Chicago Vs

According to the Institute for Supply Management Chicago’s economy is expanding sharply:

Chicago Business Barometer™ Escalated April 2010: The Chicago Purchasing Managers reported the CHICAGO BUSINESS BAROMETER escalated to the highest level since April 2005, marking its seventh month of growth. All Business Activity indexes signaled expansion for the second consecutive month. BUSINESS ACTIVITY: EMPLOYMENT marked a fourth month of growth; PRICES PAID accelerated to the highest level since September 2008; ORDER BACKLOGS and SUPPLIER DELIVERIES neared ten-year highs. BUYING POLICY: Lead times for PRODUCTION MATERIEL shortened while other indexes lengthened.

That certainly corresponds to what I’ve been seeing in my personal fortunes. Note, however, that the increase which is both strong and sustained is not being reflected in declines in comparably sharp declines in unemployment in Chicago which remains near the national average. That would appear to suggest a structural change rather than just a cyclic downturn.

It also supports a point I’ve been making for some time now: the recession is highly regional, even localized. That would in turn suggest that solutions need to be regional or localized as well and a one-size-fits-all federal solution will be at best a poor approach to economic recovery. And if, as some fear, what we’re seeing from the federal government is actually a clout-based approach it would be worse yet.

If we’re going to see a robust, sustained national recovery, resources need to be applied where they’re needed most.

4 comments… add one
  • Rich Horton Link

    “If we’re going to see a robust, sustained national recovery, resources need to be applied where they’re needed most.”

    Is this even possible in a “demand side” approach? I’d argue, no, as long as it is the Feds giving out the resources directly. After all you cannot say “Oh you can get this home buyers credit, but only if you are in these places.” The citizenry would have a conniption.

    I suppose you could merely give larger sums to states via hardest hit via block grants and have them divvy out the goods. But, I don’t see this group in Washington warming to that idea.

  • The analogy I’ve made before is to a natural disaster like a hurricane, flood, or earthquake, Rich. When a hurricane strikes the Gulf Coast, do we rush aid to Oregon and Idaho? Do we allocate the aid on a per capita basis or on the basis of who could fill out the forms fastest and best?

    But that’s what we do in an economic crisis, even in an economic crisis that’s affecting different regions to markedly different degrees.

  • PD Shaw Link

    I look at the BLS data on the Chicago metro area and it looks like the strongest jobs sectors are:

    Education and Health Services (up 1.5% over 12 months)
    Government (unchanged over 12 months)
    Mining and Logging (unchanged over 12 months and tiny)

  • Drew Link

    Two points:

    1. I think PD is spot on. “Recovery,” such as it is, is narrow in govt and health care. I don’t view that as being healthy.

    2. If you have a natural disaster, the economic dislocation is not rooted in economics. But if you have a local economic problem, say, Detroit, it is. Pouring money in to repair flood or hurricane damage is one thing. Pouring it down a rathole because of shifting economic fortunes, or, ahem, boneheaded govt policy, is another.

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