The District economic outlook : responding to labor shortages and overseas problems

The Tenth District economy slowed down in 1998, with employment growing marginally below the national average. Despite very tight labor markets, employment growth remained healthy in many sectors. Construction; trade; transportation, communications, and public utilities; and finance, insurance, and real estate---all posted healthy gains. The manufacturing and service sectors, however, turned in weak growth, a result of the Asian financial turmoil and a shortage of skilled workers throughout the district. District agriculture had a difficult year, as commodity prices plunged in the face of rising supplies and weakening demand. A large aid package from Congress late in the year prevented farm incomes from being considerably less than in 1997.> Gazel and Wilkerson discuss why the district economy is likely to slow further in 1999, growing only modestly compared with the recent past. The expected slowdown of the national economy, continued economic weakness in the rest of the world, and very tight labor markets throughout the district are all likely to play major roles in the district economic slowdown. Some sectors of the district economy, such as manufacturing and mining, are likely to be hurt more than others in the near future. The service sector is likely to repeat its weak 1998 performance, while a reduction in consumer spending will slow growth in retail and wholesale trade in 1999. Construction activity may weaken a bit in 1999, and the district farm economy is likely to face a difficult year unless the government acts to further boost subsidies.