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 , Staff writer of The Christian Science Monitor

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    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.
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    North Dakota: At the Red Trail Energy ethanol plant in Richardson, N.D., plant manager Ed Thomas said last year that 17 of the plant’s 41 employees moved back to the state to take those jobs. The plant converts corn to ethanol.
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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.

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.

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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 Economy.com.

According to a January report by Moody's Economy.com, 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.

North Dakota is one of only three states to gain manufacturing jobs, he says. Behind that gain is a push to export – up 34 percent in 2007 over 2006, the fastest rate of growth of any state in the United States. The state has also seen a big rise in energy investments in coal, oil, natural gas, and renewables. On top of that, North Dakota merchants are profiting from Canadian tourists, who are crossing the border to shop with their strong currency.

The state's unemployment rate is hovering around 3 percent. This has prompted state officials to host job fairs in Minneapolis and Denver.

"We don't see any sign of recession in our economy," says Shane Goettle, commissioner of North Dakota's Department of Commerce.

Some areas that used to be hard-hit by economic downturns are now shrugging them off. That's the case for Chattanooga, Tenn., which took a nose dive in prior recessions. "We were categorized as Rust Belt," says Mayor Ron Littlefield. "I don't think we avoided the 2001 recession, but we recovered rather well."

This time, Chattanooga has a much more diverse economic mix. "We are more tourism, more white-collar employment, and more high-tech type of industry," says Mayor Littlefield. In addition, major employers in the city are expanding, not contracting, he says. For example, BlueCross BlueShield of Tennessee is building a $299 million corporate campus, the largest construction project in the city's history.

Some cities are attracting foreign investors who want to build in the US, in part because of the weak dollar. Take the giant German steel manufacturer ThyssenKrupp, which decided to build a $3.7 billion steel mill in Mobile, Ala.

"No doubt the cheap dollar helps," says Stephen Nodine, Mobile's county commissioner. "But I think the leading factor was a location close to a deep-water port and rail lines."

In addition, if Congress does not impede a recent Air Force decision to award a major contract to EADS and Northrop Grumman, parts of a new refueling tanker will be built in Mobile.

"With a 3.2 percent unemployment rate, we've been running ads saying, 'Come home to Mobile,' " says Mr. Nodine. "Six years ago, we were hurting with jobs lost to NAFTA. Now, we're in a position to be selective in what we pursue, and our main goal is increasing household income."

Some communities credit their growth with a more aggressive approach in recruiting businesses. For example, Baton Rouge, La., set a goal of wooing motion-picture studios to make films there. "Not including the actual money for the movie, it has a $75 million impact on the city in the way of hotel rooms, restaurants, equipment companies, and the hiring of people," says Mayor-President Kip Holden. "We were not a major player, and now we are."

Inspired by movie success, the city has also delved into film animation. It hosts the biggest animation festival in the US.

As a result of its more aggressive push, Baton Rouge now finds itself moving up in US rankings for best cities for jobs. "Baton Rouge is a boomtown," says Mayor-President Holden.

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