Moody's Predicts Colorado to recover in 4th Quarter of 2009.

Posted by Greg Smith on Wednesday, June 3rd, 2009 at 7:50am.

Bill Dedman, Investigative reporter: Email

updated 8:02 a.m. MT, Tues., June. 2, 2009



If you want to be in the right place when the recovery starts, that place may be in Colorado, Idaho, Oregon, Texas or Washington.

The recession didn't start at the same time in every state, and it won't end at the same time either. A new forecast from Moody's predicts that jobs growth will return first in those five states, starting in the last quarter of this year. Four of those states benefit from strong high-tech industries, and the fifth, Texas, has a strong base of energy industries.

A second wave of jobs growth, in the first quarter of 2010, is predicted in seven states: Alabama, Georgia, Nebraska, New Mexico, North Carolina, North Dakota and South Dakota.

The next wave, in the second quarter of 2010, is expected in seven states: Alaska, Arkansas, Iowa, New Hampshire, South Carolina, Tennessee and Wyoming.

That leaves 31 states and the District of Columbia waiting until the third quarter of 2010 for jobs to start growing again.

The new forecast is released along with the monthly Adversity Index. Each month, Moody's and use data on employment, industrial production, housing starts and house prices to label each state or metro area as expanding, at risk of recession, in recession or recovering.

Like a jigsaw puzzle nearing completion, the index shows that the recession reached 373 of the nation's 381 metro areas, and 49 out of 50 states (Alaska was spared), by the end of March.

Here are several ways to explore this month's Adversity Index:

  • An interactive map on this page shows the economic health of every state and metro area. You can "play" the map to watch the progress of recessions over 15 years, or select any state to see data for each metro area. You can also see the map on its own page.
  • A month-by-month chart shows when the current recession enveloped each metro area, and which eight metro areas were not yet in decline.
  • The updated index will be published every month at There is a lag of nearly two months, so April data will be out later in June.
  • An explainer tells how the Adversity Index assesses the economy.

A head start on recovery
Why will some states recover faster than others?

High-tech industry is one element. A slowdown in technology spending in 2008 and 2009 has created a pent-up demand for technology — businesses that know they need to upgrade and are waiting for the ability to spend.

"States that have a high concentration in tech-related industries are well positioned to take advantage of this trend, which is particularly true of Colorado, Idaho, Oregon and Washington and to a lesser extent Texas," said economist Andrew Gledhill of Moody's

"Although not scheduled to begin its recovery until a quarter later, New Mexico also fits into this category of benefiting from a tech recovery."

Why is Texas, which has less high-tech industry, on the list for early job growth?

"The state had largely missed out on the housing boom (as did Colorado) and was among the last to join the recession, in large part due to lingering impacts from the energy boom of years past," Gledhill said. "Similarly, other expected early risers such as Washington and Colorado were also relatively late to join the recession for various reasons. Thus, as conditions begin to turn nationally, they have less of a hole to dig themselves out of."

Another element for those early risers: better credit ratings.

"One factor that the five early job recovery states all have in common is less erosion in household credit conditions, with the worst of the group being Idaho," Gledhill said. "As a result, once it seems apparent that recovery is setting in, households in these states will be more able to turn and inject money back into their local economies. There is less de-leveraging of household balance sheets in these states. This will in turn prompt a more favorable trend in certain types of service industries."

Greg Smith

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