A business manager, to assess the risk of a regional recession, needs to monitor
A business manager needs to be aware of each underlying economy in each of their regions.They also need to be aware of the national economy and its cycle. Since the national economy will affect each states economy and the economic situation in each 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.
The national cycle impacts the state differently depending on how similar their economy is to the nation itself. The greatest effect on a region is the national economy itself. The composition of a region’s output, in conjunction with the composition of national economy growth, is the next greatest factor on a region’s economic performance.
Factors that affect the economy in each state usually looks the same, with the largest driver being the population growth or declined. The migration that is population growth brings business with it and prosper the already existing business.
People move for quality of life, and jobs follow. This is what Arizona answered for the question. This means that even though most states have the same jobs but the quality of life in each determines where people end up.
Economy policies have almost no impact on the economy in each state. This is because they yave no real affect on the important factors in a recession.
The policy can only help with long-term growth. Though it should not be expected to solve a recession but it can be expected to build compound over time so when the recession is over the states with good policies will be in a better situation then the others.
The economic cycles have different impacts on the producer than the seller. A business selling in an area with a recession will suffer, while a business that produces will prosper. This means that producers benefit from a weak economic situation in their area.
A regional early warning system is the same as a national but with more specific specs. Information that is important to the region instead of the national business will be used, as well as current employment data.
| 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.
Location quotient is the area specific analytic statistics. This is then measured and compared to larger geographic area to compare it, this is usually the nation.
Leakages in economics is capital/income that escapes an economic system in the context of a circular flow of income model.
The cost added by producing one additional unit of a product/service.
Describe the characteristics of the following events briefly.
In Idaho during this time period they had a bigger period of population growth. This lead to economic developments increasing drastically. This also meant that there were now more people to take care of. This lead to a high pressure on building homes for everyone, something that was not lived up to. This left a lot of people homeless.
In the case of Hawaii in the mid 90s, Japan went in to an recession. This eventually lead to Hawaii’s consumer demand reduced. At this time there was also a long period of decrease in employment rate, though they had had a steady economy before this event.