LOCATION QUOTIENTS EXPLAINED

Location quotients (LQs) can be used to assess the concentration of industries or industry clusters in a particular area relative to the United States. The calculation is useful to assess the relative strength or weakness of a given industry locally. An LQ of less than 1.0 indicates that an industry is less concentrated in the region than the U.S. average, while an LQ greater than 1.0 indicates that the industry is more concentrated in the region. An LQ equal to 1.0 means that an industry is on par with the U.S. average. Location quotients, coupled with employment growth rates, are analyzed to assess the relative competitive advantage, regional specializations, and economic development potential of industries within a particular region. For example, in 2021, the region had an LQ of 14 for “Wood Product Manufacturing.” This means that the region is 14 times more concentrated in this industry than the national average for a region its size.

Compounded Annual

Growth

Rates (CAGRs) represent an annualized rate of change for a metric. For example, if a certain metric has changed from a value of 50 in 2010 to 100 in 2019, that is a 100 percent flat increase, but in terms of CAGR, the metric has changed at a rate of 8 percent each year. A CAGR represents how much a metric has changed in each year.