View Full Version : Is your state/town in a recession (interactive map link)

03-06-2008, 12:41 PM
map link (http://www.usatoday.com/money/economy/2008-03-04-local-differences_N.htm)


How's the economy in your hometown?

Digg del.icio.us Newsvine Reddit FacebookWhat's this?By Barbara Hagenbaugh, USA TODAY
On the campaign trail and in homes across the USA, the debate is underway about whether the U.S. economy in 2008 will see its first downturn in seven years.
Despite the recent onslaught of negative news, it remains unclear whether the current state of affairs meets the economists' definition of a recession: a widespread decline in economic activity lasting more than just a few months. As in politics, all economics is local.

Mark Zandi, chief economist at Moody's Economy.com, for example, believes the U.S. economy is in recession.

But the contraction is far from uniform. Zandi's firm estimates that in January, 30 state economies were expanding while 15 were "at risk" of slipping into recession.

Arizona, California, Florida, Michigan and Nevada were already in a recession at the start of the year. Those states account for one-quarter of the nation's total economic output.

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While business owners and workers in parts of the country for months have weathered recession-like conditions job losses, home foreclosures and slumping consumer and business spending others have been doing well. Some areas are likely to feel very little effect from the slowing economy.

That's mainly because a marked contraction in housing is leading the overall economy down this time. Housing had been instrumental in boosting many regions, particularly the Southwest, in recent years.

During the housing expansion, job growth in related industries flourished, and consumers tapped their growing home equity to buy everything from cars to couches.

But in many parts of the country, housing never boomed, so now there's not likely to be a corresponding bust. And a number of other elements of the economy are still doing well, helping to keep some regional economies above water.

Depending on a state's business mix, factors such as high agricultural prices, strong tourism or a heavy reliance on exports are keeping some state economies growing. Likewise, heavy dependence on struggling sectors such as automobile manufacturing can drag states down further.

Even troubling aspects of the economy such as high energy costs produce some winners.

Stanley Stonier of Boise started as an entry-level worker on an oil rig near Pinedale, Wyo., in January. Before, the 31-year-old was making $15 an hour as a housing construction worker. Now he is making $26 an hour.

"I'm loving it," says the former Army reservist who served a year in Iraq in 2005.

A look at a variety of factors in play in states around the nation:


Home sales are down in nearly every state, but the depth of the decline varies widely. Many of the hardest-hit states are those in the Southwest, such as Arizona, Nevada and New Mexico. Other states, such as Colorado and Arkansas, saw more modest declines. And home buying was up or unchanged in the fourth quarter in North Dakota and South Dakota, according to the National Association of Realtors.

But economists' statistics alone don't tell the story of the USA's uneven housing market. Sales of house paint hold some clues, too.

"The Sun Belt area of the country, those areas where housing had been strong, are feeling most of the pain today," says Chris Connor, CEO of paint company Sherwin-Williams.(SHW)

"Other areas of the country are holding up fine for us," he says, noting the company still plans to add stores and expand business this year.

The housing sector has a way of trickling through the economy. Not only are people who work in related fields, such as construction and real estate, negatively affected, but the ability of homeowners to take out loans to fund their spending has all but dried up as home values have declined.

And that decline tends to have a so-called negative wealth effect on consumers: When people feel less wealthy they are less likely to spend as much. Homeowners who are seeing their interest rates jump on their adjustable-rate mortgages also have less spending money.

In the Reno area, home foreclosures jumped from 105 in 2006 to 750 last year, according to the Center for Regional Studies at University of Nevada, Reno. Thirty miles south of Reno in the state capital of Carson City, business is down at the Carson Oak Outlet furniture store.

"I think the numbers are 20% to 30% down from last year, and last year wasn't too good, either," owner Michael Lavin says. "Everything in the economy is affected by this."

In Arizona, Jose Cabrera, 39, made a good living as a real estate agent for eight years in Phoenix. Then, suddenly, Cabrera went from selling three units per month to none. In June, he got a second job as a machinist making airplane parts.

Cabrera likes the work, even if it means "going into a cave" for eight hours daily. But his income has been cut in half. And he doesn't take his wife and four children to dinner or movies as often.

"Before, I didn't think anything of going out," Cabrera says. "Now, you have to watch where you spend your money."

Across the country in Black Mountain, N.C., where housing, although slower, has been helped by an increase in residents to the area, Pisgah Brewing co-founder David Quinn is seeing an entirely different picture. He expects the firm to sell 2,500 barrels of the firm's organic beer this year, up from 1,340 in 2007 and 538 in 2006, when the company started.

He's hiring workers and says the company is growing so fast it is "getting close to our physical limit."

Businesses and consumers not in areas most affected by the housing boom and bust are not escaping the effects of the housing slump entirely. That's because in the fallout from the subprime mortgage mess, banks have tightened lending standards for a variety of loans, no matter where the borrower is.

"The whole key (for the economy) since August has been the credit crunch extending beyond housing," says James Diffley, managing director of U.S. regional services at Global Insight.


Farmers have benefited from a historic run-up in grain prices driven by surging demand in nations such as China and India, poor weather in some important producing nations and the increasing use of corn and other crops to make biofuels such as ethanol.

Soybean prices on the Chicago Board of Trade have jumped from around $7.50 a bushel in late 2006 to nearly $15 today. Wheat prices have doubled to more than $10 a bushel. Corn prices, which had been averaging about $2.50 a bushel earlier in the decade, have surged to more than $5 a bushel.

While higher farm prices are leading to rising prices in grocery stores, the gains are providing a big boost to areas where grains are grown, such as regions of North and South Dakota, Iowa, Kansas and Nebraska.

Not only are the higher prices helping farmers, but they also are boosting sales of companies that sell to farmers, such as John Deere. (DE) The Moline, Ill.-based company said last month it expects sales of equipment such as tractors and combines to rise approximately 17% in 2008.

Those who grow crops "have a spring in their step and a song in their hearts," Wells Fargo (WFC) agricultural economist Michael Swanson says.

But there is a downside, Swanson notes. Farmers with livestock who do not grow their own feed are having to pay high prices that they are not fully recouping when they sell their animals or milk. Those farmers are facing significant losses. He recently met with some dairy farmers in Texas. "They are terrified."


The weakness in the dollar, down 11% against a basket of major currencies during the last year, makes U.S. goods more affordable for buyers abroad and is helping to boost exports.

Exports account for more than one-tenth of all economic activity in seven states: Washington, Vermont, Texas, Louisiana, Kentucky, Michigan and Oregon.

"This cushions some of the blow, particularly in the manufacturing sector," Global Insight's James Diffley says.

International sales of an online service for businesses from WBP Systems have been growing 5% to 10% faster than overall sales, according to the Pullman, Wash.-based firm's chief software architect, Ben Smith. The company sells a service that helps small businesses track clients and charges a monthly rate. The weaker dollar is "advantageous for" customers abroad, Smith says, noting sales in the United Kingdom are particularly strong.

Texas, where exports account for more than 14% of the state's economy, has one of the best job growth rates in the country. It's not only those selling abroad who appear to be benefiting.

Al Bussmann, sales and marketing director at Perfect Lawns and Landworks of Austin, expects business at the firm, which provides lawn maintenance and landscaping services, to grow by double digits this year. He notes that for most people, having someone mow their lawn or plant shrubs is an expense that can be cut in tough times. So the fact that business is growing suggests the local economy is doing well. The city had a 3.6% unemployment rate in December, presenting a challenge to Bussmann's company.

"Our biggest challenge is hiring people, because the unemployment rate is so low in Austin. Overall, the economy is good," he says.


In Canton, Mich., 30 miles west of Detroit, Sharon Grigorian is trying to sell the Mobil Lounge, a bar that catered to workers at General Motors' (GM) Willow Run plant before the assembly line closed in 1993. The plant still makes transmissions.

Grigorian, 66, has owned the bar for 35 years, and the downturn in auto manufacturing has been tough on her business.

"We were basically a GM bar, and it was so easy in those days," she says, referring to when the company was the undisputed king of automakers. "You could just set the clock by the shifts. You didn't need dart leagues and pool leagues to make a living. All you had to do was open the door."

Grigorian says she still gets weekend crowds, but customers are much more careful with their money.

"It's just a different world, and a lot harder to earn a living these days," she says.

North American car factories are expected to turn out a little more than 14 million vehicles in 2008, according to consulting firm Global Insight. That's down nearly 1 million from 2007, when vehicle production also fell, and the lowest in more than two decades.

"These are incredibly low numbers," Global Insight senior analyst Catherine Madden says of the manufacturing fall-off.

Slow auto sales and increased competition from abroad are leading to the declines. It's been particularly painful for domestic auto producers, which in recent years put greater emphasis on building bigger vehicles such as SUVs and trucks, vehicles that have become harder to sell given elevated gasoline costs.

States with a heavy reliance on domestic car production, such as Michigan and Ohio, are reeling as assembly lines close and jobs are cut. The effects are trickling to suppliers and beyond. At 7.6%, Michigan's unemployment rate in December was the highest in the nation and far above the 5% U.S. average. The unemployment rate in the Detroit area was 8.5%.


Strong increases in travel-related spending are helping to offset housing gloom in states with large tourism industries, including California, Florida and Nevada, some of the very places where the real estate downturn has been most severe.

Mike Carey, chairman at SnowSports Industries America and co-owner of Seirus Innovation, a maker of snow-sport accessories in Poway, Calif., says after years of industrywide growth in the low single digits, sales are up 13% this season.

He attributes the increases to ample snowfall across a large portion of the USA as well as an increase in foreign tourists who are coming to take advantage of the weakened dollar, which helps stretch their money.

"Across the country, there are really no weak pockets," he says.

Walt Disney (DIS) last month reported attendance at Walt Disney World theme parks in Florida was up 4% while per capita spending was up 3%.

"The weakness of the dollar against foreign currencies has probably resulted in fewer Americans traveling overseas and has resulted in more people from international markets traveling to the U.S.," Walt Disney CEO Robert Iger said in a conference call with analysts. "That's why we had record attendance at our domestic parks. It came from basically both

03-06-2008, 12:43 PM
Kansas - Expansion
Lawrence : At risk
Topeka/wichita- Expansion

03-06-2008, 12:44 PM
California looks bad

03-06-2008, 12:45 PM
My house sits in one of the most desired neighboorhoods in all of the KC metro area and our house has lost $28K in value in the last year and a half.

03-06-2008, 12:49 PM
My house sits in one of the most desired neighboorhoods in all of the KC metro area and our house has lost $28K in value in the last year and a half.

i thought you were renting?

03-06-2008, 12:52 PM
i thought you were renting?
I have a nice house in Lee's Summit. I'm renting an apartment in St. Louis for a job during the week

03-06-2008, 12:55 PM
I haven't seen any signs personally. I wouldn't mind if the real estate market was even more attractive in about 6-12 months so I could take advantage of it, though.

03-06-2008, 01:20 PM
California looks badit's been bad for a long time, no one wanted to end that Pyramid game

03-06-2008, 09:55 PM
This is great news. I hope house prices crash in the next two years, then when I buy a house, start to go up again. Outstanding.