A business manager, to assess the risk of a regional recession, needs to monitor
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 regional production structure is most greatly affected by the national overall economy. Every state has its own natural cycle, but the overall economy still reigns supreme as the biggest influence.
A lot of what causes cycles in economics in a certain region is population growth. There are places that people move to in order to work throughout the year and that causes fluctuation.
Long-term regional growth is extremely dependent on population. If a region is seeing a large population growth it is most likely because there are jobs that need to be filled. New jobs often stimulates a regional economy.
Economy policy has a much smaller effect than expected. If taxes are raised people will most likely be paying the difference out of their own pockets which lowers the economy. Good policy can help keep a regional economy stimulated and growing year after year.
Production is likely hurt less in a regional economy as they may have other customers who are not suffering inside of the regional economy.
Very similar to a national warning system. You have to add in local and regional factors that will affect your economy, but as long as you factor these into your equation it is not much different.
| 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.
How important a certain industry is to their own regional location as opposed to how important they are in the overall national economy.
Capital that escapes an economy.
How much producing more units of products costs in terms of cost of prodution.
Describe the characteristics of the following events briefly.
Idaho’s once booming economy started to falter which led to a pretty decent decline in many industries including construction employment. ### the case of Hawaii in the mid-1990s (page 215) Even with an overall national economy that was growing Hawaii’s economy was falling due to a recession in Japan.