Economic Diversity

North Central is the Only Region with High Economic Diversity

Why is it important?

Economic diversity is the same idea as diversifying your investment portfolio. Higher diversity reduces a local economy’s exposure to shocks such as factory closures, downturns in major sectors, and general recessions. Places with high economic diversity rebound more quickly than those with low diversity. Unemployment rates and per capita income return more quickly to the levels they had before the shock. Low economic diversity is a major reason why rural communities experience boom-and-bust cycles.

How are we doing?

North Central is the Sierra Nevada’s only region with high economic diversity, but it declined slightly toward the end of the 1990s. Both North and South Central have medium economic diversity. The East has the lowest economic diversity, making it the most susceptible to experiencing economic shocks. The East’s trend in economic diversity moved in the opposite direction from the rest of the Sierra, declining during the 1990s expansion, then increasing toward the end of the decade as the economy slowed down.

Download data and charts 1990 to 2000