Robert CaldwellRegional Economies: Is Anyone Afloat?
June 2nd 2008 20:54
Economic Info:
Regional economic growth slowed in April. Labor markets highlighted the contracting macroeconomy. According to the most recent BLS report, only ten states registered month-to-month growth in employment. The West South Central is the only region holding up. The expansion in Texas and Louisiana bolstered growth in this region.
Housing markets continue to provide a cause for concern. In April, total housing starts decreased in the Northeast and held up elsewhere. Residential building permits decreased in the Northeast and South, but increased in the Midwest and West regions. Although housing supply is roughly holding steady, demand continues to fall. House prices have taken the hit in most regions.
Consumption is expected to slow across all regions. Government will attempt to make up for the slowdown by boosting spending. This will only increase budget deficits in the long run, however. The sole hope resides in export-oriented industries. The weak dollar should increase these industries ability to compete.
Overall, the Northeast's economy appears to be contracting the fastest. Labor markets are cooling and housing has tipped. The downturn that has previously plagued the West, South and Midwest is beginning to creep into the Northeast.
Why is this important?
Regional economic performance is very important to real estate investment and business investment. If the labor market is shrinking in a specific area, investors will be less likely to invest in that area. This will weigh on housing markets and pull down overall growth. At this point in time, the Northeast appears to have tipped. It's important to highlight, however, that the West and South have been dismal over the course of the last few months primarily due to contracting housing markets. Moreover, the Midwest is a typical laggard due to the consistent decline in that area's manufacturing industry. The turn in the Northeast indicates that the rest of the nation's problems are beginning to affect all corners of the country. Despite recent good news elsewhere on the economic front, this indicates that we may be "in" a recession.
If you are looking for more analysis or client-specific work, please contact me at schmidpat@regionaleconomiccon sultants.com
Regional economic growth slowed in April. Labor markets highlighted the contracting macroeconomy. According to the most recent BLS report, only ten states registered month-to-month growth in employment. The West South Central is the only region holding up. The expansion in Texas and Louisiana bolstered growth in this region.
Housing markets continue to provide a cause for concern. In April, total housing starts decreased in the Northeast and held up elsewhere. Residential building permits decreased in the Northeast and South, but increased in the Midwest and West regions. Although housing supply is roughly holding steady, demand continues to fall. House prices have taken the hit in most regions.
Consumption is expected to slow across all regions. Government will attempt to make up for the slowdown by boosting spending. This will only increase budget deficits in the long run, however. The sole hope resides in export-oriented industries. The weak dollar should increase these industries ability to compete.
Overall, the Northeast's economy appears to be contracting the fastest. Labor markets are cooling and housing has tipped. The downturn that has previously plagued the West, South and Midwest is beginning to creep into the Northeast.
Why is this important?
Regional economic performance is very important to real estate investment and business investment. If the labor market is shrinking in a specific area, investors will be less likely to invest in that area. This will weigh on housing markets and pull down overall growth. At this point in time, the Northeast appears to have tipped. It's important to highlight, however, that the West and South have been dismal over the course of the last few months primarily due to contracting housing markets. Moreover, the Midwest is a typical laggard due to the consistent decline in that area's manufacturing industry. The turn in the Northeast indicates that the rest of the nation's problems are beginning to affect all corners of the country. Despite recent good news elsewhere on the economic front, this indicates that we may be "in" a recession.
If you are looking for more analysis or client-specific work, please contact me at schmidpat@regionaleconomiccon sultants.com
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Comment by Harry
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Comment by Patrick Schmid
This simply means that the Northeast is begining to slip, whereas most other regions (most notably the South and the West) already have. The only other region, the Midwest, is typically a laggard.
The South and West have been hit by subprime contagion, especially in Florida, California, Nevada and Arizona. It looks like the housing market woes are beginning to affect the Northeast as well. The housing downturn is also seeping into the Northeast's labor market.