Open For Biz: The crystal ball

Incomes fell in 223 U.S. metro areas last year — including Asheville. Compared to 2008, local per capita income dropped 2.2 percent in 2009, according to recent reports in the Wall Street Journal.

“Personal income took a hit in most of the U.S. last year with the only gains coming from government support, according to new data from the Commerce Department,” writes Phil Izzo in an Aug. 9 blog post, “U.S. Incomes Tumbled in 2009.” On average, incomes in U.S. metro areas fell 2.8 percent, when the year prior, they rose by about the same amount.

Nine areas saw no change, and 134 experienced income increases, he continues. But in about half the latter, “the growth came from transfer receipts such as unemployment benefits or Social Security payments. In most of the remaining 57 metro areas, the gains were concentrated in the government sector, the Commerce Department said, including strong growth in military earnings.”

Prices also declined last year by 0.2 percent.

Some of the worst income declines were in Texas, such as Midland’s 8.4-percent drop, Conor Doughtery reports writes Conor Dougherty in his Aug. 10 Journal article, “Incomes Fall in Most Metro Areas..” , also noting, “Among the 10 metro areas with the largest personal income growth, seven had a strong military presence, among them Jacksonville, N.C., which houses the Marine Corps’ Camp Lejeune and Fayetteville, N.C., home of the Army’s Fort Bragg.”

In just five metro areas did the private sector account for most of the earnings growth: Kennewick, Wash.; Cumberland, Md.; Morgantown, West Va.; Cape Girardeau, Mo.; and Ithaca, N.Y.

Nationally, unemployment remains at 9.5 percent. In the Asheville metro area, the rate is about 8 percent.
Don’t let the forecast get you down

A few weeks before the Wall Street Journal report, local economist James Smith told a crowd of about 300 gathered for the 11th Annual Asheville Metro Economic Outlook, “Things are much better than you read.” Smith is the chief economist for Asheville investment firm Parsec Financial Management and a national authority (he’s a member of the forecasting panels of Bloomberg, Business Week and the Federal Reserve Bank of Philadelphia; and he has served on the Board of Governors of the Federal Reserve System).

Smith assured the July 28 audience of business leaders, bankers, retirees, investors and others, “Do not worry about another recession this year, next year, or the year after.” The chances of a new (or continued) recession are no higher than 20 percent — only a few things could derail the recovery, such as a large-scale natural disaster or Congress allowing tax rates to revert to the year 2000 rates, he said, mixing jokes with forecasts.

Acknowledging that the American economy relies heavily on consumer spending, he urged an old adage from his days at Sears, Roebuck and Company: “Shop till you drop and hit the floor. Then go shop some more.”

After his presentation, Smith acknowledged his viewpoint leans conservative and pro-free market: “Less government is better,” he told Xpress. He voiced concern about the United States’ rapidly growing national debt, remarking that current levels of government spending “are unsustainable.” If government spending is not slowed or reversed, the country could end up like Greece — broke, he asserted.

Nonetheless, Smith was steadfastly optimistic, and some of the local numbers do seem encouraging: Home sales are up 30 percent, and overall job loss has slowed to a trickle compared to the early stages of the recession. “We’re on the precipice of adding jobs,” said Tom Tveidt, research economist for the Asheville firm, SYNEVA Economics.

Providing numbers to back Smith’s cautiously optimistic forecast on July 28, Tveidt noted such data as Asheville’s relatively low unemployment rate, compared to some of the hardest-hit parts of the state —the Hickory metro area, which includes Morganton and Lenoir, is seeing nearly about 13-percent unemployment, much higher than in Asheville, he mentioned.

Still, there’s a structural change in the Asheville-area economy: The real estate market is permanently altered, said Tveidt. Fewer well-to-do retirees and baby boomers will be moving to the area; and those who do will be looking for value when they purchase homes.

In short, don’t expect the sometimes rapid home-appreciation rates Asheville has experienced in the past. Home prices have dropped about 7 percent since last year, Tveidt reported.

As for jobs, most of the growth is in the government, health and leisure-and-hospitality sectors. In particular, the Asheville metro area has had five consecutive months of economic growth in hospitality and hotel jobs, and the health services industry was the only sector of the Asheville metro economy that didn’t lose jobs in the recession, he added.

When asked how and whether the area could regain lost manufacturing jobs, Smith stepped in to note that the majority of all people employed in the U.S. have jobs processing information, not making things. Said Smith, “It’s been that way since Nixon administration.”

— Margaret Williams can be reached at 251-1333, ext. 152, or Direct your business news Michael Muller at 251-1333, ext. 154, or to


Thanks for reading through to the end…

We share your inclination to get the whole story. For the past 25 years, Xpress has been committed to in-depth, balanced reporting about the greater Asheville area. We want everyone to have access to our stories. That’s a big part of why we've never charged for the paper or put up a paywall.

We’re pretty sure that you know journalism faces big challenges these days. Advertising no longer pays the whole cost. Media outlets around the country are asking their readers to chip in. Xpress needs help, too. We hope you’ll consider signing up to be a member of Xpress. For as little as $5 a month — the cost of a craft beer or kombucha — you can help keep local journalism strong. It only takes a moment.

About Margaret Williams
Editor Margaret Williams first wrote for Xpress in 1994. An Alabama native, she has lived in Western North Carolina since 1987 and completed her Masters of Liberal Arts & Sciences from UNC-Asheville in 2016. Follow me @mvwilliams

Before you comment

The comments section is here to provide a platform for civil dialogue on the issues we face together as a local community. Xpress is committed to offering this platform for all voices, but when the tone of the discussion gets nasty or strays off topic, we believe many people choose not to participate. Xpress editors are determined to moderate comments to ensure a constructive interchange is maintained. All comments judged not to be in keeping with the spirit of civil discourse will be removed and repeat violators will be banned. See here for our terms of service. Thank you for being part of this effort to promote respectful discussion.

One thought on “Open For Biz: The crystal ball

  1. ashkat

    Social Security payments did not change this year but medicare monthly premiums increased. That made a net decrease in income for retirees living on Social Security.

Leave a Reply

To leave a reply you may Login with your Mountain Xpress account, connect socially or enter your name and e-mail. Your e-mail address will not be published. All fields are required.