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Big cities are still waiting for economic recovery

/ Source: msnbc.com

The recovery made only slow advances in October and was still skirting most major population areas in the U.S., according to new readings of the Adversity Index from and msnbc.com.

Nearly one in three metro areas have started to recover, but virtually none of the nation's biggest cities. (The full list is below.)

One likely reason is that the nascent economic recovery started in the nation's midsection, from south to north, a part of the country that has relatively few big cities. The oil and gas industry has helped states from Texas up through the Great Plains. Heavily urbanized states such as New York and California were among the hardest hit in the recession and are proving slower to recover. Areas with the largest runup in home prices have been the slowest to recover, economists say, particularly Nevada and Florida.

Out of 384 metro areas in the nation, 118 were in recovery, or 31 percent, according to the October Adversity Index. That's up from 100 metro areas in September and 79 in August, the first month when any areas showed a rebound beginning.

A much larger group, 264 areas, had a "moderating recession" in October, meaning their economies were still shrinking but not so severely as earlier this year.

That leaves two metro areas still spiraling downward in a full recession, both of them in Nevada: Las Vegas-Paradise and Carson City.

Each month, the Adversity Index uses government data on employment, industrial production, housing starts and home prices to label each state and metro area as expanding, at risk of recession, in recession or recovering. The index was developed by msnbc.com and Moody's Analytics, which .

In most states the recovery has so far not taken hold in the largest metro areas. In New York, for example, the three areas in the recovery category are Buffalo-Niagara Falls, Ithaca and Utica-Rome. In Tennessee, the only two are Clarksville and Cleveland. Five metro areas are in recovery in North Carolina, but not Charlotte.

There were 20 areas that moved into the recovery category in October: Albany, Ga.; Amarillo, Texas; Birmingham-Hoover, Ala.; Buffalo-Niagara Falls, N.Y.; Charleston-Summerville , S.C.; Clarksville, Tenn.-Ky.; Dover, Del.; Dubuque, Iowa; Eau Claire, Wis.; Fayetteville, N.C.; Gainesville, Ga.; Laredo, Texas; Morgantown, W.Va.; Mount Vernon-Anacortes, Wash.; Norwich-New London, Conn.; Pensacola-Ferry Pass-Brent, Fla.; Salisbury, Md.; Sheboygan, Wis.; Waco, Texas; and Wausau, Wis.

Two areas shifted from the recovery category into the recession category: Dallas-Plano-Irving, Texas and Kalamazoo-Portage, Mich.

"Recovery" doesn't mean that an area's economy is above where it was at the beginning of the recession, just that the area has begun to dig its way out of the hole.

No metro area yet is shown in "expansion," the most positive category; that label is triggered when a metro area's economy grows past its previous peak. Most of the recovering areas are far from that level.

First signs of manufacturing gains
October was the first month since November 2008 when any metro area showed an increase in manufacturing output. Nine of 384 areas posted gains: Wichita, Kan.; Sebastian-Vero Beach, Fla.; Seattle-Bellevue-Everett, Wash.; Crestview-Fort Walton Beach-Destin, Fla.; Savannah, Ga.; Tucson, Ariz.; Merced, Calif.; Lake Charles, La.; and Carson City, Nev.

Only 10 of 384 areas gained jobs: Kennewick-Pasco-Richland, Wash.; Sandusky, Ohio; Hot Springs, Ark.; McAllen-Edinburg-Mission, Texas; Iowa City, Iowa; St. Joseph, Mo.-Kan.; Jonesboro, Ark.; Ocean City, N.J.; Lynchburg, Va.; and Bethesda-Rockville-Frederick, Md.

By contrast, 115 areas showed increases in housing starts.

‘Play’ the index
Here are several ways to explore this month's Adversity Index:

  • An
  • The updated index will be published every month at . There is a lag of about six weeks, so November data will be out in January.
  • An tells how the Adversity Index assesses the economy.
  • This shows which counties are within each metro area.

Regional outlook from Moody's AnalyticsIn its monthly regional forecast, Moody's Analytics found that the economy is recovering first in the central plains, where unemployment has stabilized, and that the recovery is only starting to spread outward.

"Many Plains and nearby Mountain state economies are now recovering," wrote Steve Cochrane, managing director at Moody's Economy. "The next region likely to turn the corner will be the Southeast, except Florida and perhaps Georgia, where housing markets remain so uncertain." High numbers of bank failures in the Southeast are also a concern, he wrote.

State by state
Looking at the state-level data, there was only one state that moved into the recovery category in October: Alabama. It joined Alaska, Idaho, Indiana, Iowa, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, South Dakota and Washington, D.C. Within those states some metro areas are still in recession.

Nevada was the only state left classified as being in a full recession in October, according to the Adversity Index. All other states were in a moderating recession.

Metro areas in recoveryHere are the 118 metro areas where the Adversity Index shows a recovery under way in October. Several of the metro areas cross state lines and are listed more than once.

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The view from ElkhartAmong the 118 recovering areas is Elkhart, Ind., where

Elkhart's economy started to improve in August, based on comparisons with figures posted six months earlier.

But if you compare Elkhart's numbers with a year earlier, or go even further back, it's clear that it may take a long time to return to the highs of the past. According to the index, Elkhart was one of the first areas outside of Michigan to slip into recession when its downturn began in December 2006.

Here are Elkhart's Adversity Index numbers for the three-month period ending in October, compared with a year earlier, along with the biggest losers and winners among all metro areas: