NCPA - National Center for Policy Analysis

Hope And Success In The Midwest

April 19, 1997

Midwestern states in the U.S. have tended to lead America both into and out of recessions. Now Illinois, Ohio, Michigan, Wisconsin and Indiana are booming.

  • Their exports -- particularly to Mexico -- are growing faster than the national average.
  • Their unemployment rates, at an average of 4.4 percent, are the country's lowest.
  • Over one-half the car assembly plants opened since 1979 have been in the midwest.

A new study by the Chicago Federal Reserve suggests that in the next national economic downturn this area may not be in the leadership position.

Here are some of the reasons cited:

  • The growth of exports in the midwest has made them less vulnerable to domestic economic fluctuations.
  • Dramatic restructuring by firms, heavy capital investment and greater productivity will help sustain the region.
  • Midwest consumers are now less heavily in debt than those on the two coasts.
  • Midwestern state governments are running higher public surpluses than the nationwide average.

Also, the region is less dependent on Medicare than any other part of America -- in part because considerable health-care restructuring has already lowered costs. Thus, it would be less hard-hit by cuts in the program.

One of the very few clouds on the horizon, economists say, is shortage of workers. Indiana, the most manufacturing-intensive state in the union, now has an unemployment rate of just 3 percent.

Source: "A Test of Mid-West Mettle," The Economist, April 19, 1997.


Browse more articles on Economic Issues