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Signs of an improving economy in Patchwork Nation

Dante Chinni

Posted: 10.28.2009 / 7:52 AM PDT

For months now, the question behind every new piece of economic data has been obvious: Are things getting better or worse?

This month’s Economic Hardship Index, for the first time, may provide a positive answer. By almost every measure in October, the index paints an improving picture in most of our 12 community types. Patchwork Nation calculates the index using economic indicators that include gasoline prices, foreclosures, and unemployment.

The average hardship score for all the community types dropped to 22.58 in October from 24.76 last month. The hardship scores fell in every one of the 12 community types except the “Mormon Outposts.” Those communities, which are primarily in the West, were hurt by gasoline prices and foreclosure rates that rose slightly.

Unemployment, meanwhile, fell in all our community types.

It’s probably still too early to declare that the economy is on the road to recovery. But these figures show that at least for this month, things are looking better in many ways.

Differences from place to place

Even in this month’s scores, however, there are clear differences among community types.

Rural, agricultural “Tractor Country” counties are again seeing the lowest hardship score – 19.74 in October. Those counties stand apart in a few ways: an extremely low unemployment rate of 5 percent and an almost nonexistent foreclosure rate of 0.15 per 1,000 homes. Those numbers are down from last month’s, and they are by far the lowest in any of our community types.

The hardship index measures short-term changes in economic distress – so small changes from month to month can mean movement in the scores. That’s why the “Evangelical Epicenter” counties experienced a drop in their hardship score, from 24.60 in September to 19.89 in October. This month’s score took into account that in “Evangelical Epicenters,” the August unemployment rate declined slightly and September gasoline prices fell by about 5 percent. (These statistics are the most recent available for calculating the October scores.)

A similar thing happened in the wealthy and educated “Monied ’Burbs.” These communities saw a drop in foreclosures and slight drops in the unemployment rate and gasoline prices to earn a hardship score of 19.95 this month.

However, the “Mormon Outposts” did not see the same kinds of improvements. Their hardship score went from 24.10 in September to 31.55 in October. That’s partly because gasoline prices in the West have been so high – particularly in Utah and Idaho, where many of the “Outposts” are located.

Troubles remain

Even in some places where things are looking better, they are not looking great. Take, for instance, the small-town “Service Worker Centers.”

The economic outlook in these communities improved only marginally in this index – a score of 25.43 versus 25.97 in September. Foreclosures there rose by 12 percent between July and September. Unemployment dropped in September, but it is still high – at 10.13 percent.

Another community type seeing limited improvement is the big-city “Industrial Metropolis.” While its hardship score went down to 23.43 in October – from 26.66 in September – its unemployment rate has hardly moved: In August, it was 10.29 percent, and in September, it was a barely better 10.25 percent.

The real improvement in the “Industrial Metropolis” came from a drop in foreclosures – down about 9 percent since July.

What does a recovery look like?

In the coming months, the numbers within the hardship index – gasoline prices, foreclosures, and unemployment – may be as interesting to watch as the index itself.

If indeed the United States is in the early stages of an economic recovery, that recovery will not be uniform. Our different community types will see different sorts of improvements, and some will see more than others. The numbers in the index will help show what is going on.

The differences in what our community types are experiencing economically will play a big role in coming policy debates – whether aid is needed, how much, and where. The differences will also play a big role in the elections of 2010.