Mid-Sized, Mid-West Cities Weathering Downturn Best

As banks pull back on risk-taking across the nation, consumer lending is rising in places like Columbia. Many midsize cities are outperforming their larger counterparts, owing to more disciplined economic development strategies in those cities, more diverse employment and lower costs.

States in the Great Plains and Rocky Mountain West are experiencing either mild recessions or none at all. Lingering effects of high commodities prices have helped, but the lack of a real estate boom may be the more important factor.

Columbia may be able to learn from Germany, where the Mittelstand (small- and mid-sized enterprises) are acting as a shock absorber against the economic smash-up. Firms with up to nine employees are the backbone of the German economy, making up 93 percent of the country's 1.6 million enterprises. While small and middle-sized firms hire two-thirds of new employees--an even greater percentage than in the US and Britain--the Mittelstand has avoided large-scale layoffs so far.