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County Economies 2016: Widespread Recovery, Slower Growth

County economies are the building blocks of regional economies, states and the nation. County economic conditions can constrain and challenge county governments, residents and businesses or, conversely, provide opportunity. This analysis of county economic conditions identifies growth and recovery patterns for 2016 by examining annual changes in jobs, unemployment rate, economic output (GDP) and median home prices. It also explores average wage dynamics in 2016 and the economic recovery patterns of counties that voted Democratic in 2008 and 2012 presidential election yet switched to Republican in 2016.

The overall analysis

51% of county economies recovered on unemployment rates by 2016.

2016 was a year of recovery, especially on unemployment rates. Almost one in four county economies closed their unemployment gap in 2016, nearly matching the total since the beginning of the recovery. Most of these were small county economies — in counties with fewer than 50,000 residents — and predominantly in the Midwest and South. As a result, a majority of county economies attained unemployment rate recovery by 2016 (See Figure 1). Further, almost eight in ten county economies returned to their economic output (GDP) pre-recession levels by 2016. The remaining county economies that still need to reach their pre-recession levels on economic output (GDP) are small, in counties with fewer than 50,000 residents, mainly in Southern states such as Georgia, Kentucky, Mississippi, North Carolina and Virginia.

Figure 1: Unemployment Rates Recovered to Pre-Recession Lows in The Majority of County Economies by 2016

Percent of County Economies That Returned to Their Pre-Recession Levels by 2015 and by 2016

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2015
2016

Note: This report examines only the economies of counties with county governments.

Source: NACo Analysis of Woods and Poole Economics, Inc., 2016 data

11% of county economies had faster job growth in 2016 than in the previous year.

Economic growth was widespread in 2016, but slower than in 2015. The overwhelming majority of county economies saw positive growth across all indicators in 2016, more prevalent than in the previous year. For example, only about 10 percent of county economies recorded worse unemployment rates in 2016, most of them in the South. Overall, however, economic growth occurred at a slower pace than in 2015. Job growth accelerated in only 11 percent of county economies, for instance (See Map 1). This trend was most evident in the South and West in small county economies — in counties with populations fewer than 50,000. While 2016 saw slower economic output (GDP) growth in almost two-thirds of county economies, virtually none of them had declines. Home prices increased faster in only 6 percent of county economies in 2016 than in the previous year.

Map 1: Employment Grew Faster in Only 11 Percent of County Economies

Job Growth Rates, 2016 relative to 2015

Note: This report examines only the economies of counties with county governments. The dark grey areas in Conn., R.I., parts of Alaska, Mass. and Va. are counties or county-equivalents without county governments.

Source: NACo Analysis of Woods and Poole Economics, Inc., 2016 data

68% of county economies recovered on at least three indicators by 2016.

Economic recovery spread out fast in 2016. By 2016, more than one in four county economies recovered to their pre-recession levels on all four indicators analyzed, nearly double the rate of the previous year. Most of these county economies are in Kentucky, Iowa, Minnesota, Missouri, Nebraska, South Dakota, Texas and Wisconsin. Large county economies — in counties with more than 500,000 residents — have the highest rate of full recovery (41 percent). In contrast, more than three quarters of small county economies, in counties with fewer than 50,000 residents, still have not reached their pre-recession peaks across all four indicators by 2016. Overall, more than two thirds of county economies recovered on at least three indicators by 2016 (See Map 2). Most often, unemployment rates are holding back the full recovery of county economies. None of the county economies in Arizona, Delaware, Hawaii, Maryland, Nevada and New Mexico achieved unemployment rates below their pre-recession lows. Only 22 county economies still have not recovered on any of the four economic indicators analyzed by 2016. Half of them are in the West, in states such as Arizona, Nevada, California and Idaho.

Map 2: More Than Two Thirds of County Economies Recovered on at Least Three Indicators by 2016

Number of Indicators County Economies Recovered by 2016

Notes: This report examines only the economies of counties with county governments. The dark grey areas in Connecticut, Rhode Island, parts of Alaska, Massachusetts and Virginia are counties or county-equivalents without county governments. The four indicators analyzed are jobs, unemployment rates, economic output (GDP) and median home prices in the county economy.

Source: NACo Analysis of Woods and Poole Economics, Inc., 2016 data

County economies of all sizes recorded slower wage growth

55% of county economies had real wages rising slower in 2016 than in 2015.

Wages grew slower in the majority of county economies in 2016. Last year, wages grew faster than inflation in virtually all county economies. However, the pace of growth slowed down in 2016 in almost 55 percent of county economies (See Map 3). This was especially true in Western county economies, with almost 60 percent seeing slower wage rises in 2016 than in the previous year. In states such as Alabama, Nebraska and New Mexico, more than three quarters of county economies saw wages growing at a slower pace in 2016 than in the previous year. County economies of all sizes recorded slower wage growth, with larger ones — in counties with more than 500,000 residents — slightly more likely to fit this pattern.

Map 3: Wages Grew Slower in 55 Percent of County Economies in 2016 than in 2015

Average Real Wage Growth Rates, 2016 relative to 2015

Notes: This finding analyzes the economic conditions of the economies of 3,053 counties with county governments for which there were available real wage data for 2015 and 2016. The dark grey areas in Connecticut, Rhode Island, parts of Alaska, Massachusetts and Virginia are counties or county-equivalents without county governments.

Source: NACo Analysis of Woods and Poole Economics, Inc., 2016 data

56% of the economies of swing counties that voted Republican in 2016 presidential election did not recover on employment.

2016 swing Republican counties are more likely to experience weak job recoveries. About 200 counties that voted for the Democratic presidential candidate in both 2008 and 2012 voted Republican in 2016. The majority are in the Midwest, in Illinois, Iowa, Michigan, Minnesota and Wisconsin. These swing counties are disproportionately mid-sized — with populations between 50,000 and 500,000 residents — and have economies specializing most often in agriculture, forestry and manufacturing. Overall, these 200 counties have weaker job recoveries than county economies overall (See Figure 2). The majority of them (56 percent) did not reach their pre-recession job peaks by 2016, while nationally only 43 percent of county economies fit that pattern. This is the result of their longer and deeper job recessions than county economies overall. They also lag in economic output (GDP) recovery due to deeper economic output (GDP) declines.

Figure 2: The Majority of Swing Counties That Voted Republican in 2016 Presidential Election Are More Likely to Have Weak Job Recoveries

County Electoral Results in 2008, 2012 and 2016 and Job Recovery Status by 2016

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3,069 County Economies
Republican
Swing Republican
Democrat

Note: This finding analyzes the conditions of the economies of 3,043 counties with county governments for which there were available presidential elections results for 2008, 2012 and 2016. Counties that voted majority Democratic in the 2016, and either 2012 or 2008 presidential elections are marked as “Democrat.” Those that voted majority Republican in the 2016, and either 2012 or 2008 presidential elections are marked as “Republican.” Counties that voted majority Democratic in the 2008 and 2012 presidential elections and Republican in 2016 are considered “swing Republican.”

Source: NACo Analysis of Woods and Poole Economics, Inc., 2016 data; The Guardian, 2008 and 2012 U.S. election data; Dave Leip’s Atlas of U.S. Presidential Elections, 2016 data

Map 4: The Majority of Swing Counties That Voted Republican in 2016 Presidential Election Are More Likely to Have Weak Job Recoveries

County Electoral Results and Job Recovery

Note: This finding analyzes the conditions of the economies of 3,043 counties with county governments for which there were available presidential elections results for 2008, 2012 and 2016. Counties that voted majority Democratic in the 2016, and either 2012 or 2008 presidential elections are marked as “Democrat.” Those that voted majority Republican in the 2016, and either 2012 or 2008 presidential elections are marked as “Republican.” Counties that voted majority Democratic in the 2008 and 2012 presidential elections and Republican in 2016 are considered “swing Republican.”

Source: NACo Analysis of Woods and Poole Economics, Inc., 2016 data; The Guardian, 2008 and 2012 U.S. election data; Dave Leip’s Atlas of U.S. Presidential Elections, 2016 data

Swing counties are disproportionately mid-sized

County Economies 2016 is a reminder that local economic conditions often vary from the national economy narrative. The data reveal that the economic recovery accelerated in 2016 on unemployment rates and is taking hold across large swaths of the country. However, continued economic growth in 2016 most often occurred at a slower pace than in the previous year. Wage growth also slowed last year in a majority of county economies, affecting counties of all sizes. This analysis found that counties that voted majority Democratic in the 2008 and 2012 presidential elections and Republican in 2016 are more likely to have weaker job recoveries than county economies overall. The opportunities and challenges in county economies across the country show the continued need for a strong local-state-federal partnership in providing economic opportunity.

County Profiles

Key Terms

Print Key Terms

Average Real Wages: Total wages and salaries paid by industries located within a county relative to the number of jobs within that county. The estimates are adjusted for inflation and expressed in chained 2009 dollars. 2016 data are forecasts. Data Source: NACo analysis of Woods & Poole Economics, Inc., 2016 Data

Average Real Wage Growth Rate: Year-over-year growth rate of average real wages in a county economy. Data Source: NACo analysis of Woods & Poole Economics, Inc., 2016 Data

Annualized Growth Rate: Year-over-year growth rate of an indicator (economic output (GDP), jobs or home prices) over a specified period of time, showing how much an indicator would have grown annually if it increased at a steady rate over a certain period. The growth rates of county economic output (GDP) and average wages are inflation-adjusted.

County: The primary legal division of most states for which the U.S. Census Bureau releases data. This is the geography of an area with county boundaries. In Louisiana, a county is known as a parish. In Alaska, a county is known as a borough. According to the U.S. Office of Management (OMB), there are 3,143 counties in the United States.

County Economy: The economy of a county with county government.

County Government: An organized entity with governmental character, having sufficient discretion in the management of its own affairs to be an independent government unit and which covers the area of a county or county equivalent. Depending on the state, county governments are also known as a parish government or a borough government. NACo considers an entity to be a county government if it is recognized as a county government under the state constitution, state law or by charter. This includes 42 counties that are city-county consolidations, the District of Columbia, incorporated counties (Los Alamos, Nevada) and independent cities that are considered county governments under their state constitution (Baltimore City, Maryland; St. Louis City, Missouri) or city charter (Carson City, Nevada). There are 3,069 county governments in the United States.

Economic Output (gross domestic product - GDP): Total value of goods and services produced by a county economy, also known as GDP. 2016 data are forecasts. Data Source: Woods & Poole Economics, Inc., 2016 Data

Industry Employment: Total number of jobs at 2 digit NAICS level aggregation. The County Economies 2016 individualized county profiles show for agriculture and public administration the number of jobs of their 3 digit NAICS components. All industry job numbers below 1,000 are rounded to the closest 10 on the individualized profiles. Data Source: Woods & Poole Economics, Inc., 2016 Data

Jobs: Total number of wage and salary jobs, whether full or part-time, temporary or permanent in a county economy. It counts the number of jobs, not employed people, for all employers in a county economy, not only for the county government. 2016 data are forecasts. Data source: Woods & Poole Economics, Inc., 2016 Data

Large County Economies: The economies of counties with more than 500,000 residents in 2015. Data Source: Census Population Estimates, 2015 vintage

Median Home Sales Prices: Median sales prices of existing single-family homes in a county economy. 2016 data are forecasts. Data source: Woods & Poole Economics, Inc., 2016 Data

Medium-sized County Economies: The economies of counties with populations between 50,000 and 500,000 in 2015. Data Source: Census Population Estimates, 2015vintage

Peak: The highest annual value of a county economy indicator (the lowest for the unemployment rate) between 2002 and 2009. 2002 is the first year after the end of the previous U.S. recession and 2009 marks the end of the latest U.S. recession. The National Bureau of Economic Research (NBER) determines the beginning and end of U.S. economic recessions. This analysis determines peak values and years separately for each county economy and each indicator.

Population: The number of county residents in 2015. Data Source: Census Population Estimates, 2015 vintage

Real Economic Output (real GDP): Total gross output of a county economy adjusted for inflation. The estimates are in chained 2009 dollars. 2016 data are forecasts. Data source: Woods & Poole Economics, Inc., 2016 Data

Recession: The period between the peak and the trough years for an indicator for a county economy during the latest U.S. economic downturn. This research counts a recession only when the difference between the peak and the trough value is larger than one percent of the peak value. It is possible that no recession occurred for an indicator in some county economies during the latest U.S. economic downturn. This analysis determines recession start and end years separately for each county economy and each indicator.

Recovery: The period between the trough year to 2016 for an indicator for a county economy, to identify the period of growth after recessionary declines. If a county economy had no recession on a specific indicator, the recovery period is counted from 2009 to 2016. It is possible that a county economy had declines on one or more of the indicators analyzed and has not yet entered the recovery period for some of those indicators by 2016. This analysis determines recovery start and end years separately for each county economy and each indicator.

Recovered on an indicator: A county economy recovered on an economic indicator if it underwent a recession on that specific indicator and subsequently grew to reach or exceed its pre-recession peak.

Small County Economies: The economies of counties with fewer than 50,000 residents in 2015. Data Source: Census Population Estimates, 2015 vintage

Specialized Industry: An industry that is more concentrated in a particular county economy compared to the state’s overall industry job composition.  The County Economies 2016 individualized county profiles show the top five industries in the county economy in terms of employment location quotient. Data source: NACo analysis of Woods & Poole Economics, Inc., 2016 Data

Trough: The lowest annual value of a county economy indicator (the highest for the unemployment rate) between the peak and 2016. This analysis determines trough values and years separately for each county economy and each indicator.

Unemployment Rate: The proportion of the civilian labor force that is unemployed in a county economy. Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior four weeks and are currently available for work. 2016 data are forecasts. Data source: Woods & Poole Economics, Inc., 2016 Data 

Acknowledgments

Within the National Association of Counties, the authors would like to thank Sanah Baig, Matt Chase, Daria Daniel, Jonathan Harris, David Jackson and Arthur Scott for their helpful comments and contributions. A big thanks goes to Ricardo Aguilar who created the maps and graphics and conducted data checks. The authors also express their appreciation to their Public Affairs colleagues for the graphic design and the website of the report and to Chris Franco for the interactive maps and individualized county profiles.

For More Information

www.NACo.org/Lab

Dr. Emilia Istrate
Managing Director,
Counties Futures Lab
research@naco.org

Tadas Pack
Research Assistant
research@naco.org

About the Counties Futures Lab

The NACo Counties Future Lab brings together leading national experts to examine and forecast the trends, innovations and promises of county government with an eye toward positioning America's county leaders for success. Focusing primarily on pressing county governance and management issues — and grounded in analytics, data and knowledge sharing — the Lab delivers research studies, reports and other actionable intelligence to a variety of venues in collaboration with corporate, academic and philanthropic thought leaders to promote the county government of the future.

About NACo

The National Association of Counties (NACo) unites America’s 3,069 county governments. Founded in 1935, NACo brings county officials together to advocate with a collective voice on national policy, exchange ideas and build new leadership skills, pursue transformational county solutions, enrich the public’s understanding of county government and exercise exemplary leadership in public service.

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