New unemployment numbers for the state of Alabama came out on Friday, and they were not good. According to the Associated Press, Alabama’s unemployment went up to 8.5% in August. That represents over 183,000 unemployed citizens in the state. The numbers were released Friday by the state Department of Industrial Relations.
August marks the fourth straight month in which the unemployment rate has gone up. The rate reached a low of 7.2% in April, and then began to tick up in May, reaching 7.4%. In June, the rate was 7.8%, and in July it jumped to 8.3%. A year ago, the unemployment rate in the state stood at 9.1%, so we are still better off than we were at that time.
A number of factors could be leading to the rising unemployment. Budget cuts by Governor Bentley are taking a chunk of money out of the state economy. Similar austerity measures in Europe have led to a recession across the pond. The stimulus package passed by President Obama possessed a lot of money for the states, money which is now gone. The lack of federal backup could be putting the pinch on Alabama as well.
Whatever the cause, it could get worse in the coming months. The looming fiscal cliff, a combination of federal spending cuts and tax increases, could send the entire country hurdling towards recession. Alabama could get hit particularly hard, because half of the spending cuts are going to be with the military. Alabama has many workers in the defense industry, particularly in Mobile County at Austal. If the defense cuts go through, those jobs could be lost.
With Congress unable to get anything done, it may be up to the state government to stimulate the economy. The economic outlook nationally is not terrible. Florida’s unemployment rate was unchanged in August. Something needs to be done on the local level to promote growth. Budget battles like the one in Mobile are indicative of the problem. They are fighting over whether or not to cut spending or raise sales taxes to fund the budget. In a weak economy, the worst thing you can do is cut spending.