The uneven recovery

In late 2007, Meredith Whitney, then a rising analyst at Oppenheimer & Co., started warning that a looming meltdown in mortgages spelled disaster for many of America's big banks. Whitney's contrarian calls proved prescient and made her a celebrity on Wall Street. In her new book, Fate of the States, Whitney, 43, offers another daring prediction. She views America's future as the tale of two economies so wildly divergent they could exist as separate countries. The housing boom temporarily masked the weakness of such states as California, New York, and Arizona and encouraged their governments to spend recklessly. For Whitney, the future belongs to the unglamorous "flyover" states of the central corridor -- Nebraska, Iowa, Indiana, South Dakota -- places that never had a housing boom or bust, that benefit from low taxes and low debt, and that maintain the resources to fix their roads and nurture their schools. These are America's new emerging markets, and they will thrive by pulling jobs and businesses from the old-economy states destined, barring a revolution in leadership, to keep spiraling into decline. Our excerpt from Fate of the States:

It sounded like yet another corporate cutback story.

In March 2009, Tampa Bay-based Sykes Enterprises told city officials in Minot, N.D., that the company was going to have to lay off 200 workers and shutter the call center Sykes had been operating there since 1996. A sign of the bleak economic times -- right?

Well, there's a wrinkle to this particular story. Sykes's problem, according to the Tampa Bay Times, was not a lack of business. In fact, business was booming. The problem was that Sykes just couldn't find enough employees in Minot to handle all the demand. The company had originally hoped to expand its Minot call center to 450 workers. But in North Dakota's booming economy -- one in which fast-food joints are paying high school kids $20 an hour and young oil workers are pulling in $100,000 a year -- hiring has become a huge challenge for employers like Sykes. "They'd been advertising all the time for employees but just couldn't find them," said Minot mayor Curt Zimbelman, noting that true unemployment in North Dakota oil country "probably doesn't exist."