Unemployment Rate and Residential Construction Growth, by State

As a followup to my earlier post, Housing Starts and the Unemployment Rate, Professor Amir Sufi sent me this graph of the unemployment rate and residential construction by state.

Credit: Professor Amir Sufi. "This maps the unemployment rate in a state in 2010q4 against the percentage drop in construction of new residential units from 2005 to 2010 (i.e., [new units constructed 2010 ? new units constructed 2005]/new units constructed 2005)."

Click on graph for larger image in graph gallery.

Of course cause and effect can run both ways: A higher unemployment rate probably means less residential construction, and less construction would mean a higher unemployment rate (so areas with high levels of construction during the boom - like Florida, Nevada, Arizona and California - would see a higher unemployment rate during the bust).

Note: I've excerpted before from papers by Sufi. Here is a recent Fed Letter with Atif Mian: Consumers and the Economy, Part II: Household Debt and the Weak U.S. Recovery

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