American Consequences - June 2018

RESURGENCE OF THE AMERICAN HEARTLAND

a group of folks who have generated a lot of attention and concern in recent years. But now, we’re seeing some hope. The “green shoots” of a growing economy are starting to peek out from the soil of the heartland... RURAL COMMUNITIES ARE OUTPACING URBAN GROWTH Since the Great Recession, I’ve detailed to subscribers to my Retirement Millionaire letter that the economy was grinding higher and constantly improving. Of course, we were mainly talking about New York, California, Washington, D.C., and other areas that were fully involved in the modern “knowledge” economy. We’d often add a caveat that plenty of areas were still struggling with high unemployment and low growth. Now, we can skip the warning. Economic growth in the formerly depressed, blue-collar areas has started to match that of the “urban elites.”

or auto factories. They moved in such great numbers... They brought their entire culture to a wide swath of territory stretching from West Virginia and western Pennsylvania through the Upper Midwest. Like the coal-mining industry, the steel industry today has passed its heyday. Since the 1950s, U.S. steel employment fell nearly 80%. There’s now roughly two times as many folks working at Starbucks (SBUX) than in the steel industry. And even with car sales booming in recent years, Detroit’s auto industry – once a consumer of steel – has declined in terms of manufacturing headcount and wages. Today, when we talk about “America’s heartland,” we often have in mind this stretch of land expanding out from the Hillbilly Highway. But the truth is, the concept of our heartland is less about a geographic location and more about a group of people defined by their social and economic circumstances. And it’s

Economic growth in the formerly depressed, blue-collar areas has started to match that of the

“urban elites.”

Since the start of 2017, the economies of rural states have outpaced the more urban ones (see chart to the left). Not all states fit easily into one category. For example, we consider Illinois urban thanks to Chicago, but left Michigan as rural despite Detroit. But even if you shift some of the borderline states between categories... the results don’t change much. The U.S. Bureau of Economic Analysis’ most recent state-by-state

RURAL GROWTH NOWMATCHING URBAN

24 June 2018

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