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Regional economist foresees slowdown in second half

By Andrea Damewood
Published: July 7, 2010, 12:00am

Clark County is among the two-thirds of U.S. counties that saw economic improvement in May, according to an analysis by The Associated Press. But one local economist warns not to put too much stock in the numbers.

“I would say — and most economists would agree — things have been getting better in first half of the year,” said Scott Bailey, regional economist with the Washington Employment Security Department. “The economy is almost certainly going to slow down in the second half.”

Clark County’s AP Economic Stress Index rating in May was 15.52, down from 16.46 in April, largely on the back of a lower unemployment rate. A lower stress index number signifies a healthier economy. The best-off county in the U.S., Ward County, N.D. received a rating of 3.35, and the worst-off county in the U.S., Imperial County, Calif., received a rating of 31.74.

Although Clark County falls roughly between those two extremes, it is worse off than the country as a whole — the national stress index was 10.3 in May. Clark is also the most economically stressed county in the state.

Multnomah County, Ore., clocked in at a rating of 12.42.

The Economic Stress Index is based on foreclosures, unemployment and bankruptcy rates. The AP considers counties distressed that have a score of 11 or higher.

Weakness of index

Economist Bailey said that one weakness of the index is that the AP does not use seasonally adjusted unemployment rates, meaning it’s missing a part of the puzzle.

More jobs are created in the summer, as construction and other warm weather work heats up. (Work in a few areas, such as education, slows in summer). But those changes don’t last.

To see the underlying trend, economists perform seasonal adjustments on unemployment figures, Bailey said. If temporary jobs are taken out and there’s still a lower unemployment rate, that’s a better way of telling if there’s been overall job growth, he said.

The AP index also doesn’t measure people who have had their hours cut or people who have stopped paying their mortgages and are waiting for the foreclosure papers, Bailey noted.

Bailey said he doesn’t see the economy “double dipping” back into a recession, though Clark County is likely to join the rest of America in improving more slowly in coming months than it did at the start of the year.

State and local government cutbacks and layoffs will slow spending in key areas such as construction, social services and contracting.

The index is “a decent enough snapshot over time,” Bailey said. “But saying it got better, I don’t know about that.”

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