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The Conference Board
For Immediate Release Release #4450A
U.S. REGIONAL ECONOMIES HOLDING ON, DESPITE WEAKNESS IN ASIA AND LATIN AMERICA, CONFERENCE BOARD FINDS
While economic weakness in Asia and Latin America are chipping away at U.S. export growth, burgeoning markets in other areas are cushioning the blow, The Conference Board reports today in its latest Regional Economies and Markets report.
Despite a weakening global economy, robust growth has continued throughout most of the country. The Conference Board's Regional Performance Index (RPI) includes measures of consumer confidence, help-wanted advertising, personal income, housing permits, and employment. The Index was up by at least 3% from a year earlier in every region of the country, excluding the Pacific. Leading the way was the Middle Atlantic (New Jersey, New York, Pennsylvania), up 5.2%, followed by the Pacific at 3.9%.
"The combination of global deflationary forces and excess capital fleeing foreign financial markets have helped push long-term U.S. interest rates to historic lows, reigniting housing markets in the process," says Bhashkar Mazumder, author of Regional Economies and Markets, the Conference Board report.
While exports to Asia fell by more than 10% from the first quarter of 1997 to the first quarter of 1998, exports to all other regions rose by more than 10% during the same period. The Rocky Mountain region of the U.S. was most severely affected by the Asian crisis, according to Commerce Department data. Lower Asian exports contributed 7 percentage points to the overall export decline in the Rocky Mountain area. Arizona fared particularly poorly, with its 30% fall in Asian exports contributing 14 percentage points to the state's overall export decline.
The Pacific region, which has the highest share of exports from the U.S. to Asia, and the Middle Atlantic also suffered, each with a 4 percentage point decline in exports attributed to Asia. The hardest hit Pacific states were Alaska, Hawaii, and Oregon. All three Middle Atlantic states experienced a decline in Asian exports of about 15%. ( m o r e )
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The regions least affected were New England (where exports to Asia actually contributed a positive, though negligible, amount to overall export growth) and the West South Central, where export growth was reduced by only one percentage point.
U.S. exports are increasingly going to fast-growing countries both inside and outside of Asia. The Rocky Mountain has experienced a particularly steep decline in export growth. After increasing at an average annual rate of 15% since 1991, export growth in 1998 is flat. The Middle Atlantic suffered the largest percentage drop in 1998 as exports fell by nearly 7%.
PROBLEMS STEMMING FROM LATIN AMERICA
The spreading of financial instability to Latin America threatens to slow U.S. exports considerably more in the coming year, Mazumder says. Regions in the Southern U.S. are particularly vulnerable.
The South Atlantic (including Delaware, Florida, the Carolinas and Washington D.C.) leads the U.S. in the share of exports to Argentina, Brazil, Chile, Colombia, Mexico, and Venezuela. This is somewhat misleading, because Florida sends 68% of its exports to these countries. The only other state in the region with a double-digit share is West Virginia (11%).
The West South Central (Arkansas, Louisiana, Oklahoma, and Texas), which to this point has been immune to the global slowdown, may be heading for rougher times. The region sends 21% of its exports to these Latin America countries.
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Source: Regional Economies and Markets, Third Quarter 1998, The Conference Board
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