Continued recovery outlook in labor markets; strong growth in the Sunbelt expected
- Long-term demographic trends are a big reason for this swift economic growth, with more people moving away from the Northeast and Midwest to the South and West. The 2009 recession and its aftermath hurt mobility and household growth across the United States but domestic migration levels have been back in full force in recent years, which is a major positive stimulus for the Sunbelt.
- The Southeast and West rely more on the areas of the US economy that will do well this year, such as housing and consumer spending, and generally rely less on manufacturing, the volatile upstream energy sector, and exports.
- In terms of employment growth, Nevada, Utah, Arizona, and Florida will lead the way.
- Texas will rank fifth with the help of a stabilizing energy sector followed by four additional states in the West/Southeast: Colorado, Oregon, North Carolina, and Washington.
The top oil and natural gas producing states will see economic conditions improve:
- Areas heavily involved in oil and natural gas drilling — Texas, North Dakota, Oklahoma, Louisiana, and New Mexico – were hit hard in 2015 and 2016 as prices and exploration tumbled with all experiencing some form of recession except Texas.
- The outlook for these states is much brighter for 2017 even if it will be a long climb back to 2014 activity levels.
- US rig counts have been trending higher since May 2016 and both oil and natural gas rigs are up more than 50% from their bottom.
- With the worst of the energy-related cuts in the rearview mirror and a measured expansion ahead, 2017 will be an important transition year for the major oil and gas producing states as they make the welcome shift from recession to recovery.
Housing activity will remain a key stimulus in the West and Southeast:
- Homebuilding activity and construction will remain robust this year, which along with continued home price gains will give the West and Southeast an extra jolt.
- Nevertheless, the economic stimulus from housing this year will not be as impactful relative to the previous few. We are already multiple years into the housing recovery and affordability has been dampened by persistent home price gains and rising mortgage rates.
No additional states to return to prerecession employment levels in 2017:
- Overall, 42 states have now returned to their prerecession peak employment levels; the United States as a whole fully recouped is losses during the first half of 2014.
- In late 2016, North Carolina overtook Michigan to become the state with the ninth most jobs in the nation, and Arizona surpassed Maryland to move into the top 20.
- None of the remaining 8 states—Alabama, Connecticut, Maine, Michigan, Mississippi, New Mexico, Rhode Island, Wyoming—will get back to precession levels this year.
Regional employment rankings will change among top metros:
- Milwaukee, Wisconsin is the largest metro returning to peak employment as it finally gains enough service-sector jobs to offset heavy manufacturing declines.
- Phoenix will overtake Detroit to move up to the 12th highest metro job total this year.
- Seattle will leapfrog Minneapolis and Detroit, moving from 15th to 13th.
- Detroit will fall from 12th to 14th this year, and slip to 15th in the years ahead.
- Reno, Nevada, will return to peak with the help of large scale private-sector investments.
- Tallahassee and Pensacola will be two of the last Florida metros to get back to peak employment.
- Winston-Salem, North Carolina; Altoona, Pennsylvania; Beaumont, Texas; and Topeka, Kansas will also return to peak employment in 2017.