US: Western part leads economic growth – Wells Fargo

Research Team at Wells Fargo Securities, notes that the West continues to see the strongest growth in the US, with real GDP rising 3.4 percent in 2015.

Key Quotes

“California and Oregon led the nation, as both saw real GDP rise 4.1 percent. The common denominator in both states is the booming technology sector, particularly in areas tied to mobile devices and cloud computing. Production of tech hardware has not fared as well.

The San Francisco Bay Area remains the epicenter of nearly all aspects of technology. Other areas along the West Coast are also riding the technology wave, with specialty areas such as life sciences and wearables driving growth in San Diego, digital entertainment fueling gains in Los Angeles and e-commerce and cloud computing driving growth in Seattle. Other notable tech hot spots in the West include Denver, Salt Lake City and Anaheim-Irvine. The tech boom set off another gold-rush type of migration to the West. Rapid population growth proved to be a potent job creating force, fueling hiring in construction, retail and health care.

Slow growth abroad, coupled with increased geopolitical uncertainty and tepid investment growth in the U.S., pulled commodity prices considerably lower. Wyoming, Alaska, New Mexico and Colorado have taken the hardest hits. Agriculture producers face income pressure as bumper crops add to stockpiles and weak global demand pulls prices lower. The stronger dollar also increases the relative price advantage enjoyed by foreign producers, impacting agriculture and forestry sectors particularly in Montana, Wyoming and Idaho.

Tourism was a powerful economic offset for states most adversely affected by declining commodity prices, particularly Wyoming, Alaska, Montana and New Mexico. Western states where tourism is more of an economic mainstay, notably Hawaii, Nevada, Colorado and Southern California, all saw strong gains in 2015 and the first half of this year.

We look for the West to continue to outpace the nation this year. Growth is likely to moderate, however, as the global economic slowdown and stronger dollar weigh on exports.”