‘Cautionary’ Drop in September Minnesota Unemployment Rate Is Largest in Decades

Department of Employment and Economic Development (DEED) Commissioner Dan McElroy and State Economist Tom Stinson were very cautious in their outlook of the Gopher State’s jobs situation after DEED released new numbers on Thursday that showed Minnesota’s seasonally adjusted unemployment rate had dropped from 8.0 percent in August to 7.3 percent in September.

But if, as Stinson warned, the September numbers might be a statistical anomaly, oh, what an anomaly they would be.

A Smart Politics historical analysis of unemployment data over the last four decades finds the 0.7-point drop from August to September to be the largest percentage point decline in jobless claims since at least January 1976.

The largest previous drop in unemployment during this span in Minnesota had been 0.5 points, when jobless claims fell from 5.0 to 4.5 percent in March to April of 2004.

In fact, on only seven occasions during the past 33+ years had the monthly unemployment rate fallen by 0.4 points or more.

Largest Percentage Point Reduction in Minnesota Unemployment Rate, 1976-2009

Rank	Period	From	To	Change
1	August-September 2009	8.0	7.3	-0.7
2	March-April 2004	5.0	4.5	-0.5
3	January-February 1976	6.2	5.8	-0.4
3	June-July 1981	5.9	5.5	-0.4
3	June-July 1983	8.0	7.6	-0.4
3	January-February 1984	6.9	6.5	-0.4
3	March-April 1987	5.4	5.0	-0.4
3	December 1977-January 1978	4.6	4.2	-0.4

Bureau of Labor Statistics seasonally adjusted unemployment data compiled by Smart Politics.

Moreover, the reported decline in jobless claims of 8.8 percent from August to September is also the third largest percent drop during this span. Only the March-April 2004 decrease in unemployment of 10.0 percent and the October-November 1998 decline of 9.7 percent have been larger.

Largest Percent Reduction in Minnesota Unemployment Rate, 1976-2009

Rank	Period	From	To	Change
1	March-April 2004	5.0	4.5	-10.0
2	October-November 1998	3.1	2.8	-9.7
3	August-September 2009	8.0	7.3	-8.8
4	December 1977-January 1978	4.6	4.2	-8.7
5	April-May 1997	3.7	3.4	-8.1
6	March-April 1987	5.4	5.0	-7.4
7	February-March 1978	4.1	3.8	-7.3
8	March-April 1998	2.8	2.6	-7.1
8	November-December 1998	2.8	2.6	-7.1

Bureau of Labor Statistics seasonally adjusted unemployment data compiled by Smart Politics.

To put further into perspective just how much of an anomaly a 0.7-point drop in unemployment is in the Gopher State, Smart Politics examined the frequency of percentage point changes in unemployment across the last 400+ months since January 1976.

In more than two-thirds of the cases (68.3 percent, or 276 of the 404 months), the unemployment rate either remained flat (105 months), declined by 0.1 points (92 months), or increased by 0.1 points (79 months).

In 95 percent of the cases (385 months) the unemployment rate ranged from a decrease of 0.3 points to an increase in 0.3 points.

This highlights why the September numbers are so eye-popping and a little too good to inspire Commission McElroy and State Economist Stinson to have strong confidence that they accurately reflect the current jobs situation in the Gopher State.

Frequency of Net Change in Minnesota Unemployment Rate, 1976-2009

Change	Months	Percent
-0.7	1	0.2
-0.6	0	0.0
-0.5	1	0.2
-0.4	6	1.5
-0.3	15	3.7
-0.2	40	9.9
-0.1	92	22.8
0.0	105	26.0
+0.1	79	19.6
+0.2	33	8.2
+0.3	21	5.2
+0.4	4	1.0
+0.5	5	1.2
+0.6	1	0.2
+0.7	0	0.0
+0.8	0	0.0
+0.9	0	0.0
+1.0	1	0.2

Bureau of Labor Statistics seasonally adjusted unemployment data compiled by Smart Politics.

However, in a sign that the Upper Midwestern economy generally might be heading in the right direction, it was announced on Thursday that the unemployment rate also dropped in South Dakota in September, from 4.9 to 4.8 percent, as well as in Wisconsin, from 8.8 to 8.3 percent.

The 0.5-point drop in Wisconsin was tied for the 7th largest on record in the Badger State since 1976.

Unemployment data will be released in the coming days in Iowa and North Dakota.

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