According to a report by the Associated Press, the increasing number of homes for sale due to foreclosures eclipsed positive unemployment numbers in December, showing the U.S. economy is still severely stressed.
The AP's Economic Stress Index indicates foreclosures rose in 33 states to end 2010. In particular, four states – Utah, Nevada, New Jersey and Arizona – experienced the harshest rate of filings in December.
Based on unemployment figures, foreclosure activity and bankruptcy rates, the index scored every county in the U.S. with a rating between 1 and 100. The source says the higher the rating, the more economically stressed a county is. A rating of 11 or higher, according to the news source, signifies a county has a poor economy.
The average rating for counties in December was reportedly 10.4, a hike from November of 0.1. Colorado, Florida, Georgia, Utah and Nevada experienced an increase in economic stress for all of last year, the report shows, while every other state's economic woes eased.
Despite the economic strain on many Americans, the source states housing experts predict the economy will gain steam by the end of the year with the help from a cut to Social Security taxes, which will add more money into workers' paychecks, as well as higher employment. Last year, manufacturing employers reportedly added 136,000 workers last year, the first net increase since the late '90s.
Nevada, with a stress score of 22.56 in 2010, was easily the hardest hit state economically, followed by Florida, with a score of 16.47, and California, which had a rating of 16.36. Conversely, the healthiest states in the country came from New England and the Midwest. North Dakota, South Dakota, New Hampshire, Nebraska and Vermont had the lowest ratings last year.
Unemployment numbers were outweighed by the high volume of foreclosures, but the report says fewer jobless claims may lead to overall improvements in 2011. With a decrease in unemployment of 0.8 percent between November and January and the Social Security tax cut, the report says more consumers could start spending more this year.
"The tax deal provides the economy with some significant juice that will lead to better growth, better job creation and lower unemployment," Mark Zandi, chief economist at Moody's Analytics, said in the report.
In December, states in the West region had the most stressed economies. With some of the highest numbers of foreclosures and bankruptcies, including California and Nevada, recovery is still at least a year away, the report states. Four of the five most-stressed counties in the country last year came from those two states.
In the South, Georgia made the Index's list of the five most-stressed states, replacing Michigan. Rajeev Dhawan, an economist at Georgia State University, said the housing bust is the main cause of economic troubles for many states since the recession began.
"Bankruptcies and foreclosures are the side effects of the damage from the real estate bust," Dhawan said in the report. "First, you have the real estate problem, and then it's going to spill over into bankruptcies and foreclosures. That is what has been happening in Georgia."
Foreclosures, according to the source, are expected to rise in many states this year. However, unemployment continues to slide in throughout the U.S. The Bureau of Labor Statistics reports the unemployment rate in January was 9.0, down 0.4 percent from December. More than 36,000 jobs were created during the month, the report shows.
