Jobs for Americans: Which states will take longest to rebound?

Unemployment, which recently hit a 26-year high of 10.2% nationwide, won't begin to show signs of improvement until the second quarter of 2010. Even then, it will take until 2013 for half the states to regain their previous peak employment levels. That's according to analysis from economic forecasting firm IHS Global Insight.

IHS argues that the U.S. economy is recovering, albeit at a glacial pace. It sees Texas, Virginia, Arkansas, Montana and North and South Dakota returning to their previous peak employment levels in 2010 to 2011. Montana and the Dakotas have benefited from strong commodity and agricultural prices. They also didn't have any housing bubble to speak of.

New York, Pennsylvania and New Hampshire are among the states that will make a comeback in 2012, while California, New Jersey, North Carolina and Georgia are among those expected to recover the following year. IHS doesn't expect Connecticut, Ohio and Michigan are laggards to recover until after 2015 (see map below).

"Because the labor force will have expanded further over that time, the unemployment rate will only then edge below 8%. Ten states, including California, Illinois, Michigan, and Ohio, will still be suffering with unemployment in excess of 9%," according to IHS.

In other words, the recovery isn't going to feel like one. The official unemployment rate doesn't count people who have given up looking for work or are employed only part-time. Former Labor Secretary Robert Reich recently pegged the "unofficial" unemployment rate at as high as 20 percent.

For instance, Applied Materials (AMAT), Electronics Arts (ERTS) and Adobe Systems (ADBE) all announced layoffs this week, even as many economists continue to argue that the U.S. economy is showing signs of a rebound. But many businesses are worried that the economy remains vulnerable to additional downturns.

"Companies are waiting to see whether the recovery is taking hold before they start hiring new workers," says Dave Iaia, U.S. Regional Managing Director at IHS Global Insight, in an interview.

States such as Connecticut have been hobbled by layoffs in the aerospace sector. Michigan and Ohio are getting pummeled by the automakers' woes. Nevada's recovery has been crimped by the slowdown in the casino industry but it has great capacity to add new jobs, according to Iaia.

The line between the good times and the bad times is proving surprisingly thin. And for many states, the bad times seem likely to linger for far too long.
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