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What economic slowdown? Some spots still boom

Some states and many cities expect growth because they have the right industries or resources at the right time.

By Ron SchererStaff writer of The Christian Science Monitor / March 24, 2008

Mobile, Ala.: The Airbus North America Engineering Center recently opened here. If Congress does not impede a recent Air Force decision to award a major contract to Northrop Grumman and EADS, which is Airbus’s parent, parts of a new refueling tanker will be built in Mobile. In addition, German steel manufacturer ThyssenKrupp decided to build a $3.7 billion steel mill in the town. Mobile has a 3.2 percent unemployment rate.

John David Mercer/ Press-Register/AP

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Don't look for an economic downturn in North Dakota: In fact, the state is holding job fairs in other states to try to fill 13,000 open jobs.

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The slump hasn't hit Chattanooga, Tenn., either. There, pent-up demand is so strong that a large back order exists for major connections to the municipal electrical grid.

Even if builders are hanging up their hammers in a lot of cities, they are still building subdivisions in Mobile, Ala., which is expecting an onslaught of thousands of new workers at a new steel mill.

Amid concern that the US economy is slipping and sliding into a recession, some states and many cities expect to continue to grow. In some cases, the growth is the result of having the right industries or resources at the right time. In other cases, it is the result of savvy and diversified economic development that appears to be shrugging off the recession blues. In virtually all cases, areas of growth appear to have avoided the huge run-up in housing prices and subsequent collapse.

"Recessions are not monolithic. They often hit a region or regions hard and leave the rest of the country OK," says Mark Zandi, chief economist for Moody's

According to a January report by Moody's, 30 states still showed signs of economic expansion, 15 were at risk of sliding into recession, and five had already entered a downturn. The five states already in recession – Arizona, California, Florida, Michigan, and Nevada – represent about 25 percent of US gross domestic product (GDP), Mr. Zandi says. The 15 states at risk of recession represent another 25 percent of the GDP.

A softening economy fits into the portrait painted by the Federal Reserve Board's Beige Book, which takes a more anecdotal approach to business activity. On March 5, the Beige Book, which looks at the Fed's 12 districts, found economic growth had slowed since the beginning of 2008. "Two-thirds of the Districts cited softening or weakening in the pace of business activity, while the others referred to subdued, slow, or modest growth," stated the report.

Some of the states that are still growing are in agricultural areas, benefiting from soaring wheat, corn, and soybean prices. This includes Iowa, Kansas, Nebraska, and Indiana.

But North Dakota, a farm state, has also worked hard to diversify its economic base, notes Gov. John Hoeven. "That's been our No. 1 focus," says Governor Hoeven in a phone interview.