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.”
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