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Investigative reporter Bill Dedman of msnbc.com
By Bill Dedman Investigative reporter
NBC News
updated 5/5/2009 11:21:08 PM ET 2009-05-06T03:21:08

Want to live in a sunny town that's immune from recession? Try Jacksonville. Just make sure that while you're on the beaches, you watch out for an amphibious assault.

We're talking Jacksonville, N.C., home of Camp Lejeune and its Marines, whose efforts in two wars have also helped the local economy fight off the worldwide recession.

Too hot for you? Try Rochester, Minn., where the Mayo Clinic kept the economy healthy until it slipped into a mild recession this January.

Or move northwest to Washington, where the Kennewick-Pasco-Richland metro area has only now joined the recession, thanks to a resource that will pay glowing dividends for thousands of years: nuclear waste from the Manhattan Project and the Cold War.

They're economic paradoxes, highlighted today in the monthly Adversity Index from Moody's Analytics and msnbc.com. The index shows that the recession reached 367 of the nation's 381 metro areas, and 47 out of 50 states, by the end of February.

Here's the surprise. On the one hand, cities with greater economic diversity tend to show steadier growth. A balance of industries usually means less boom or bust. Cities that put all their eggs in one market basket increase their risk of calamity. (See: Elkhart, Ind., the recreational vehicle capital of the world .)

Yet this is also true: Most of the 35 metro areas that have largely avoided recent recessions, and most of the 14 metro areas that still haven't fallen into the current recession, are Johnny One Notes, dominated by a single industry. They're college towns (State College, home of Penn State), government centers (Olympia, Wash.), military bases (Virginia Beach, Va.), or the stray mecca for health care (Rochester) or agriculture (Salinas, Calif., the Salad Bowl of America).

In Hinesville, Ga., home of the Army's 20,000-employee Fort Stewart, the next largest employer is the Wal-Mart. Yet Hinesville was among the last metro areas in the U.S. to join the recession.

Recession-resistant doesn't mean recession-proof. Now even most of those 35 metro areas are getting a case of recession, though it's likely to be brief and less painful.

Here are several ways to explore this month's Adversity Index:

  • An interactive map shows the economic health of every state and metro area. You can "play" the map to watch the progress of recessions over 15 years, or select any state to see data for each metro area.
  • A second map shows the 35 recession-resistant metro areas, which have had little recession experience over the past 15 years. You can explore their history and major employers. That map also has its own page .
  • The updated index will be published every month at http://adversity.msnbc.com. There is a lag of nearly two months, so March data will be out in late May.
  • An explainer tells how the Adversity Index assesses the economy. Each month, Moody's Analytics and msnbc.com use data on employment, industrial production, housing starts and house prices, labeling each state or metro area as expanding, at risk of recession, in recession or recovering.

The national view
Of the 50 states, only Alaska, North Dakota and Wyoming were showing enough signs of growth to delay a declaration of recession by the end of February.

Among metro areas,  96 percent were in recession by the end of February, up from 93 percent in the January report . That's 367 out of 381, up from 353 a month earlier.

Of the 14 metro areas still not in recession, again this month only one showed an expanding economy: Laredo, Texas, a border community energized by trade with Mexico — at least before the outbreak of swine flu across the border.

The 13 others were judged to be at risk, meaning they appeared to be decelerating toward a recession. Many on that list, but not all, are one-note economies of a different sort, producers of oil and gas. The 13 are Anchorage, Alaska; Bismarck, N.D.; College Station-Bryan, Texas; Farmington, N.M.; Grand Forks, N.D.; Grand Junction, Colo.; Jacksonville, N.C.; Killeen-Temple-Fort Hood, Texas; Las Cruces, N.M.; Midland, Texas; Odessa, Texas; Oklahoma City, Okla.; and Texarkana, Texas-Ark.

Not a single metro area in the nation was judged to be in recovery in February.

Accelerating pain in Elkhart
The economic decline accelerated in February in Elkhart, where msnbc.com is focusing reporting on the nation's hard times.

  • Employment in the Elkhart-Goshen metro area fell 12.0 percent from a year earlier, according to the latest Adversity Index, compared with a 9.4 percent annual decline reported in the January data. That was the worst decline in the nation. The next on the list were mild by comparison, 9.5 percent in the metro areas of Flint, Mich., and Kokomo, Ind.
  • Industrial production in the Elkhart area fell 24.77 percent year over year, compared with a 22.21 percent annual decline reported in the Adversity Index a month earlier. Only two metro areas showed slightly greater declines: Kokomo, down 25.03 percent, and Gary, Ind., 24.83 percent.
  • The housing construction industry nearly collapsed in Elkhart, with housing starts falling 69.9 percent from a year earlier, according to the latest Adversity Index. Only 24 of the 381 metro areas showed a greater decline. The most precipitous was in Janesville, Wis., where housing starts fell 84.4 percent.
  • The fourth component of the Adversity Index, house prices, will be updated next month for the first quarter of the year.

A mild touch of the recession
Two years of recession — that's been the typical experience of metro areas across the nation over the past 15 years. For the median, or middle metro area, that's been 23 months of recession spread through the 177 months studied in the Adversity Index.

Yet the recession-resistant metro areas we identified each had no more than nine months of recession during that same period. Most of these 35 areas missed the last national recession in 2001-02, and most of them came late to the current decline.

These 35 metro areas can power through just about any illness — so long as their one economic heart keeps beating.

Lincoln will always have the University of Nebraska. There's no talk of moving the capital of Washington out of Olympia. And in southeastern Washington state around Kennewick, Richland and Pasco, the process of cleaning up nuclear waste at the Hanford Site has years to go.

Not one of the recession-resistant metro areas ranked very high on a scale of industrial diversity from Moody's Analytics.

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There are a few with moderately high diversity scores — large regional centers, such as Atlanta, or smaller diverse economies, such as Bend, Ore., and Salisbury, Md.

"Generally speaking, diverse economies tend to have more sustainable growth with less severe dips, at the expense of less robust booms," said economist Andrew Gledhill of Moody's Analytics, which sells reports and forecasts on metro areas.

One reason is that a single sector of the economy can go into recession by itself. "For instance, overexposure to telecom in the 2001 recession would have led your local economy to be disproportionately affected," Gledhill said. "Having a diverse economy limits these kinds of instances."

The extreme exceptions are the 35 recession-resistant areas, which mostly have low to middling diversity scores yet somehow have slid past those national recession. North Carolina's Jacksonville turned in an industrial diversity score of just 5 out of 100 on the Moody's scale, the lowest of these 35 areas. Jacksonville is always just one defense appropriation bill away from joining recession-prone areas. But could Marines ever be as obsolete as RVs?

"There are some industries that have historically been less susceptible to the ebbs and flows of the business cycle," Gledhill said. "Health care and the military are good examples of this."

Minnesota's Rochester is a world leader in health care because of one name: Mayo Clinic. The medical center employs about 30,000 people, and supports many ancillary businesses. The next largest employer, IBM, had only about 4,000 on the payroll before layoffs in January and March. (IBM hasn't disclosed the number laid off, but news reports have estimated the job losses at several hundred.)

Despite the national recession, the Mayo Clinic added jobs in 2008, according to Moody's Analytics.

"Now, however, the national economic slump is hitting Mayo as well," said a report by economist Edward Friedman for Moody's clients in February. "According to spokesmen, in the near term the only hiring, if any, will be for direct patient care. Research and training jobs will be frozen. ... Further, charitable contributions, a major source of funds for unbilled services, are declining, which puts additional downward pressure on the clinic."

A spokesman for the Mayo Clinic declined msnbc.com's request for an interview. Spokesman Karl Oestreich said in e-mail: "We don't give quarterly updates to the media on our financial situation as is required of for-profits. We don’t intend to start giving updates now. Mayo Clinic is a humanitarian not-for-profit institution that is primarily concerned with the delivery of our mission. In general, we are weathering the financial crisis about as well as could be expected. Our mission isn’t really about supply and demand; it’s about healing the sick and advancing the science."

Over the long term, the Moody's prognosis for Rochester is one that nearly every other part of the nation would envy: "The metro area will experience a moderate recession over the course of 2009," then get quickly back on track, as long as health care spending remains high.

That might be a better bet than foreign wars or nuclear waste.

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