U.S. Industrial Transition and Its Effect on Metro Areas and Community Banks

As alternative forms of energy and lower carbon technologies emerge, the economies of areas with concentrations in industries exposed to these changes may undergo transition. The FDIC study “U.S. Industrial Transition and Its Effect on Metro Areas and Community Banks (PDF)” explores industrial transitions in the United States between 1970 and 2019. The economies and demographics of many Metropolitan Statistical Areas (metros) changed significantly during the five-decade span. The national economy shifted away from the manufacturing sector, and industries such as steel and textiles were hollowed out by the forces of automation and globalization. In the study, the authors create a novel metric called a Transition Score to measure industrial transition across metros, use this metric to determine which metro areas were most affected by industrial transition, and compare the economic and banking performance of affected areas to areas with lower levels of transition. 

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