Murky prospect for Carter: more layoffs in key states

First came embarrassing double-digit inflation, followed by sky-high interest rates. Then came Billygate and flip-flops on key economic policies, including whether to balance or unbalance the budget.

Now, Mr. Carter faces another grim challenge. Job layoffs during the next several months are expected to take place in those very states that are most crucial to his re- election bid.

Specifically, private economists and government analysts expect the largest increases in unemployment during the weeks ahead to take place in New England, the Mid- Atlantic states, the upper Midwest from Illinois through Michigan, and the Southeast. These regions were all integral parts of the winning -- but very close -- electoral margin put together by Mr. Carter in 1976.

Ironically, the jobless rate is expected to remain lowest -- and rise only minimally, if at all -- in the regions of the United States where Republican presidential contender Ronald Reagan already enjoys his greatest strengtH. Those areas are the far West, the Mountain states, and the Southwest.

Unfortunately for the President, the increase in unemployment later this year in the East will come about despite an expected upswing in the economy.

The reason, according to economists, is that employment gains tend to lag behind a rising economy. Put another way, unemployment tends to increase even after an economy begins to come out of a recession, since subcontractors and smaller companies tend to have layoffs months after primary industries, such as autos and steel, have already had their worse periods of unemployment.

Moreover, after a series of initial gaffes on such matters as China, the theory of evolution, and the Ku Klux Klan, Mr. Reagan is expected to turn the focus of his campaign to unemployment and economic policy -- and what Republicans perceive as a record of failure on the part of the Carter administration.

Mr. Reagan met Sept. 4 with his top economic policy coordinating team, including Alan Greenspan, George Shultz, US Rep. Jack Kemp (R) of New York, and Walter Wriston, president of Citibank.

New unemployment figures for the month of August will be out Sept. 5. But no matter what the current figures, Carter campaign officials are known to be most concerned about the later September figures that will be released in early October. That will be at the height of the election campaign.

The July nationwide unemployment rate was 7.8 percent. Even that, according to an economist with US Bureau of Labor Statistics, masks "much more severe unemployment" in key states that Mr. Carter must carry to win re-election. The July rate in Michigan (which President Ford carried four years ago) was 13.6 percent; in Ohio, which Mr. Carter barely won, 9.9 percent; in Illinois (which Mr. Ford won), 9.8 percent; in Pennsylvania (Mr. Carter), 9.5 percent; New York (Mr. Carter), 8 percent.

In California and Texas, by contrast, where Mr. Reagan already has sizable support, the unemployment rate in July was relatively low, at 6.7 percent and 5. 2 percent, respectively.

Although unemployment figures will "stabilize" by the end of the third quarter of this year (i.e., the quarter ending Sept. 30), the rate of increase over the second quarter is still expected to show a sizable jump, according to Andrew Moody, an economist with Chase Econometrics.

Mr. Moody calculates that the average rate of increase in most industrial states ranged from 0.5 percent to 1 percent for the second quarter over the first quarter. The increase for the third quarter -- the quarter ending in September -- over the second will likely average around 0.75 percent, he predicts.

In some industrial states, such as Rhode Island, Indiana, Michigan, Oregon, and Washington -- all states focused on by the Carter campaign -- the rises may reach one percentage point, Mr. Moody says.

According to an analysis by Citibank, joblessness in the Northeast and Southeast will rise substantially from here on out. In fact, according to Citibank, the rise will be substantial in most of the older, or Eastern, industrial states.

To date, according to Citibank, New England and the Southeast have enjoyed only modest jumps in unemployment. Now those regions should show substantial jumps during the months ahead. And what that all adds up to, analysts here say, is one more re-election problem for the President.