Counties Stressed by Foreclosure, Bankruptcy and Unemployment

In an Associated Press study of the stress effects of foreclosure, bankruptcy and unemployment on the nation’s counties, nearly 40 percent of all counties had a stress index higher than 10 in February.

The stress index is a significant increase from the only 6.5 percent of counties with an index higher than 10 in September 2008.

The AP Stress Index uses data on bankruptcy, unemployment and forclosure to estimate the economic effects of the economic downturn on over 3,000 counties in the U.S. using a scale of one to 100.

In March, the percentage of counties with a stress index higher than 10 dropped to 38 percent.

Since December 2007, Elkhart County in Indiana suffered the highest increase in stress among counties with over 25,000 residents as its unemployment rate soared from 4.7 percent in 2007 to 18.8 percent last March. Its stress index of 6 in the last month of 2007 soared to 21 points in March 2009.

Meanwhile, Imperial County in California experienced the highest level of stress among counties in March with over 25,000 residents with its index of 28.1. Across the county, over 25 percent of employees have lost their jobs, the number of people making bankruptcy filings is soaring and one unit in every 31 housing units is being hit with a forclosure filing.

Wachovia Corp senior economist Mark Vitner said the stress map is getting gloomier and gloomier as the combination of unemployment, bankruptcy and foreclosure spreads across the country.

He explained that the forclosure wave started the economic downturn, but it is the unemployment wave that is speeding up the slide.

During the first months of the foreclosure crisis, job losses occurred in industries linked to the housing sector, such as furniture producers and home fixtures manufacturers. Over the next several months, layoffs were happening in all industries.

The unemployment rate in Sheboygan County, Wisconsin soared from only 4.3 percent during last year’s October to ten percent in March due largely to layoffs by kitchen parts maker Kohler Co.

In the timber towns of Oregon and California, lumber mills have been laying off workers to cut costs. Wood products manufacturer Weyerhaueser Co. has already closed its mills in Dallas, Oregon and in Wright City, Oklahoma.

Since the recession started in December 2007, 5.1 million job slots have been cut down, including an estimated 3.3 million jobs eliminated since November last year.

Vitner and other economists said the second forclosure wave will be caused by unemployment as the first forclosure wave from subprime lending is already bottoming.

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