Determining the sustainability of the current recovery is an important topic here at the Atlanta Fed. Much depends on the rebound in labor markets-job growth and a decline in unemployment. Part of our overall strategy in determining labor market activity is, of course, to look at the data to identify in which areas are new jobs being created.
Let's look at the states of the Sixth District in geographic terms. The chart below shows what we call an "Employment Momentum" snapshot. We plot the longer-term trend in employment (the year-over-year percent change) along the horizontal x-axis against the short-term trend (the three-month average percent change) along the vertical y-axis. The size of the bubble represents the relative proportion of the measured area.
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Interpreting the chart is straightforward. When a state is performing well and new job creation has a lot of momentum, it will be located in the "Expanding" quadrant, signifying that both its long-term (year-over-year) and short-term (three-month average) measures are positive. When conditions begin to deteriorate, the short-term measure turns negative, but the longer-term measure remains positive, evidencing "Slipping" momentum. When an area has experienced sustained net job losses, both measures are negative, and it moves into the "Contracting" quadrant. When job growth returns, the area's short-term momentum turns positive while the longer-term measure stays negative. Then the area is experiencing "Improving" momentum.
Two observations stand out. First, Florida is clearly on the mend. Its momentum is squarely in the Improving quadrant. Second, Georgia is lagging and remains in the Contracting quadrant. Let's look into that.
The three-month average employment change in Georgia is negative, but the latest reading for April showed that Georgia gained 14,500 new net jobs-the state's first substantial seasonally adjusted monthly gain since February 2008. Another positive month of job growth should land Georgia in the Improving quadrant. Nevertheless, why is Georgia lagging other states in the region in terms of job growth? Is there a part of the state that is underperforming the rest, or is weakness concentrated in a particular sector?
Let's look at another momentum chart, this one focusing on the major Georgia metro areas:
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Most metro areas in Georgia have moved into the Improving quadrant. Notably, Atlanta—the state's largest metro area by far—has improving employment momentum (barely). A few smaller areas remain in the contracting quadrant. What stands out is the fact that nonmetro Georgia (derived by subtracting the total employment in all Georgia's metro areas from total state employment) is deep within the contracting quadrant. It appears that most of the state's metro areas are exhibiting either improving or close to improving employment momentum, while for nonmetro Georgia, weakness in job markets means that they remain entrenched in contraction territory.
By Michael Chriszt, an assistant vice president in the Atlanta Fed’s research department