by Calculated Risk on 9/27/2005 11:08:00 PM

Georgia has an unemployment problem. The Atlantic Journal Constitution reported on a job fair today:

By noon Tuesday, signs of a troubled Georgia job market swollen with storm evacuees were unmistakable inside the massive Georgia World Congress Center.

At a job fair designed to help victims of Hurricane Katrina, organizers had to block the doors to newcomers after the event reached its limit of 15,000 job-seekers. It was still three hours before registration was expected to end.

The crowd was so big at the United Way Job Fair Tuesday that the 180,000 square feet at the Georgia World Congress Center couldn't hold everyone, so some job seekers were turned away. The limit was 15,000, and most of those, say employers and job seekers, were from Georgia.

Yet the majority of those who made it inside the center, and those who were stuck outside, were not storm evacuees. They were Georgia's jobless — a telling indicator of the state's serious problem with unemployment.

"A Category 5 economic storm is brewing in Georgia, and that's not hyperbole," said Michael Thurmond, commissioner of the Georgia Department of Labor. "The job fair today presents additional evidence as to how difficult the job market is in this state."

Click on graph for larger image.

The job picture is concerning in Georgia. The unemployment rate is rising and has reached the highest level since the recession of the early '90s.

Part of the problem is that Georgia's housing market has underperformed during the housing boom. According to the OFHEO House Price Index, Georgia's housing has only appreciated 12.4% since the end of 2002. This compares to the national average of 26.1%.

So Georgia probably hasn't seen the same housing related employment boom as much of the nation. This is a chicken and the egg problem. Housing might be weak because of relatively weak employment; employment might be weak because of relatively weak housing.

Perhaps partly because of the weak labor market, and as buyers stretch to afford a home, Georgia leads the nation in IO mortgages:

Georgia has become the national leader in an increasingly popular but controversial type of mortgage that lets borrowers postpone payments on the loan principal for years.

More than half of mortgages last year in Georgia were interest-only, compared with fewer than one-third nationwide ...

So it isn't surprising that with a relatively weak labor market, a high concentration of creative loans and minimal house price appreciation:

"Georgia ranked fourth in the nation in the number of properties in foreclosure".

But what comes first? Weak employment or weak housing? And as the housing market slows, will Georgia's problem become a national problem?