Latest Regional Economic Oulook

Here's the latest from Economy.com about U.S. regional economies.

The South and West are expected to continue to lead the economy into a stronger recovery through the rest of this year and next. Near-term strength will remain concentrated among the defense-intensive economies of Southern California, the Southwest, portions of the Southeast and the Gulf Coast, and the greater Washington, DC area.

Other sources of strength also will begin to support other regions. Distribution services and improved travel patterns by this fall will contribute to recoveries in Orange County, Fort Worth, Atlanta and Miami. Indeed, Atlanta has posted sizable employment gains in recent months. Some tech production centers will be expanding by late next year. Even hard-hit Silicon Valley may be at least stabilizing by mid-2004.

The Midwest will be reined in by a slower pace of auto production, although more diversified economies in the region will begin to expand next year as well if spending on industrial equipment persists. While the region will improve in step with national trends, the pace is expected to lag the U.S. both in the near and the long term. In the Northeast, the Mid-Atlantic region will have the better prospects, as New York and southern New England await improvement in the financial service and money management industries.

As an indicator of hiring intentions, regional help-wanted advertising can provide a window to near-term labor market performance. There is only one region—the Mountain West—that has seen a significant improvement in help-wanted advertising since the beginning of this year. This reflects the relatively robust economies still seen in Arizona, Nevada and New Mexico, and a surge in the ad index for Salt Lake City despite no turnaround yet in actual hiring there. These small economies are among the few with stable, although moderate, rates of job growth at the moment. The Pacific and West South Central (Texas and the Oil Patch) regions show tentative gains in help-wanted ads since May, indicating some potential growth. Elsewhere in the U.S., help-wanted advertising is either flat or still declining.

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