The Gulf: Paying The Bill for the Party Next Door

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The forecast is better for most of the Western and Midwestern states, where growth has been solid, if slow. Housing markets from Indianapolis to Lincoln, Neb., have enjoyed price increases averaging 10% or better, while Idaho has the fastest-growing real estate market in the U.S. Problems dot the map, however. In once booming Los Angeles, housing construction fell nearly 50% in the first six months of the year, and thousands of workers have lost their jobs to defense-industry cutbacks. Still, energy-rich California may be helped by rising oil prices.

Well-off states cannot afford to gloat too much. If the oil shock manages to push the U.S. into a bona fide recession, regional benefits will mean little. Says Robert Dederick, chief economist of Chicago's Northern Trust Bank: "Hard times move quickly from one area of the country to another. No one is immune."