A business manager, to assess the risk of a regional recession, needs to monitor How similar our region is compared to the national economic cycle.
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.
Knowing the differences and similarities between a regional industry, and the national economy Can help business managers understand how well certain areas do in relation to the national economy.
Business managers Should know what affects different regional cycles, such as population growth, and other significant Policies that the community and region implicate.
* What drives long-term regional growth?
Rapid population growth Often have a secure growth pattern and can increase revenue coming into that state, or region. Other impacts on long-term regional growth are the different relationships That the region has secured That will help improve their growth overtime.
Economic policies have a major impact in regional cycles, and can Have a massive impact on the overall national cycle.
Different economic policies can either help improve your business, or create Roadblocks when trying to grow your business. The less economic policies that restrict growth, the better your business will be.
Big companies who are involved in multiple different regions have a hard time controlling their profits compared to small companies exclusive to certain regions, the small companies can thrive because they can change their prices quickly if a recession occurs, and be exclusive to the regional economy rather than the national economy.
Creating a regional early warning system is important for many different companies because what usually happens in a regional economy, can affect the national economy.
| 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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Explan 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.
Evaluate an industry in a region and find out how significant that industry is relative to the national economy.
A decrease in profits from the economy results in a decrease in the total income in the world.
When a product has been produced more than expected, the price can fluctuate negatively or positively.
Describe the characteristics of the following events briefly.
With the drastic increase in growth rate in Idaho, People needed homes, and consumers were spending money. When a decreasing growth rate hit Idaho, the unemployment rate dropped significantly and no more homes were being built.
The state showed a positive outlook in the economy, but was suffering from low employment rates and much more. This issue happened during a recession in Japan which led to a decline in tourists.