The gap between Nevada's and North Dakota's unemployment rates is a staggering 10.7%. Among these best and worst, the usual suspect have remained mostly the same. You can see that the top three states' rates, which all housing bubble-driven, failed to improve in December.

2010's Winners and Losers

December's data also allows us to see how states did for the entire year. Here were the best and worst performing states during 2010 (click to enlarge):

You can see that Colorado and Nevada both saw their unemployment rates increase by a dramatic 1.5% during the year. That's much worse than other states, as only those five even saw their rates rise by as much as 0.5%.

On the other hand, good things are happening in Michigan, as its economy has been improving very rapidly. The other states shown also experienced significant job growth during the year, though it's hard to identify any underlying trait explaining the group's solid performance.

Nevada's Woes

So how bad are things in Nevada? The chart provides the big picture:

December's 14.5% rate was the highest over this time period, which is as far back as BLS has state-by-state data. That probably means unemployment in Nevada hit its highest rate since the Great Depression. And remember, this doesn't take into account jobless residents who are discouraged or have left the workforce for some other reason, but ultimately need a job.

If Nevada's unemployment rate rises any further, it will set a new high for the highest statewide rate during the recession. Its December level matches the highest rate hit thus far, by Michigan in December 2009. Clearly, the harm done by the housing market collapse in Nevada has made its labor market recovery very difficult. While most states are beginning to see improvement, it hits new lows.

Michigan's Recovery

Speaking of Michigan, it's the biggest success story. Its rate has declined an impressive 2.8% year-over-year. In December alone, it declined by 0.7%. Here's its chart:

Its state rate never reached its high of 16.8%, hit in 1982, but it got pretty severe a year ago at 14.5%. After peaking at that time, its rate has begun to decline fairly steeply, however. No state has shown near as much improvement.

So what's its secret? It probably has something to do with the auto companies. After all, that's Michigan's biggest industry. Since the bailout, both General Motors and Chrysler have been improving. Ford has also been performing better. The Detroit-three have reported hiring over this period, which has likely helped to stimulate economic activity, in general, and other firms in the area that support the auto industry, in particular.



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