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In swing states, economies mostly looking up

By Douglas Hanks, The Miami Herald –

MIAMI — In a state President Barack Obama needs to win, the incumbent should be pleased by the sales report from Tom Sarach’s staffing firm in southeast Virginia.

“Last year was a record year,” said Sarach, president of Reliance Staffing, which has four offices in the Hampton Roads area. “This year we’re doing even better.”

The growing demand for Sarach’s temporary workers helps explains Virginia’s 5.7 percent unemployment rate, far below the national average of 8.3 percent. Home to a large chunk of the federal bureaucracy, Virginia’s relatively strong labor market helps explain Obama’s narrow lead in Virginia as the national economy recovers at the slowest pace since the 1930s.

“What’s making Obama much more competitive here is the economy,” said University of Virginia political scientist Larry Sabato, the leading political guru in a state seen as a prime battleground in the 2012 election. “If you have economic conditions in Virginia that are this good and he can’t win, how can he win elsewhere?”

With polls tight and the national recovery limping along, state economies could provide the difference in Mitt Romney’s bid to unseat Obama. While the U.S. unemployment rate gets the most attention from commentators and candidates, it’s the state-level data that best reflect what voters face on a daily basis.

To get a more nuanced look at the economy’s role in the presidential election, The Miami Herald analyzed eight economic indicators for the 14 states where polls are the closest. The exercise was designed to roughly answer the question Ronald Reagan made famous in 1980 when unseating another Democratic president battling a battered economy. “Are you better off than you were four years ago?”

No swing state could honestly answer yes to that question; none has seen hiring return to where it was in 2008. But some clearly have done better than others, and the bulk of them are outpacing the country in some key metrics.

Ten have lower unemployment rates than the current national average, which hit 8.3 percent in July. The federal labor agency will release state-level unemployment reports for July on Friday. Only three swing states saw their unemployment rates increase more than the nation’s did during the last four years.

Eleven have lower foreclosure rates than the nation, and eight have seen stronger property values than the national average since 2008. And since the end of 2008, eight swing states have watched their economic growth outpace the nation’s.

“If the economies in the swing states were doing worse,” Sabato said, “I would say Obama would be cooked.”

Not all of the numbers are rosy for swing states, and none shows a truly healthy economy compared to where it stood before the recession. Only two are adding jobs at a faster rate than are employers nationwide. Using a Federal Reserve index of economic output, only three saw growth pick up at a faster pace than the national average this year.

On one end of the swing-state economic spectrum are two clear stand-outs: Virginia and Iowa.

For Iowa, the latest unemployment rate of 5.2 percent is even lower than Virginia’s, and just a point higher than where it was in November 2006. But the standout statistic comes from the housing market.

A home-price index tracked by the Federal Housing Finance Administration shows that nationally, property values dropped 9 percent during the last four years. But alone among the swing states, Iowa actually posted a tiny bit of appreciation since the Obama election: Values are up 1 percent. Experts see hardship coming from the ongoing drought, but for now the housing industry is looking far stronger than the rest of the battleground states.

“We’re not seeing a lot of problems with appraisals,” said Ken Clark, a Coldwell Banker broker and president of the Des Moines Association of Realtors. “We have a good market. We don’t have a great market, but we have a good market.”

Far on the other end of the battleground spectrum sit Nevada and Florida, two swing states still suffering the consequences of burst housing bubbles, and whose economies are trailing the national recovery in most categories.

Florida’s property values have dropped 16 percent in the last four years, a mere slump compared to Nevada’s 33 percent plunge. Florida still suffers from a 12 percent foreclosure rate, more than double Nevada’s.

The two states haven’t come close to erasing the damage of the recession in terms of economic output. Florida’s GDP is down 4 percent compared to 2008, while Nevada’s is down 6 percent. No other swing state comes close to such a weak overall performance during Obama’s first term.

Job News USA, a company based that runs job fairs across the country, recently saw record attendance at a hiring fair near Fort Lauderdale. About 3,200 people crammed into the Signature Grand’s banquet hall last month to interview for about 600 openings. “A lot more people are getting desperate in their job search,” said Tiffany Price, general sales manager for the South Florida area. “The people five years ago who would turn their noses up at job fairs now are coming out.”

Obama leads Romney by an average of 3.5 percentage points in the national polls, according to a daily summary by Real Clear Politics, and he is ahead of Romney in 12 of the 14 swing states analyzed by The Miami Herald. Romney only leads Obama in Missouri and North Carolina, two swing states with economies that are mostly underperforming the others. Still, Obama is five points ahead in Nevada, easily home to the worst performing swing-state economy.

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