Georgia joins economic ‘most stressed’ list for the first time
Despite a reduction in economic stress for much of 2010, the end of the year saw an increase in stress throughout the country. High foreclosure rates are likely the main contributor to the increased economic stress, despite a drop in unemployment, economists say. In Georgia, high foreclosure and bankruptcy rates combined to make the state one of the top five most stressed for the first time.
From November 2010 to January 2011, the national unemployment rate decreased from 9.8 percent to 9 percent, which seems like it would decrease economic stress. However, the real estate market is still struggling to recover in most states, which outweighed the stress-reducing factor of low employment.
Economic stress is calculated on a scale of one to 100 based on county unemployment, foreclosure and bankruptcy rates. The threshold for stress is relatively low: a county need only score 11 or more to be deemed ‘stressed’. Among the 3,141 U.S. counties, approximately 40 percent were considered stressed in December, which is an increase from November.
Stress lessened in all but five states during 2010, which is a good sign. Unfortunately, with high foreclosure, bankruptcy and unemployment rates, Georgia is one of those five with a stress level of 14.5. The other four ‘most stressed’ states are Nevada, Florida, California and Arizona.
Currently, Georgia has a 2.2 percent bankruptcy rate, which is greater than all other states except one (Nevada). Georgia also has the seventh-highest foreclosure rate, which stems from the state’s real estate boom and subsequent crash. “Bankruptcies and foreclosures are the side effects of the damage from the real estate bust,” said Georgia State University economist Rajeev Dhawan. “First, you have the real estate problem, and then it’s going to spill over into bankruptcies and foreclosures. That is what has been happening in Georgia.”
Source: ABC News, “AP Analysis: Foreclosures Raise US Economic Stress“, Martin Crutsinger and Mike Schneider, 8 February 2011
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