A business manager, to assess the risk of a regional recession, needs to monitor
The National Economic Cycle
The National Cycle of the most important industries in the state or region
The Internal Growth Cycle also known as, the Regional Economic Cycle of the State
Although a regional economic cycle is not perfectly synchronized with its national counterpart, it tends to move up and down with the national economy. In addition to the broader national economy, two other factors influence a regional economy: the national cycle of its most important industries and its internal growth cycle associated with construction swings.
There are two different perspectives to consider in analyzing a regional economy: when a company sells into a distinct local market and when a company primarily produces in a local market and sells into a national or global market.
This section talks about regional products being spatially into other categories. There are three stages in the production structure. The national economy usually has a greater effect on a region than any other possible factor.
The largest driver of internal cycles is population growth. With this, changes in a regions population growth rate can cause economies to accelerate or decelerate.
Technological progress is the reason for long-term regional growth. Places that have jobs that attract people, the book mentioned Alaska being one of those places. Population flowed into Alaska back in the day when there was good work that needed to get done.
Often ignored when talked about with regional economic cycles. Governors are given the credit for economic recoveries. State and or local economic policy has very little effect in the long run.
A good tax policy. States that have little to no income tax are experiencing. These states have found faster economic growth in comparison to states with high income tax.
Everything affects one another in short summary. An example being, a business selling goods in a particular region will suffer when the area goes into a recession. Another example from the book is regional producers benefit from weak local conditions, and they are hurt by local economic strength.
Measures of the industries that are important to the region is crucial data. Must stay alert and keep an eye on that.
| indicators | |
|---|---|
| national economy | |
| national cycles of the industry | national automobile sales for car dealers |
| local economy |
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| population and migration | housing permits, drivers licenses |
| consumer spending | state sales tax: drill down to exclude construction materials |
Dealing with a regional downturn
| the local economy is similar to the national economy | the local economy is different from the national economy | |
|---|---|---|
| a company selling into the local market | Follow the pattern described in chapter 7 with no additional local considerations. |
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| a company only producing in the local market | Follow the pattern described in chapter 7 with no additional local considerations. |
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Explain each of the following terms in your own words. The author explains the terms in the textbook. If necessary, you may also Google the term on the Web. Good resources include:
Explain the terms in your own words briefly.
A measure that shows the significance of an industry to a state or metropolitan area relative to the industry’s importance
A diversion fund from some kind of iterative process
It is a cost that is added by producing an additional unit of a product or service
Describe the characteristics of the following events briefly
Population growth slowed in the 80s and this is visibly noticeable when looking at construction activity
Hawaii suffered from 4 years of declining employment in the mid 90s. The ironic part is that the national economy grew steadily during this time. Japan was going through a recession during this time and it affected tourist spending in Hawaii.