Friday, July 25, 2008

Scraping Off the Rust

Buffalo is another Rust Belt city weathering the current economic downturn relatively well. The numbers still won't turn the heads of economists, but they do indicate some progress and restructuring:

The local job market’s relative strength, in itself, is unusual. The Buffalo Niagara region, because of its heavy reliance on cyclical manufacturing, historically has tended to fall earlier and harder when the economy begins to slow.

That hasn’t happened in this current slowdown because manufacturing now is a much smaller part of the overall economy here, despite the continued struggles of the auto industry, which remains a big part of the local manufacturing sector.

“We’ve become a much more diversified economy. That can help us at times like this,” said Richard Deitz, the regional economist at the Federal Reserve Bank of New York’s Buffalo branch.

National and even global economic disconnect is both good news and bad. How can Buffalo capitalize on the good? Hopefully, Buffalo can reconnect to global flows from a more commanding position. The current respite of splendid isolation is unsustainable. Autarky is not the answer, at least in the long view.

Not every city turtling through the recession will emerge from the storm as the next boomtown. My bet is that Pittsburgh will and Louisville, KY keeps grabbing my attention as a city ready for rapid growth (although I need to learn much more about the economic landscape there). I recall Seattle and Minneapolis getting out of the gate quickly after the recession of the late 1980s and early 1990s. Austin was probably another city with a similar head start at that time.

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