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The Western region in 1986

  • Agricultural Science
  • Economics


FRBSF .WEEKLY LETTER February 6, 1987 The Western Region in 1986 During 1986,the overall rate of economic growth in the Twelfth Federal Reserve District (Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon, Utah, and Washington) slowed from its 1985 pace, but growth rates dif- fered considerably among the western states. Arizona and Nevada were two of the fastest growing states in the country, while the econo- mies of Alaska and Idaho were among the weak- est in the nation. For the District, nonagricultural wage and salary employment grew 2.4 percent between Decem- ber 1985 and December 1986, almost identical to the 2.5 percent pace registered nationally. Arizona and Nevada had two of the fastest employment growth rates in the nation, at 4.2 and 4.8 percent, respectively. California, which accounts for about two-thirds of all Twelfth Dis- trict employment, experienced 2.4 percent employment growth, while Hawaii, Oregon, and Washington also registered growth between 2 and 3 percent. In Utah, employment grew only 1.2 percent, and Idaho's employment fell an estimated 1.7 percent while Alaska's fell 5.1 percent. As was true nationally, the economic forces with the most important effects on the West's perfor- mance were fairly robust consumer spending, lower interest rates, and lower oil prices. They affected the economic well-being of different parts of the District differently because of the various mixtures of industries among the western states. Thus, while forest products and residen- tial construction activity benefited from lower interest rates during 1986, oil and energy com- panies suffered fromthe sharp drop in oil prices that occurred early in the year. Trade and services Consumer spending is important in determining the overall pace of western growth because trade and service activity together account for almost 50 percent of total employment in the western states. In 1986, consumer spending gave a major boost to the western economy, even though it grew more slowly than its

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