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IPFS News Link • Economy - Economics USA

Recession Already Reality in Spots From West Virginia to Wyoming

• http://www.bloomberg.com

Dale Oxley doesn't need to hear about rising odds of a U.S. recession to dread the future. For the West Virginia homebuilder, the downturn has already arrived.

"Everyone is going to have to tighten their belts," said Oxley, the 48-year-old owner of a Charleston-area construction company. "The next couple of years are going to be difficult."

As economists size up the chances of the first nationwide slump since 2009, pockets of the country are already contracting. Four states -- Alaska, North Dakota, West Virginia and Wyoming -- are in a recession, and three others are at risk of prolonged declines, according to indexes of state economic performance tracked by Moody's Analytics.

The regions suffering the most are in the flop stage of the energy industry's boom-to-bust cycle, and manufacturing-dependent areas hurt by a rising dollar are at risk of receding. Whether the weak links break the entire U.S. economy will hinge largely on a group that's benefited from the energy price collapse: American consumers.

"The impetus for weakening regional economies is the huge fall in energy prices and other commodities prices, which is taking a tremendous toll," said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York, who is concerned of a broadening into a national recession. "If the consumer were to falter for any reason, that would be a big problem."

Job gains and losses are key factors that the National Bureau of Economic Research uses to chart U.S. expansions and recessions. Even as U.S. employers added 2.7 million workers in 2015, job cuts last year totaled 18,800 in North Dakota, 11,800 in West Virginia and 6,400 in Wyoming, according to the U.S. Labor Department.

The common thread? They all have concentrations of energy companies. A 72 percent plunge in crude oil prices since a peak in June 2014 has led to lower production and firings.


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