Meredith Whitney’s “Great Migration”
Since I write about muni issues every day, I couldnât find where Meredith Whitney had covered much new ground in her book, Fate of the States: The New Geography of American Prosperity, which is released June 4. It felt like the book had been written over a year ago and was not in tune with current fiscal realities. For example, on page 117 Whitney says, âWe have reached a breaking point for some states. There is no more money.â The only state that I know where that might apply is Puerto Rico. In fact, numerous states are seeing modest surpluses this year and some are rebuilding rainy day funds.
Bloombergâs municipal columnist Joe Mysak drove straight to the heart of Whitneyâs thesis:
Weâre all moving to North Dakota.
Or South Dakota. Or somewhere out there in the middle of the country.
This is the thesis of Meredith Whitneyâs âFate of the States: The New Geography of American Prosperity.â The countryâs âcentral corridor,â largely untouched by the housing bust, is going to drive the economy for decades to come.
The âsmart money,â she writes, âis flocking to states with lower tax burdens and less strained budgets.â
Whitneyâs contention that the population is moving to the central corridor of the U.S. is not supported by any data she can point to. Forbes wrote:
In fact, most of the top-10 states people are leaving are located in the Northeast and Great Lakes regions, including Illinois (60 percent), New York (58 percent), Michigan (58 percent), Maine (56 percent), Connecticut (56 percent) and Wisconsin (55 percent). According to Stoll, this reflects a consistent trend of migration from the Frost Belt to the Sun Belt states based on a combination of causes.
The data show that people are moving from the north to the south of the U.S. A county-by-county analysis of Bureau of Labor Statistics data performed by municipal data firm Lumesis is shown in the map below. Job growth over the past year is happening in numerous parts of the country. Itâs distributed among low and high tax rate states. This undermines Whitneyâs contention that new employment will be concentrated in low-tax areasÂ (California had strong job growth, though it is a high tax state).
Whitneyâs book may be a useful intro for those who have not followed the fiscal struggles of state and local governments over the past five years. At 206 pages itâs a fast read. But I would encourage readers to view it as the opinion of one analyst who has often been wrong. In one memorable case, the Nevada State Treasurer Kate Marshall went after Whitney for her errors in calculating the liabilities of her state.
Muniland is a complex place with 50 micro economies, political practices and differences between state laws and constitutions. The best comment about Whitneyâs book that I read was from fiscal analyst Kil Huh:
â Kil Huh (@KilHuh) June 3, 2013