Regional Spectrum Shows Healthy Hue

PRISM ON US ECONOMY

Pick any region of the US and you can almost feel the hum of economic activity.

Whether it's the iron-ore rich ranges of Minnesota, the bustling theme parks of Orlando, Fla., or the huge aircraft hangars in Seattle, most of the regional economies are continuing to pump out jobs - although at a slower rate than last year.

The most dynamic areas are the Rocky Mountain West and the South. But the Far West and Southwest are a close second. California, which represents 12 percent of the nation's job base, has become the nation's economic "comeback kid." A solid auto industry is keeping the Midwest rust-free. The only region struggling to keep up is the Northeast, which continues to lose manufacturing jobs, and suffer from corporate downsizing and military spending cuts.

Economists are not surprised that the Mountain West and the South are leading the pack. The regions continue to attract new migrants and business from other states. Their cost structure, including lower taxes and reasonably priced power, attracts factories from other areas.

"They just run faster," says David Hensley, an economist at Salomon Brothers in New York.

But the growth is not coming without cost. Denver is struggling with rising crime. Pollution bedevils Phoenix and Las Vegas, Nev. Salt Lake City residents are watching housing prices rise like the Wasatch Mountains. There are shortages of workers in many areas - "from baby sitters through the top skills," says David Littmann, chief economist with Comerica, Inc., a financial holding company in Detroit. Here's a look at the economy, region by region:

ROCKY MOUNTAIN WEST

By Jillian Lloyd

Special to The Christian Science Monitor

DENVER

In Salt Lake City and Provo, Utah, the economic surge is so strong that a U-Haul dealership may be the second-hottest investment in town.

The first? A home.

With 10 to 15 percent annual price jumps, "People are buying houses, keeping them for a year, then selling them and making a profit," says Ernie Goss, a Creighton University economics professor in Omaha, Neb.

While the rate of Rocky Mountain economic growth is slowing overall, it still outpaces the rest of the country. And Utah leads the way, with robust construction and manufacturing sectors, says Professor Goss.

The overall growth rate here is double the nation's, according to the latest Western Blue Chip Economic Forecast published by Arizona State University. "The region is doing well and is likely to continue to grow," Goss surmises.

But in some places, such as Colorado, the pace of job growth has throttled back and home sales have shrunk. Even population growth regionally isn't rising as fast.

The West is rapidly shifting gears, in some areas more smoothly than others. Land-based industries that have traditionally dominated - mining, logging, ranching, and agriculture - are giving way to advanced technology and telecommunications industries.

Colorado's oil and gas sector, once an economic mainstay, now provides less than 1 percent of jobs. Meanwhile, real estate development, financial services, technology, and international trade have become major employers.

The economic picture in Wyoming may be the region's least promising. But in Idaho, manufacturing and high-tech companies are boosting job growth.

In Colorado, the real estate market is starting to smart from unmet expectations. Sales agents say resale homes now sit longer on the market and sellers aren't getting hoped-for prices. High construction rates in the Denver area are outstripping demand, creating a retail space glut.

"We've built too much, and there aren't enough new businesses to fill it up," says Tucker Hart Adams, chief economist for Colorado National Bank in Denver.

PACIFIC

By Daniel B. Wood

Staff writer of The Christian Science Monitor

LOS ANGELES

California has won its jobs offensive after years of defense cutbacks. Washington is soaring on the wings of a Boeing Aircraft turnaround. Oregon is conducting a semiconductor revolution.

These Pacific Coast state economies are humming along more than at any time since the late 1980s, economists say. The Golden State, with the world's seventh-largest economy, has more than recovered the 350,000 to 500,000 jobs lost with post-Cold-War defense downsizing. A well-balanced expansion is adding yet another 25,000 to 30,000 jobs per month - 1 of every 8 new jobs being created nationwide.

The new employment is driven by international trade, entertainment, tourism, manufacturing, and construction. "If you think of any 21st-century growth industry, chances are California is in the lead," says Steve Levy of the Center for the Continuing Study of the California Economy.

The state's population outflow has largely been stemmed and young migrants are coming. Government attempts to loosen businesses' tax and regulatory burdens have slowed the exodus of firms to other states.

Significantly, economists note that the California rebound is really a "structural recovery," in which the jobs being added are in new or changing industries. It is not simply a revival of the existing industrial base.

As a metaphor for the "new California," analysts say, think of the emerging sector dubbed "Siliwood" - a cross between Silicon Valley's computer wizardry and Hollywood's imagination. It's a hybrid that produces things like talking pigs in the film "Babe."

Still, an influx of illegal immigrants and a shift to a service economy are producing a growing underclass that is producing a two-tiered economy. "One drawback is that the overall rise is not affecting all income levels equally," says Joel Kotkin, a senior fellow at the Denver-based Center for the New West. "The rich-poor gap is widening."

For Washington State, the growing global demand for airplanes has given a giant boost to the country's largest exporter, Boeing. Having slowly lost about 30,000 employees from 1985 to 1989, the company this year hired 10,000 back.

Hefty stock options are earning thousands of employees at Microsoft headquarters six-figure salaries, giving Seattle yet another lift, according to area economist William Beyers.

The agricultural sector - driven by fruit, wine, wheat, livestock - is adding significant markets abroad. The rumpled by rain Northwest also continues to be a magnet for outsiders. The number of people moving to Washington grew by 11.6 percent last year, boosting the population to 5.5 million.

In Oregon, Intel's recent expansion into Portland is a major boon. Other companies have taken advantage of state property-tax abatement programs as well: Hyundai, Siltec, Fujitsu, Toshiba. But the outlook is not favorable for the lumber industry, notes Debbie Kitchen, regional economist for the Northwest Power Planning Council. "There is a disparity of economic fortune across Oregon," she says, with the greatest problem concentrated in rural areas. But unemployment is very low, about 3 percent, with growing diversity in manufacturing, tourism, and retirement activities.

SOUTHWEST

By Robert Bryce

Special to The Christian Science Monitor

AUSTIN, TEXAS

After several boom years, Arizona, New Mexico, Oklahoma, and Texas are starting to cool off. Austin, Texas companies have laid off more than 1,000 workers in the past four months and jobless rates in several cities are creeping up. "We are going from very good economic times to average times this year and next," says Brian McDonald, a forecaster at the University of New Mexico in Albuquerque.

But don't expect the region between Tulsa, Okla. and Tucson, Ariz. to take a tumble anytime soon. Buoyed by out-of-state migrants and the strong national economy, analysts expect it to maintain solid growth.

"Of any of the regions in the nation, this area is ... the strongest in terms of job creation," says Dan Anderson of Arizona's Department of Economic Security. Unemployment in Phoenix last month stood at 3.8 percent, in Albuquerque at 4.1 percent, and in the Dallas-Fort Worth area at 4 percent.

The service sector has driven much of the growth. America Online will hire 1,000 new workers for its new technical support center in Albuquerque. In Oklahoma City, Boeing will add 1,000 jobs for its engineering and technical support facility, and long-distance phone-service provider LDDS says it will create 700 new positions by moving its billing operations there.

Back on the farm, drought hit Oklahoma and Texas hard. Crop and cattle loss estimates in Texas alone stand at $2.4 billion. Ranchers in both states sold many cattle for slaughter rather than buy feed.

Even so, Texas' economy continues to expand. The Lone Star State is relying on new service-sector, construction, and manufacturing jobs. But it still has pockets of extreme joblessness, particularly along the Mexican border. McAllen, a southern city, has the nation's highest unemployment rate - 18.6 percent.

Mexico is buoying some border towns, though. Texan exports to Mexico jumped 32 percent in the past year. In the same period, unemployment in Laredo - another border town plagued by high joblessness - fell 3.9 percent, the largest drop of any US city.

Travis Tullos, an economist with Texas Perspectives, an Austin-based firm, says increased trade, along with an energy sector recovery, bodes well for the future. "If you compare Texas with any other market in the US," he says, "we're in very good shape."

SOUTH

By Elizabeth Levitan Spaid

Staff writer of The Christian Science Monitor

ATLANTA

No question about it - the Southeast still has its sizzle. From Florida to Tennessee, the region's economy is projected to boom through the end of the decade thanks to a low-cost structure that attracts domestic companies and foreign investment, diversity, and a growing service sector.

"I don't see any region challenging the Southeast," says Mark Vitner, an economist at First Union National Bank in Charlotte, N.C. "There's stronger growth in ... the Rocky Mountain states, but they ... can't match the Southeast in terms of the absolute magnitude of jobs being created and the number of people moving here."

Atlanta, Nashville, Orlando, Fla. and Raleigh-Durham, N.C. have job growth rates of 3 percent or more and jobless rates of 3.5 percent. In Orlando, where tourism accounts for 22 percent of the economy, the Walt Disney Company is spending billions to build the Animal Kingdom, a zoo-centered theme park. Universal Studios is spending $3 billion to enlarge its entertainment complex over the next two years, and Sea World has begun its biggest expansion ever.

"We're the most dynamic economy in Florida," boasts Dan Lynch, president of Metro Orlando Economic Development Commission.

Meanwhile, economists are still determining how the 1996 summer Olympics affected Atlanta. The city added more than 40,000 temporary jobs for the Games, then quickly shed them. After the upward spike in the months leading up to July, September job numbers won't look so good.

"The Olympics didn't set off a boom as many people had hoped," Mr. Vitner says. "The good news from that is because we didn't have a boom we're not going to have as much of a bust."

The sectors that have propelled Atlanta's growth - data processing, communications, retailing, and construction - remain robust. "The Atlanta economy is still one of the strongest in the country with job growth at around 4 percent and just over 70,000 [permanent] jobs created over the past year," Mr. Vitner says.

The Southeast's neighbors - Alabama, Mississippi, and Louisiana - are lagging behind the region. But a resurgence in oil and gas drilling has Louisiana on a par with the nation. Mississippi experienced a boom two years ago, and overall levels of employment and income are higher, but growth has since slowed. In Alabama, Huntsville and Birmingham are vibrant, but severe cutbacks in the apparel industry have hurt the southern part of the state.

MIDWEST

By James L. Tyson

Staff writer of The Christian Science Monitor

GARY, IND.

The Gary Works steel mill constantly rumbling on Lake Michigan's shore symbolizes the industrial Midwest's economic revival and current modest expansion.

This year the mill, part of the Pittsburg-based USX Corp., will log one of its highest production tallies since it first fired up in 1909. "Our order book is very, very strong," says spokesman Thomas Ferrall.

Throughout the industrial Midwest, smokestack industries like the Gary Works are thriving thanks to wholesale restructuring and top-dollar investment, helping the region shake off its "rust belt" tag and don the mantle "High Performance Heartland."

The mill is thriving largely because of continued growth in the auto industry, its biggest customer and the region's biggest industrial force. Over the past year, automakers have expanded production in fits and starts.

The nation's farms have also given regional auto and farm equipment makers a lift. Grain prices have been well above historical averages and the boost in farm income has trickled down to balance sheets across the farm and nonfarm economy.

Exports and domestic demand for sheet and other steel products are strong, although off levels of recent years because of rising domestic demand. Similarly, Midwest exports, especially of machinery, chemicals, and electronics, have been unusually high this decade, partly explaining why regional growth has exceeded the national average.

Much of the regional vitality stems from relatively low energy costs, low interest rates, and the comparatively low value of the dollar, says David Allardice, manager of the Detroit office for the Federal Reserve Bank of Chicago. All three cost advantages have edged up in the past several months, but "if those factors turn in direction," Mr. Allardice says, "the region's economic fortunes could also turn. The real key is how much progress we have made in productivity improvement and product quality."

Dependence on autos and other cyclical industries underscores the region's comparative lack of diversity and vulnerability. "The Midwestern economy will always be tied more than other regions to cyclical downturns in the economy," says Paul Bishop, a regional analyst at the WEFA Group in Eddystone, Pa.

NORTHEAST

By Shelley Donald Coolidge

Staff writer of The Christian Science Monitor

Northeasterners are hoping that slow and steady wins the race. While the region's economic growth continues to lag behind the nation's, it's making steady progress.

Since the spring of 1992, it has regained more than two-thirds of the 1.5 million jobs lost during the three-year recession that began in early 1989. The gains have come in an array of industries: high-tech, health-care services, business services (such as management consulting and public relations), and retailing. "There isn't any obvious industry driving economic growth here," says Katharine Bradbury, a Boston Federal Reserve Bank economist.

Unemployment remains relatively low, home sales are strong, and homebuilding is up more sharply than in the rest of the country.

Still, sluggish population gains and consolidations in financial services, utilities, and defense-related manufacturing continue to hold the area back, economists say. The high cost of doing business also still makes it difficult to attract and retain companies.

Regional job growth slowed from an annual rate of 1.7 percent in the first quarter of 1996 to just 0.7 percent in the second quarter, according to DRI/McGraw-Hill, well off the nation's 2 percent average.

New Hampshire, Massachusetts, and Vermont have been the standout states in the region, boosted by expansions in the high-tech and business-services industries.

And with jobless rates in these three states near 4 percent, labor-supply shortages are emerging. "The supply and demand for high-tech skills is as far out of whack as I've ever seen it," says Stephen McMahan, managing director of Boston's Source EDP, a national job placement firm for high-tech professionals. "If enough people existed to fill all our job openings, we would do four times as much business."

Boston has managed to feed off of the expanding mutual-fund industry, but the economies of New York, Pennsylvania, Rhode Island, and Connecticut are not so fortunate. A DRI McGraw-Hill study estimates they'll rank among the bottom 10 states in nonfarm employment growth through 2000.

One bright spot is the Big Apple, which added 46,000 new private-sector jobs in the last year. And while Connecticut continues to take big hits from consolidation of the aerospace and insurance industries, two casinos have provided some job growth. The newly opened Mohegan Sun Casino, in Montville, Conn., is hiring 4,000 workers. And Foxwoods, which employs more than 10,000, is developing a conference center and plans to add another 2,500 workers.

New Jersey, while still battered by downsizing at AT&T, is outperforming its neighbors. A new international terminal at Newark Airport has expanded the region's role as a transportation hub.

Downsizings have also hurt Pennsylvania , yet Philadelphia's western suburbs are growing as bio-tech companies come in, says Mark Zandi, chief economist at Regional Financial Associates in West Chester, Pa.

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