Saturday, January 16, 2010

The Economic Center of Gravity in the U.S.

Due to the emerging markets of Asia, it's now somewhat commonplace to refer to a new center of gravity in the world's economy. Regardless of the truth in that, I believe a similar type of change is occurring in the United States.

Starting in the 1970's, the economic power of the industrial Midwest, centered in Michigan, began to be debilitated by years of of outsourcing and reduced market share. This power shift benefited not only countries like South Korea, or Japan, but areas in the southern United States where production shifted. And, in terms of political influence, Silicon Valley and California replaced the Big 3.

It seems that California is now locked into a long-term cycle of decline. This means that Texas, with the second largest GDP by U.S. states, and much less affected by the recession, is poised to gain leadership and political influence at the expense of the West.

1"Even with austere budget plan, California counts on federal funds" - Washington Post; Vick and Cho

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