Saturday, May 14, 2011

Avoiding the worst

Yahoo Finance had an interesting article this week about some of the metropolitan areas that have suffered less in the Great Recession. The Clarion Content has read about the low unemployment in parts of the depopulated Great Plains, the Dakotas and Nebraska, but this is less about regional commonality and more demographic commonality.

Yahoo says that university centered towns and cities have been more recession proof. There are still 112 metro areas in the United States with 10% unemployment or greater. It is not the places with big universities. Among the cities Yahoo cites, Austin, Texas, Boulder, Colorado and Madison, Wisconsin---all have unemployment rates well below the national average. Of course, double winner, big university town, in a depopulated natural resource heavy state, Lincoln, Nebraska, checks in with a miniscule unemployment rate of 4.1%.

Another factor not noted by the Yahoo folks, but likely just as important as the universities in shielding these areas from recession, all saw significant population growth in the last ten years.

Austin, TX Population change 2000-10: 20.4%

Madison, WI Population change 2000-10: 11.6%

Boulder, CO Population change 2000-10: 5.8%

Lincoln, NE Population change 2000-10: 14.5%

If one buys into the Simon-Steinmann Economic Growth Model, that may simply be that. Simon would seem to be especially likely to be relevant in metro areas with big universities because his assumptions about population growth and economic growth moving in concert are underpinned/fueled by technological developments and advances.

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