5 posts from November 2012

Government workers feeling brunt of job loss

Government jobs have long been known for their comparatively high job security. During and shortly after the recession, government employment actually rose slightly while private employment plunged (see previous blog post), thanks in large part to the federal stimulus plan that funneled billions of dollars to local and state government budgets to stave off further unemployment in the economy.

But with that stimulus gone, government employment has fallen by about 2 percent, or roughly 18,000 jobs, across Ninth District states from the first quarter of 2010 to the first quarter of 2012, according to data from the Bureau of Labor Statistics.

But there was considerable volatility in government employment even before the recession. An analysis of total government employment (federal, state and local) shows that almost half of the counties in district states saw a net decrease in government workers from 2001 to 2007 (see Chart 1). Some (unknown) portion of the decrease is likely due to the wind down of the 2000 decennial census; the number of federal workers dropped by almost 1,300 during this period while overall government employment rose by 12,300. About 85 percent of the job gains occurred in state government, where jobs are not as geographically widespread.

  Local govt. employment -- Ch1 -- 11-21-12

The federal stimulus temporarily pumped up government payrolls in the district, adding 18,000 net public workers from 2007 to 2010, half of them at the local level. But once the stimulus funds ran dry, the pink slips came out. By the first quarter of 2012, district states had shed almost 19,000 government jobs, about two-thirds of which were local government workers; another one-quarter of losses were federal workers, likely the result of another census winding down. Job losses were seen in 62 percent of district counties analyzed (see note at end).

The past two years have been particularly rough on counties with large employment bases, with all of them seeing at least a nominal decline in the most recent period (see Chart 2, right-most panel). But many saw earlier cutbacks, and some even declined in spite of stimulus funds (see other two panels). Many of these larger counties are in Minnesota and Wisconsin, where state and local budgets have been see-sawing since the 2001 recession. Larger counties in the Dakotas and Montana generally fared better in terms of government employment, in part because they are seeing strong population growth, which tends to induce more government services and subsequent employment.

Much more on local government budgets and employment will follow in the forthcoming January fedgazette.

  Local govt. employment -- scatter charts 11-6-12

 (One methodological note: County-level data can be hit or miss for a given quarter, particularly among smaller counties. Almost one-third were missing valid counts in one or more of the dates analyzed. As a result, the scatter-plot analysis above includes 244 out of a possible 355 counties in the Upper Peninsula of Michigan, Minnesota, Montana, North Dakota, South Dakota and all of Wisconsin, only the northwestern one-third of which is part of the Ninth District.)

Quarterly update: District banks continue slow improvement

Slow and steady wins the race—at least that’s what Ninth District banks are hoping, as they continued to see small improvements in a variety of indicators, according to third-quarter data just released by the Federal Reserve Bank of Minneapolis.

Overall, district banks saw only “middling improvement” in asset quality, while profitability and loan growth were generally flat. But the quarter saw a decline in problem assets, particularly in commercial real estate, as well as a decline in other real estate owned. More than half of banks had positive loan growth in the third quarter, led by banks in the Dakotas, which generally saw the strongest performance among most indicators.

South Dakota banks continue to report minimal problem assets as the rest of the country recovers from crisis conditions, while North Dakota’s banking conditions “stand out,” according to Ron Feldman, senior vice president of Supervision, Regulation and Credit at the Federal Reserve Bank of Minneapolis. Profitability continues to increase despite already being above precrisis levels, and loan growth and asset quality “are as strong as they’ve been since the mid-1990s.”

For a recap of district banking conditions see the video below.

Local governance: Practice makes perfect?

Minnesota and some other Midwestern states are widely regarded for good governance. Maybe that comes with practice, because Minnesota and other Ninth District states exercise a lot of governance.

Despite having just 4.4 percent of the country’s population, five Ninth District states—Minnesota, Montana, the Dakotas and Wisconsin—have more than three times that share (14.2 percent) of local government units in the country, about 12,600 in all, according to data from the U.S. Census.

A good deal of that share stems from a preponderance of town and township units that govern the rural expanses that dominate much of the district and have few if any paid employees. Indeed, only 20 states recognize these geographically small units of government. But at every jurisdiction, the share of local governments in the district is more than double its share of total population (see Chart 1).

Nationwide, there is a unit of local government of some type for about every 3,500 people. Minnesota has the most units of local government in the district, with about 3,600, or one for roughly every 1,500 people. With 2,700 local governments, North Dakota has a local government unit for every 260 people.

Since 2007, most states have seen the number of local units decline, mostly as rural townships get annexed onto cities, or two similar units of government merge into a single larger unit. But among district states by 2012, there was a net gain thanks almost exclusively to Minnesota’s increase of 106 units, many of them special district governments for things like watershed management and other special purposes (see Chart 2).

Local govt units Ch1-2 -- 11-13-12

Home prices rebounding across most of the district

Call it one more stick in the bridge to recovery. Nationwide, home prices in September rose by 5 percent over levels in September of last year, according to an index put out by CoreLogic, a real estate analytics firm. Better news yet, home prices rose even more in most of the district.

All district states except one saw increases between 6 percent and 9 percent (see chart, blue bars). Wisconsin home prices lagged considerably, at just 1 percent, which was in the bottom quarter of states. Seven states saw home values decline.

CoreLogic also measures home prices after stripping out foreclosed and other distressed properties (see chart, orange bars). Notable in the district is North Dakota, which actually saw prices for all homes (including distressed) rise more quickly than prices for nondistressed homes. One possible reason: The oil boom in the western part of the state has put housing in short supply, and buyers might be bidding more aggressively on distressed homes, which often are listed at discounted prices.

And here’s another stick for the bridge: Preliminary CoreLogic data also suggest that national home prices rose stronger still in October, at 5.7 percent.

CoreLogic HPI chart -- 11-7-12

Minnesota farmland has bumper crop of $$$

It’s no secret that the farm economy has been robust for a considerable stretch. That persistent strength can be seen in the market value of farmland in Minnesota, especially when compared with other types of property, particularly residential, which is by far the state’s largest segment of so-called real property.

It’s almost like agriculture didn’t get the memo on the recession and slow recovery. Thanks mostly to steadily strong crop prices, farm property saw exceptional growth during the recession through 2010 (see Chart 1). The last two years have been flatter—but still growing—in stark contrast with virtually all other real property. Like corn during a good growing season, farmland value as a share of all real property grew from 16 percent in 2007 to 24 percent in 2012 (see Chart 2).

MN farmland market value -- 11-1-12