U.S. Regional Economic Outlook

September 3, 2021 – U.S. GDP (Gross Domestic Product) growth reached full recovery in the second quarter of this year, but some parts of the country are contributing to the rebound more than others. The South region and Mountain West division have benefited from both an earlier lift in restrictions than some other parts of the country and having some of the hottest housing markets in the U.S., which will help support construction and real estate jobs going forward. As a result, the South and West will likely return to pre-pandemic levels of employment by the end of 2022. While much of the Midwest relaxed restrictions early as well, its reliance on manufacturing has left the region very susceptible to recent international supply chain disruptions. The Northeast was hit hardest by the pandemic with very tight restrictions on tourism and retail businesses. Thus, the Midwest and Northeast are not expected to reach pre-pandemic levels of employment until 2023. In terms of GDP growth, the Northeast is the only region that will likely not recover until Q3-2021.

The Northeast was also the only region where nominal consumer spending did not fully recover in the first quarter of this year. However, a recent acceleration in the reopening process likely led to a full recovery in consumer spending in the Northeastern states in the second quarter. The South is experiencing the strongest consumer spending recovery among the four regions, with spending 7.7 percent above its pre-recession peak. As the Delta variant continues to surge in less vaccinated areas of the U.S., regional consumer confidence will be a key indicator of how much the new surge in cases is impacting the regional consumer spending outlook.

Highlights:

• Consumer spending growth likely spiked in Q2-2021
• South and Midwest will lead in consumer confidence
• South and West should recover pre-pandemic employment levels by the end of 2022
• Northeast expected to lag all other regions in recovery
  

Forward-Looking Statements

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