Great Recession took deep toll across U.S. states

Thu Jun 21, 2012 11:53am EDT

Related Topics

* South, West hit the hardest; Northeast fared best

* Study measured population's income losses

* Poverty, college degrees, unemployment top factors

* Economic insecurity on the rise since 1986

By Susan Heavey

WASHINGTON, June 21 (Reuters) - The nation's recent recession had a "broad and deep" impact across the United States, but certain states such as Florida and California were particularly hard-hit, according to a report released on Thursday.

The study, led by Yale University political science professor Jacob Hacker, found that while the U.S. Northeast was largely spared from the economic fallout in the years after the Great Recession, the U.S. South and West were hit harder.

Researchers said their study is the first state-by-state look at the how the downturn affected economic security and household incomes. It was paid for by the Rockefeller Foundation, a global nonprofit organization focused on relieving economic inequality.

States in the Midwest, a large industrial hub, saw a slower economic erosion from 2008 to 2010, the findings showed. The recession officially ran from late 2007 to mid-2009.

"No part of the nation was spared. Nonetheless, some states were hit particularly hard," the report said.

Hacker's team ranked the recession's impact on states by developing a measurement tool based on government economic data, called the Economic Security Index.

The index represents the percentage of the population who experienced a substantial financial loss from one year to the next. Specifically, it shows the share of Americans who experienced a financial loss of 25 percent or greater due to either a decline in income, an increase in medical spending or both.

States with the worst economic losses from 2008 to 2010 were Florida, Georgia, Alabama, Mississippi, Arkansas and California. Among the states with the least impact were Vermont, Connecticut, New Hampshire, Rhode Island, Massachusetts and Maine.

Researchers found several factors linked to a state's hardship, including poverty rates, the number of college graduates and unemployment rates, although the role of employment was somewhat murky.

Some states such as Mississippi and Arkansas saw higher levels of insecurity even though they had "relatively modest declines in employment," according to the report. Other states, including Michigan and Utah, had lower levels of insecurity despite higher unemployment.

While the recession hit many states hard, the problem has been growing for decades, researchers said. Their data looked back as far as 1986 and found a substantial rise in economic insecurity since then.

The longer-term findings indicate "the broad vulnerability of Americans of all walks of life and in all parts of the nation to large income losses," Hacker and his team wrote.

Although some states fared better than others, "residents of all states are facing very high levels of insecurity," they said. "The relatively better performance of a few regions does not diminish the need for an effective federal response." (Editing by Leslie Adler)

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