Economic Recovery Picking Up Pace Across U.S. Counties

Many places that initially struggled to bounce back from the recession are finally seeing progress, but more than 90 percent still haven't fully recovered.
by | January 18, 2016
One of the main drivers of the economic expansion over the past year is a rise in home prices. (AP/LM Otero)

The economy in 214 counties this past year has fully recovered to pre-recession levels, almost three times the number that had bounced back by 2014.

Still, overall progress has been slow. A staggering nine out of 10 counties have yet to achieve full recovery nearly six years into the national economic expansion.

The data comes from a new report by the National Association of Counties (NACo), which analyzed economic data for the nation's more than 3,000 counties. The analysis considered four measures: job totals, unemployment rates, economic output (GDP) and median home prices. A full recovery means that a county has reached its pre-recession peak (or its low, in the case of unemployment rate) in all four categories.

This is the third straight year NACo has released such a report, and the data for 2015 marked an important change. Whereas the best-performing counties had previously been concentrated in the center of the country, particularly in oil states, this year’s data indicates a more spread-out recovery.

For the first time, counties from California to Ohio to Vermont are showing a full recovery from the recession. Also, 17 of the 126 largest counties -- those with more than 500,000 residents -- are part of this group.

The main drivers of the expansion over the past year are decreasing unemployment rates and a rise in home prices. The number of counties that closed their unemployment gap more than doubled between 2014 and 2015, bringing that total up to 462 counties. Home price recovery saw a similar jump.

“This is great news, but it’s still a very small number,” said Emilia Istrate, NACo's research director. “This explains why most Americans aren’t feeling the good numbers you see nationally.”

Istrate also noted that a county’s improving economic performance doesn't always translate to funding more services, such as repaving roads or shoring up county school budgets. That's because a rise in home prices, for example, doesn’t mean a county is collecting more in property taxes. Most county assessments lag behind the housing cycle. One county in Texas has a cycle of eight years, said Istrate. In addition, 43 states have limitations or caps on how much property tax collections can increase year-to-year.

A full 16 percent, or 478 counties, haven't yet recovered on any of the four indicators. Most of these jurisdictions are in the South and Midwest. Three quarters of them are rural, with fewer than 50,000 people. Of the remainder, all but seven are mid-sized counties (with populations between 50,000 and 500,000).

Job growth and GDP have also stalled in 2015, particularly within states that are reliant on oil production. More than half of the county economies in oil and gas territory saw economic output declines.

NACo also analyzed wage growth compared with productivity and found that nearly 1 in 3 counties saw productivity rise but saw real wages decline between 2009 and 2014.

“In states like New Jersey or North Carolina, this was the case for the majority of county economies,” said Istrate. “So we are seeing that the recovery is spreading, but it’s creating an uneven geography of opportunity around the country.”

A Brookings Institution report also released last week noted that income inequality is being driven by falling incomes for the poorest households. That study found that income inequality is increasing in large U.S. cities and metropolitan areas.

"Household income inequality in the United States is higher today than before the Great Recession," according to the Brookings authors. "Most places mirror that overall trend, though by varying degrees."