The outlook: Regions still matter, but less than in past
WASHINGTON -- Regions matter.</br></br>That's part of the conventional wisdom about the economy, and as plain as day to most Americans. Especially in recessions, regions have mattered greatly. The past 15 years have brought a series of regional-rolling recessions: the oil-patch bust, the farm crisis, the Rust Belt woes, the collapse of the bicoastal economy in the late 1980s.</br></br>The good news: The U.S. has been spared a simultaneous calamity on a national scale, and most of these regions have recovered.</br></br>Looking ahead, though, some economists wonder whether regional blowouts are less likely in the next downturn, whenever it comes. They note that services are stable, ever-more important and everywhere. "I think the economy as a whole has become more cyclically stable as the share of services in the economy has grown," says W. Michael Cox, vice president of the Federal Reserve Bank of Dallas.</br></br>In addition, some once highly vulnerable states have changed the most. Texas derived nearly 20% of its economic output from oil and natural gas in the early 1980s, when its crisis struck. Today, energy-related economic activity has dropped to less than 6%, thanks to diversification, primarily into high tech and services. Mr. Cox says medical services now surpass energy, albeit slightly, in its share of Texas output.