In former times, the heart of the industrial America pulsed here: The Rust Belt is a region in the Northeast of the United States, with a high population density and closely linked infrastructure. The region extends from New York, Boston and Baltimore on the East Coast to Philadelphia and Pittsburgh and finally to Cleveland, Detroit and Chicago at the Great Lakes.  

Here, for a period of more than 100 years factories and manufacturing sites stood in rows side by side. In the 19^th century, the motor of the industrial revolution of America was located here. The Rust Belt was the main reason why the Confederate States from the beginning did not have any chance against the Northern states of the Union in the American Civil War (1861-1865). Mainly living on agricultural economy, the Southern states could not tackle the production power of the armament factories in America’s Northeast. In the end, the number of cannons was the decisive factor.  

For a long time, a rough division of labor was valid in the United States. The South and the West delivered the raw materials and the Northeast forwarded the industrial production. To say it somewhat exaggerated: Texas supplied the oil, Detroit built the cars.

This division of labor also shaped the second Industrial Revolution. In the first half of the 20^th century, the petrochemical sector developed methods to not only gain fuel for vehicles out of crude oil but also all kinds of plastics as well as chemical and pharmaceutical products. 

The diversity of the synthetic plastics from the petro-chemistry led to the second economic miracle. Now, it was possible to manufacture all kinds of everyday items in large numbers out of plastic and rubber.  From acrylic fibres in the clothing to the PVC floor in the kitchen, from the plastic bag instead of a shopping basket to the cosmetic product – everything was cheaper now and available in great quantities.

During this stage the Northeast set the tone as well. In the 1950s and 1960s, America achieved prosperity like no other country in the world did. What was special about it was that this prosperity was distributed relatively even amongst the population. There was a strong American middle class. This middle class was tone-setting. The American dream of the single-family home with a garden in the suburbs and a job in the city reachable over the Highway by one’s own automobile: this was the new ideal of the American freedom.  

Everything was big: from the refrigerator to the cars. In Europe most people only could dream of such a standard of living. Average Americans were able to travel and their children had the possibility to go to highschool or college. In those times it was still affordable.

Images like from bygone times

If you travel to the cities of the Northeast of America today you still will be able to adore the glittering skylines in der city center. However, as soon as you go to the suburbs or industrial areas you will face a shocking picture: deserted houses, damaged roads, industrial ruins, jobless juveniles, high crime rate, poverty in old age, neglected infrastructure – a hopeless atmosphere.

The financial crises from 2007 on had accelerated this trend and shifted it to public awareness. But the trend had started long before. This was not only due to the shift and migration of the industrial production to Eastern Asia but also within the States a massive change was in the looming.  

Where did the industry migrate to?

The US automobile industry was the drive of the US economy in the 20^th century. The Ford T Model was the first mass-produced car which also was affordable for the American middle class. America was the country where the dream of a car for everybody became reality first. Germany followed later.

Today, the US automobile industry has lost its leading role. Neither in terms of the market shares, nor in terms of technology could the American auto manufacturers successfully hold their grounds against the competitors from Europe and Asia.    

In contrary, other economic branches still contribute to America’s economic success. The resources, first of all oil and gas, are needed today more than ever before. These are the strengths of the American South and West.

But, primarily the development in the field of microelectronics and internet is the area where the United States are undisputedly leading. However, these industrial sectors are flourishing less in the Northeast. Especially the South and the West are predominant in this respect. In particular, Silicone Valley in California is the reason that the former Flower-Power-Hippie-student city, San Francisco, and the Bay Area meanwhile have become one of the most expensive areas of the USA and one of the economically most successful areas of the world. Here, the course of the digital age is being determined. Also, Seattle in the Northwest has become a high-tech metropolis. In Seatlle, the primary driving force was Microsoft.

Sun Belt on the rise

The Sun Belt is an expression for the South of the USA, from California in the West to North and South Carolina in the East. Actually, it is not a coherent industrial region as the old Rust Belt. But the Sun Belt defines a geographic area where extraordinarily many economic, industrial, and technological boom districts are flourishing, so-called hot spots of progress.  

The climate cannot be the reason. It is true that California is appreciated for its sunshine – which the solar industry profits from - but periods of drought and water shortages make life hard. In the more humid Eastern South states the summer sultriness only is endurable with an air-conditioning system. Despite this, the population is growing in the entire Sun Belt. According to data of the United States Census Bureau, the Sun Belt has been responsible for more than 80 percent of the US population growth during the previous years. At the same time, the economic productivity in this region increased disproportionately.   

Local politicians attribute this fact to political location factors. They say that investors would obtain fewer constraints in these states, the trade unions would have fewer powers, and generally the levies and requirements would be lower. Critics claim that the number of migrants from Central America seeking work would bring down the wage level and thereby cause lower personnel expenses. They continue saying that the South would profit from its close vicinity to the low-wage country Mexico because component parts for industrial production could be easily transported between Mexico and the USA in the scope of the NAFTA rules. In doing so, they could take advantage of the most favorable working conditions for each working step.  

In total, the South mainly profits from the oil production, the aircraft industry, the numerous high- tech companies, the armament industry, and the new economy of the internet. Texas and California still are the driving forces of the South.  

USA will remain in the game as an economic power

The developments described are part of bigger domestic processes in the USA. There have always been asymmetries between the individual US federal states. Markets do react delayed. The individual federal states in the USA have a great legislative and executive scope to enter into competition of site conditions against each other. 

Against this background, reports about the dilapidation of parts of American cities and suburbs have to be valued in context with the overall development. Bad news from Cleveland and Detroit are relativized by good news from Austin and Houston, Texas. Texas is a boom state being economically as strong as the whole of Canada. Within the past 10 years the population of Texas has increased by a quarter to a total of 27 million people.