Recession and recovery across the nation: lessons from history

The U.S. economy officially fell into recession in December 2007, but the timing of the downturn varied widely across regions of the country. In some regions, employment began to erode much earlier in 2007, while in other regions economic activity stayed strong well into the second half of 2008. Do regions typically vary this much in the timing and circumstances of their recessions? If so, perhaps past experience can also shed light on whether some regions can be expected to rebound earlier or stronger than others from this recession. ; To explore these possibilities, Wilkerson looks at job growth trends across the 12 districts of the Federal Reserve System in recent business cycles. He finds that the timing and depth of regional recessions typically vary widely, with several districts regularly outperforming others. The same generally holds true for the timing and strength of economic recoveries and expansions across the country. Some of these differences can be explained by the unique industrial structures of the districts, but other factors also play a role.

The District economic outlook : responding to labor shortages and overseas problems

The Tenth District economy slowed down in 1998, with employment growing marginally below the national average. Despite very tight labor markets, employment growth remained healthy in many sectors. Construction; trade; transportation, communications, and public utilities; and finance, insurance, and real estate---all posted healthy gains. The manufacturing and service sectors, however, turned in weak growth, a result of the Asian financial turmoil and a shortage of skilled workers throughout the district. District agriculture had a difficult year, as commodity prices plunged in the face of rising supplies and weakening demand. A large aid package from Congress late in the year prevented farm incomes from being considerably less than in 1997.> Gazel and Wilkerson discuss why the district economy is likely to slow further in 1999, growing only modestly compared with the recent past. The expected slowdown of the national economy, continued economic weakness in the rest of the world, and very tight labor markets throughout the district are all likely to play major roles in the district economic slowdown. Some sectors of the district economy, such as manufacturing and mining, are likely to be hurt more than others in the near future. The service sector is likely to repeat its weak 1998 performance, while a reduction in consumer spending will slow growth in retail and wholesale trade in 1999. Construction activity may weaken a bit in 1999, and the district farm economy is likely to face a difficult year unless the government acts to further boost subsidies.Federal Reserve District, 10th ; Economic conditions - United States ; Employment (Economic theory) ; Labor supply

What's hampering job growth in the District's services sector?

Employment growth in the Tenth District has fallen behind the national rate in 1999 for the first time in ten years. Although all economic sectors have been experiencing slower job growth, the services sector, due to its size, has played perhaps the most important role in the slowdown of overall employment growth in the district. While services employment elsewhere in the nation continues to grow rapidly, the district has witnessed very little job expansion in services so far in 1999 (Chart 1). In fact, the district services sector has added jobs during the first seven months of this year at less than a third of the rate enjoyed by the nation as a whole.Employment (Economic theory) ; Service industries ; Federal Reserve District, 10th

The Tenth District's defining industries: how are they changing?

The economy of the Tenth Federal Reserve District has become increasingly more services-based in recent years. While this transformation has lessened many of the historical differences with the rest of the nation, the regional economy still remains distinct, especially in some states. Wyoming, for instance, still has the most unique industrial structure in the country. And Nebraska, New Mexico, and Oklahoma still rank among the top third of states with economies that differ from the rest of the nation. ; What industries make the Tenth District so different, and what can they tell us about the future of the regional economy? ; Wilkerson and Williams examine the “defining” industries of the region. They find that the performance of a relatively small group of these industries track closely with overall job growth in each state. In other words, states whose defining industries have prospered in recent years have grown quickly overall, while states whose defining industries have struggled have grown sluggishly. Thus, identifying a state’s defining industries and understanding how they are changing can provide vital context for policymakers seeking to improve prospects for growth—as well as help identify the types of economic shocks that might threaten the region in the future.Federal Reserve District, 10th

The export potential of Tenth District states

After collapsing during the financial and economic crisis, exports have grown rapidly in the nation and across much of the Tenth Federal Reserve District. Despite some risks, most economic forecasts for national exports point to continued robust growth. An export boom, however, could have disparate effects across the country, given sizable differences in the volume, composition, and trends of state exports. ; Wilkerson and Williams assess the export potential of the Tenth District. They find that future export growth in the district is likely to be strong, although most states are likely to benefit less from the expected boom than the nation as a whole. Most states in the district have smaller export sectors than the nation and slightly less favorable export industry mixes. There are exceptions, though, and most district states have an adequate mix of trading partners. And, as in the past, other factors will play a role in the district’s export potential.

The national defense boost in rural America

Rural areas ; Rural development ; Defense contracts

Booms and busts in household wealth: implications for Tenth District states

The U.S. stock market and housing market--the two largest sources of U.S. household wealth--have had sizable booms and busts in recent years. This volatility has influenced national consumption trends and had important consequences for states. Some states have become relatively wealthier, affecting both the short- and long-term consumption spending potential of their residents. ; Understanding how wealth changes affect state economies could be especially important in 2011 and 2012 given the recent resumption of home price declines in much of the country. Research has shown that consumption can be more sensitive to changes in housing wealth than other types of wealth. While the home price collapse in 2007-09 hurt the Tenth District less than the nation, home price fundamentals in several District states may be more similar to the nation over the next couple of years. ; Wilkerson and Williams examine recent changes in household wealth in Tenth District states and explore how the region is positioned heading forward.

Will tightness in Tenth District labor markets result in economic slowdown?

Labor markets in the Tenth District are tighter now than at any time in recent memory. The steady fall of unemployment rates in recent years has led many analysts to wonder if future economic growth in the region could be restricted by labor shortages. The district's labor market is actually even tighter than suggested by its unemployment rate of less than 4 percent in 1998 due to the presence of two other significant, but often overlooked, factors: high labor force participation rates and slowing domestic migration flows.> The labor force participation rate, meaning roughly the percentage of the working-age population that is actively taking part in the labor force, has been increasing rapidly in the district this decade and is now well above the national rate. This means the district is likely to have a more difficult time drawing new workers from its own population in the future. Likewise, the district has suffered in recent years from smaller net migration flows from the rest of the country after several years of strong gains following the 1990-91 recession. Thus, at a time when district labor markets need to be drawing more workers from other parts of the country, the flow of new workers is actually drying up.> Gazel and Wilkerson explore whether the growth of jobs in the district is likely to be hampered by slower growth in the labor supply in the presence of tight labor markets. They find that the district's extremely low unemployment rate, combined with a record level of labor force participation and diminishing migration inflows, does indeed reflect an economy that is likely to suffer from slow labor supply growth in the near future.Federal Reserve District, 10th ; Labor market ; Employment (Economic theory)

The impact of the Brazilian crisis in the Tenth District

The recent economic turmoil in Brazil, triggered by the devaluation in January of the "real" (Brazil's currency), has understandably created concern about how the United States will be affected. This article looks at the possible impacts in the Tenth District and finds that, at least for now, there is little need for concern. The article is divided into three sections: an explanation of the crisis and its overall potential for harm, a brief discussion of the direct impact on district producers, and a more thorough analysis of the indirect ways a spread of the crisis could affect manufacturing and agriculture in the region.Brazil