates more stress. Under a rough rule of thumb, a county is considered stressed when its score exceeds 11.
Fewer than 55 percent of counties were deemed stressed in February, slightly less than in January.
The nation's most economically distressed states were, in order: Nevada (21.4), Michigan (17.84), California (16.94), Florida (16.26) and Illinois (15.37). All saw their Stress scores decline from January to February.
Once again, North Dakota was the least stressed state in February with a score of 5.48. Next best were South Dakota (5.97), Nebraska (6.45), Vermont (7.64) and Louisiana. All those states, too, had lower Stress scores in February than in January.
The overall easing of stress was due to two main factors: A slowdown in the pace of foreclosures in battered states like California and Nevada. And a national unemployment rate that's held steady since January at 9.7 percent.
Many economists predict the 10.1 percent unemployment rate reached in October will turn out to be the peak for this downturn, the most severe the country has suffered since the 1930s. But they say the jobless rate will decline only gradually and remain around 9.3 percent by year's end.
In March, the economy added a net 162,000 jobs, the best showing in three years, though the unemployment rate remained stuck at 9.7 percent.
"The economy is stabilizing," said Mark Zandi, chief economist of Moody's Analytics. "More industries are showing signs of revival, and that is helping to support growth in more parts of the country."
Louisiana led the nation in economic improvement from January to February: Its score declined from 9.60 to 8.16.
The recession struck Louisiana later than it did most other states. And now it appears to be among a handful of states that have rebounded from it. The number of people with jobs is expected to grow more sharply this year in Louisiana than in the nation as a whole.
"We've actually come out a little before the national economy did," said Loren Scott, an economist in Baton Rouge, La., who helps write the state's annual economic forecast.
The state has been aided by Hurricane Katrina-related construction projects that have led to the rebuilding of bridges and levees. A stable energy sector has helped, too.
And Louisiana's manufacturing sector has benefited from its reliance on shipbuilding and the construction of drilling platforms, rather than on more recession-vulnerable durable goods such as appliances and cars. That's helped it avoid the deep losses of factory jobs other states suffered, Scott said.
In California, the pace of layoffs has leveled off. And some growth is being seen in agriculture and transportation sectors.
Recent changes to the state's foreclosure laws, giving homeowners more time to work out loan modifications with banks, are putting off some foreclosures. Modest increases in home prices over the past year are giving banks incentives to accept short sales on distressed properties, said Mark Schniepp, an economist based in Santa Barbara, Calif.
In a short sale, a homeowner is allowed to sell the home for less than the mortgage amount.
"The state is definitely showing much greater signs of recovery," Schniepp said. "Everything seems to be stabilizing ... so there is a lot more optimism about the economy."
The biggest wild card in California's recovery is the drag from the state's more than $20 billion budget deficit, Schniepp said. Already, 200,000 state workers are being furloughed three days a month. State officials are considering extending the furloughs and possibly laying off workers to close the budget gap.
The steepest year-to-year increases in Stress scores in February were in Nevada, Mississippi (Stress score: 13.38), West Virginia (11.82), Idaho (13.24) and Florida.
Once again, counties in Kansas and South Dakota topped the list of economically healthiest counties with populations greater than 25,000 residents. Ford County, Kan., was at the top with a score of 4.08. It was followed by Ellis County, Kan. (4.16); Brookings County, S.D. (4.36); Brown County, S.D. (4.64); and Finney County, Kan. (4.76).
Counties in interior California again dominated the list of distressed counties. Imperial County, Calif. (31.29) led the way, followed by Lyon County, Nev. (28.42); Merced County, Calif. (28.27); San Benito County, Calif.(27.51); and Sutter County, Calif. (26.24).
MIAMI – More than two thirds of Americans who've been unable to sell their home and buy one that better fits their needs have cut back on household expenses such as food, entertainment and clothing in order to pay their mortgage, a survey released Tuesday shows.
Homeowners who have fallen on financial hard times have made other sacrifices and lifestyle changes: About a third have downsized to a smaller home or delayed expanding their family as planned.
And, a quarter of homeowners who want to sell their current home and buy another say they need to make the move in order to lower their monthly expenses due to financial problems.
The survey, conducted for Move Inc., found wide-ranging concerns about the financial condition of homeowners in a challenging economy, but also unearthed evidence of increased demand among investors in residential real estate.
"Concerns around employment and their overall economic situation are causing many people to wait until the economy improves before they commit to one of the largest purchases they'll most likely make in their lives," said Errol Samuelson, chief revenue officer for Move, which runs the
A stronger housing market will be an important part of the nation's economic recovery. As home sales and prices rise, consumer optimism usually follows suit, leading homeowners to feel wealthier and make them more comfortable spending.
Despite economic concerns, investor interest in the housing market is growing, according to the survey.
About 17 percent of potential home buyers say they plan to purchase a home in the near future as an investment. That's three times the investor interest seen in March 2009.
Also, investor interest in purchasing a foreclosed property to fix up and resell rose from 11.3 percent in October 2009 to 16 percent in March, a 42 percent increase.
Strong demand persists among first time homebuyers, the survey showed.
One in five consumers say they plan to purchase a home in the next 12 months to five years. Of those, half are first-time buyers, with men being somewhat more interested in entering the housing market as a first-time buyer than women.
First-time buyers have until April 30 to sign a contract for a home purchase and qualify for a tax credit of up to $8,000.
The telephone poll, which included 1,004 interviews, was conducted in March by GfK Custom Research North America. It had a margin of error of plus or minus 3 percentage points.
TOKYO – Most Asian stock markets fell in early trading Tuesday as an appreciating yen overshadowed a strong finish on Wall Street.
Lower commodity prices also dragged down sentiment, with Japan's Nikkei 225 stock average down 1 percent to 11,141.30.
Exporters such as electronics makers lost ground as the dollar weakened to 92-yen levels from 93-yen levels a day earlier. A stronger yen reduces the value of overseas profits when repatriated to Japan.
South Korea's Kospi lost 0.4 percent, and Australia's benchmark declined 0.3 percent. Markets in Taiwan, New Zealand and Singapore also fell.
Markets in Hong Kong and mainland China bucked the trend and posted modest gains.
Overnight in New York, the Dow Jones industrial average closed above 11,000 for the first time in a year and a half. A loan agreement over the weekend for Greece eased worries that have been one of the few drags on stocks so far this year. There has been concern in recent months that mounting debt in Greece and other European nations like Spain and Portugal would stunt an economic recovery in Europe and undermine Europe's shared currency, the euro.
In Tokyo, Sony Corp. fell 1.5 percent and Panasonic Corp. was down 0.8 percent. South Korea's Samsung Electronics Co. lost 1 percent.
Resource-related issues led losses in Sydney, with BHP Billiton Ltd. down 0.8 percent and Rio Tinto Ltd. slipping 0.6 percent.
Crude oil prices fell slightly on Monday, with benchmark crude for May delivery down 58 cents to settle at $84.34 on the New York Mercantile Exchange.
In currencies, the dollar was trading at 92.79 yen from 93.21 late Monday. The euro stood at $1.3588 from $1.3582.