Recession Spreads Coast to Coast

The recession is widening. Thirty states were in recession as of September, according to the Moody's Economy.com coincident indicator, which combines changes in employment and industrial production. These 30 states accounted for 66% of employment and 64% of output, compared with 63% and 61%, respectively, in the previous month. New states that have fallen into recession are Hawaii, Minnesota and Utah. An additional 19 states are at risk of falling into recession.

Alaska and the District of Columbia are the only states expanding. What started in housing has now become a more broad-based slowdown: Financial market turmoil is weighing on businesses' ability to finance daily operations, and weak domestic demand and near recession-like conditions globally have brought the industry to its knees. Michigan has been in recession the longest, although its malaise was chiefly its own at that point. The national recession began last December or January in California, Arizona, Nevada, Florida and others. States across the industrial Midwest were the next to drop, and it spread from there.

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Of 381 metro areas and divisions covered by Moody's Economy.com, 276 are in recession—the largest being Los Angeles, Chicago and Atlanta. Notable joiners in September were Minneapolis; Portland, OR; and Camden, NJ. A number of new areas are now considered to be at risk of recession, including Houston, Dallas and Seattle. Signs of strain in these economies have developed more gradually, though warning signs in these areas include rising unemployment rates. Of the 20 largest—ranked by population—only Washington DC is still expanding, helped by steady growth in government.