Meredith Whitney’s “Great Migration”
Since I write about muni issues every day, I couldn’t 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, “We have reached a breaking point for some states. There is no more money.” 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.
Bloomberg’s municipal columnist Joe Mysak drove straight to the heart of Whitney’s thesis:
We’re all moving to North Dakota.
Or South Dakota. Or somewhere out there in the middle of the country.
This is the thesis of Meredith Whitney’s “Fate of the States: The New Geography of American Prosperity.” The country’s “central corridor,” largely untouched by the housing bust, is going to drive the economy for decades to come.
The “smart money,” she writes, “is flocking to states with lower tax burdens and less strained budgets.”
Whitney’s 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. It’s distributed among low and high tax rate states. This undermines Whitney’s contention that new employment will be concentrated in low-tax areas (California had strong job growth, though it is a high tax state).
Whitney’s 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 it’s 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 Whitney’s book that I read was from fiscal analyst Kil Huh:
— Kil Huh (@KilHuh) June 3, 2013