The biggest job growth region of the US: everywhere
Surprisingly, boom permeates nearly every state. Jobless rate hits 1 percent in Fargo, N.D.
NEW YORK — The Olympics may be over, but from an economic standpoint, virtually every region of the US gets a gold medal.
This all-American performance is virtually unprecedented - in the past at least one significant region of the economy has lagged behind.
But now, economists who look at the nation on a regional basis say the nation's economic boom has spread from coast to coast.
"There is no region of significant size that is not performing well," says Mark Zandi, chief economist at the Dismal Scientist, an economic Web site.
This widespread boom is likely to be discussed tomorrow when the Federal Reserve meets to talk about economic conditions and interest rates. In fact, the country's economic performance is so shining, it may cause the Board to take another look at interest rates - although not in the near future, experts say.
The West and the South are leading the blistering pace, according to Standard & Poor's DRI in Lexington, Mass. David Wyss, chief economist at the firm, says the growth is being helped by the tight labor market around the nation.
"People are moving to where they like the climate and lifestyle, and the jobs follow," says Mr. Wyss, who is based in New York. Among the states to benefit are Arizona, Nevada, and Florida.
Although the Sunbelt states are leading in terms of job growth, New England is also on the rise, says Mr. Zandi, noting that the region's income gains are 50 percent higher than the national average.
By way of contrast, Las Vegas, which has job growth of about 6 percent, has income growth of 4 percent - the national average. Driving the New England economy is a strong financial-services industry and labor shortages.
Even some areas that have lagged behind are starting to bounce back.
That's the case with Hawaii, which was hurt by the Asian financial crisis Now, tourists are starting to revisit the Aloha state.
"It's getting back its feet," says Steve Cochran, an economist at the Dismal Scientist.
Despite the strong economy there are still a few underperformers.
Mississippi is showing negative job growth as a casino construction boom slows. Cities along the US-Mexico border also continue to struggle.
There are eight cities with double-digit unemployment rates, and Wyss says they are located along the border. In some cases, local workers are being displaced by illegal immigrants.
In other instances, factories have moved across the border after the passage of the North American Free Trade Agreement.
But for most of the regions, the economic news is good.
There are several cities in the US with unemployment rates of under 2 percent. These include Madison, Wisc., and Lincoln, Neb.
"A lot of college towns have real low numbers," says Wyss.
However, that doesn't explain Fargo, N.D., where the unemployment rate has fallen below 1 percent - the lowest of any city in the country.
The area has benefited from a surge in financial services companies, which have set up their back-office operations.
However, Wyss jokes there may also be a shrinking labor force. "I think people are moving to Minneapolis to seek a warmer climate."
States won't have to worry about higher interest rates slowing the pace of business until at least next year.
"There is a negligible chance the Fed will do something," says Bill Rhodes of the Williams Capital Group in New York.
Some economists believe the Fed will sit on its hands for some time.
They argue that the economy is starting to cool from the torrid rate of the first six months.
"We think demand has slowed pretty dramatically," says Peter D'Antonio, an economist at Solomon Smith Barney in New York.
However, Bill Sullivan, a money-market economist with Morgan Stanley Dean Witter, believes the labor market is as tight as ever.
He points to the latest unemployment claims, which are now at a two-month low, and a surge in payroll tax payments.
"People don't pay taxes unless they are working," Mr. Sullivan says.
The Fed is also concerned about the nation's low savings rate, says Mr. Rhodes, who adds, "I don't know what they will do about it."
Another topic of discussion is likely to be the price of oil. Last Thursday, the world's oil consumers received some good news when Saudi Arabia said it would increase its oil production.
Economists expect this will help take some pressure off the Fed, which is worried about the effect of the oil prices on inflation.
(c) Copyright 2000. The Christian Science Publishing Society