When Pockets of Strength Just Aren't Enough
America's Great Plains and Midwest regions are rebounding from the recession faster than other parts of the country, but economists say their recoveries aren't enough to lift the rest of the economy out of the doldrums.</br></br>Private-sector workers in the Great Plains and Midwest have seen the sharpest rise in income since the end of the recession in mid-2009, Commerce Department data show. Plains states such as North Dakota, Texas and Nebraska are reaping the benefits of growing demand for oil and food commodities in expanding economies like China. Turnarounds by the U.S. auto sector and other manufacturers, meanwhile, have reinvigorated America's industrial strongholds of Michigan, Ohio and Indiana.</br></br>Yet despite this success, the two regions that make up the nation's midsection contribute much less to the broader economy than do California and New York. Some Great Plains states are sparsely populated. That means that locals whose fortunes have improved thanks to oil and soaring crop prices can't be counted on to boost national consumer spending, which fuels two-thirds of the economy. North Dakota, Wyoming, Montana and Nebraska, for example, contribute only about 1.4% of the country's gross domestic product--roughly equal to Connecticut's share.</br></br>The recovery of the U.S. manufacturing and auto sectors, meanwhile, doesn't fully offset their collapse during the global economic crisis. Job cutbacks have kept Michigan's unemployment rate at 8.5% in May, well above the 6.9% rate the state saw in May 2007. Ohio's jobless rate, 7.3% in May, was 5.6% five years ago.</br></br>"It's not enough to have pockets of industrial rebirth," said Jim Diffley, chief regional economist at IHS Global Insight. States like Michigan and Ohio "are not going to be pulling everyone else along, though it's great that they're gaining. We still need to have consumers and banks complete the process" of whittling away bad debts in order to start spending and lending more, he said.