Thursday, December 24, 2009

Recession slammed domestic migration

Earlier this year, I compared US migration with that in Canada - one healthy, the other not so much. As a sequel to the story, the Census released its figures for migration into 2009, and the pattern in the US has worsened (you can download the data here).

The picture of American mobility is one of people/workers/households with essentially nowhere to go. Unemployment is ubiquitously high, and the housing market is lousy - can't sell your home, can't get a job. This Great Recession dragged net-domestic migration (moving within the US borders) down in all regions of the country.

Here are some of the headline results according to the Wall Street Journal:
The recession has had a profound effect on migration patterns in the U.S., reversing the flow of people to former housing-boom states such as Florida and Nevada, the latest data from the Census Bureau show.

In the year ending July 1, 2009, Florida -- once the top draw for Americans in search of work and warmer climes -- lost more than 31,000 residents to other states, the Census Bureau reported Wednesday. Nevada lost nearly 4,000. The numbers are small compared with the states' populations, but they reflect a significant change in direction: In the year ending July 2006, Florida and Nevada attracted net inflows 141,448 and 41,640 people, respectively.

There's no place to go. If you are in Michigan, for example, which state has the better prospects? And furthermore, homeowners are likely to find it very difficult to sell. It is worthwhile to compare the current experience with the cyclical downturn of 2001, when the unemployment rate increased for two years into 2003.

The chart below illustrates the net-domestic migration rate in 2003 and 2009 for each state, excluding the outliers which are listed in the text box. This is the state-level compliment of the first chart, which lists changes in migration patterns by region.

A 45-degree line is drawn: states above the line are seeing higher net-migration compared to 2003, while those below the line are posting lower net-migration than in 2003. Also, positive numbers indicate net-immigration (more people entering the state than leaving), while negative numbers indicate net-emigration (more people leaving the state than entering).

The first observation is that the "usual suspects", Nevada, Florida, and Arizona, are the outliers. Nevada, for example, saw its net-domestic immigration rate of roughly 20% in 2003 turn negative by 2009, -1.5%. And compared to the previous recovery, which saw rising unemployment through the middle of 2003, states like Colorado, Oklahoma, Louisiana, and Utah are experiencing increased migration into their states. However, a larger share of states are seeing migration patterns slowing or even turning negative. And finally D.C., home to the US government, is experiencing large migration inflows compared to the last recession, -17.8% to +7.5% in 2009. Best to be near the spending.

In the first chart, there is clearly a negative correlation between years in which the unemployment rate is rising (2003) and net-domestic migration across regions. But this time around, the magnitude is much larger - the labor market was hit harder and the housing market is in shambles.

A more flexible migration pattern would further the structural shift that is underway in the labor market (generally out of manufacturing and financial services and into alternate industries). It will take some time for the migration clog to free up, and the structural re-balancing of production and jobs will likely take some time. There's just no quick fix.

Rebecca Wilder


  1. Rebecca: Your compariuson of US to Cdn internal migration is timely, to say the least. It further emphasizes your point on reverse migration from Alberta half a year back, as you have linked.

    Statcan release in today's news:
    [Saddled with dwindling employment and shrinking energy prices, Alberta seems to be losing its status as the promised land for job-seekers from across Canada.

    For more than a decade the province's resource-rich economy has drawn in hundreds of thousands of people from Saskatchewan, Newfoundland and Labrador and elsewhere.

    But Statistics Canada's third-quarter population estimate for 2009 shows more people left Alberta for other provinces than moved in.

    That's the first time that has happened since 1994.

    Douglas Porter, deputy chief economist with the Bank of Montreal, says the province was pulling in almost 50,000 people a year from other provinces at the height of the energy boom.

    “It is an amazing turnaround from as recently as three years ago when, on average, we were seeing about 12,000 or 13,000 net new migrants [per quarter] into Alberta from the rest of the country,” he said Wednesday.

    The culprit is probably a rising unemployment rate that's the result of tumbling energy prices, Mr. Porter said.

    For example, Saskatchewan's unemployment rate was consistently higher than Alberta's several years ago but is now two percentage points lower.[...]]

    There are more links displayed at the link above.

    I must add a very political point to all of this: Albertans have an historical grudge against "The East" (they mean Central Canada) for the National Energy Program, from the Trudeau days. What they conveniently overlook is that the Feds underwrote much of the oil development back in those days.

    Whatever, I won't discuss the minutia of tha history, but what has happened is that suddenly Alberta finds herself reviled by the rest of the nation (collectively). This was clearly demonstrated in Copenhagen, where Quebec and Ontario (over 2/3 of the nation's population), BC and Manitoba all had representation there, and a very pro-green agenda, much like US states in the West and East do (California, NY, etc)

    The present Neo-Cons in Ottawa are Alberta based, and the nation grows weary of 'carrying the can' for the tar-stained Albertans.

    Indeed, Canada received three 'fossil awards' in Copenhagen. Just as in the US, monetary and fiscal policy determined by bubble sub-economies penalizes the facets of the economy that are steady, controlled and long-term beneficial.

    The political undertones will, by necessity, be absent from Statcan results.

    As always, Rebecca, your choice of comparators is excellent. It is fortunate that the stats were released with such close timing to make the comparison so apt.

  2. I don't want to be a serial poster on this Christmas Eve, but I just returned to the article quoted above, lol...and couldn't find greater endorsement for my statement on Alberta than the latest reader comment:
    [as I was writing... not much dif between us and others I've met in Canada, TO included.

    I find it comical that so many negative comments about Alberta and Albertans can be found here today.]
    It should come as no surprise to Albertans who've had their head stuck in the tar oozing sand.

    Similar sentiments abound in the US, Texas being the closest to being the whipped fat cat (albeit historically mostly a Dem state, not Repub), and the US can take some solace in seeing the family feud to the North.

    I just wish that for all of us, both sides of the border, that we enjoy a much more *humane* year upcoming.

  3. No quick fixes? If consumers and small businesses were given equal access to credit at the Fed, instead of having to pay usury or not being able to get credit because banks would rather make the risk-free interest as excess reserves, then consumer spending would immediately recover. What evidence is to the contrary?

  4. Also, why wouldn't Sheila Bair's longstanding request to price mortgage assets to their expected values qualify as a quick fix?