Signs of Recovery Are Budding
SOUTHERN. This time around, the Southeast got hit, but it's bouncing back. From region to region across the country, recession appears to be ebbing. After a long decline, housing and manufacturing seem to be strengthening. But state budget woes will likely slow the upward trend.
THROUGHOUT the 1980s, the Southeast preserved its economic edge over the rest of the nation. It had lower wage rates, land costs, and taxes. Companies and workers flocked to the region.
So, when recession hit the rest of the nation in the early 1980s, the fast-growing Southeast barely noticed.
This time it noticed.
As the region has developed, it has begun to respond to economic changes in the same way as the nation as a whole, economists say. The region went into a recession last year about the same time that the rest of the United States did. And economists expect it is now recovering on par with national norms.
Since the region's economy looks a great deal like the rest of the US, it has lost its economic advantage, says Frank King, an economist with the Federal Reserve Bank of Atlanta. Its manufacturing base has expanded; wages and land costs are closer to national averages.
Even the great influx of working people into the Southeast is probably over, he says, because baby-boomers are much less likely to relocate in their 40s and 50s than they were during their 20s and 30s. (The region's economy is still attractive to retirees, however.)
In the 1960s the price of prime industrial land in Charlotte, N.C., stood at about 60 percent of the national average: today it's reportedly 85 to 90 percent of the average.
The 1990 recession hit hardest and has lasted the longest in the northeastern part of the region.
Virginia, for example, went into recession by May 1990, perhaps earlier, says Roy Pearson, director of the business research bureau at the College of William and Mary in Williamsburg, Va.
"It wasn't a one-industry recession and it wasn't a one-area recession," says Mr. Pearson. Businesses throughout the state felt the squeeze.
That marks quite a change for Virginia. During the '80s, it enjoyed the sixth highest growth rate in personal income, Professor Pearson says. Last year, it ranked a dismal 42nd.
Farther south, the recession had less effect. Florida felt a pinch, particularly in its service sector, but its economy probably didn't contract, says Patrick Fishe, an economics professor at the University of Miami.
Whereas Virginia is still looking for signs of recovery and Georgia has seen only a weak uptick in real estate sales, Florida has already seen business pick up.
"Consumers are coming back to that marketplace," Professor Fishe says.
"There are clear signs that activity is occurring in real estate."
One of the surprises of the current recovery in the region is that it is being led by Louisiana and Mississippi, states usually not known for their economic prowess, says Mr. King, the Atlanta Fed economist.
"Clearly we seem to be coming out of the recession as is the nation as a whole," says Yutaka Horiba, an economics professor at Tulane University.
"We can now look for some solid growth" in Louisiana, he says.
The state's rebound has not come from its oil sector - the run-up in prices during the Gulf crisis was too short to give the industry a big boost. Instead, it has come from a diversification of the economy. Louisiana in the last 10 years has bolstered its manufacturing base and its tourism industry, he says.
Tennessee is also experiencing a rebound. "The economy has started to pick up fairly nicely in the last month or so," says Robert Margo, an economics professor at Vanderbilt University in Nashville. Retail sales and real estate activity are up.
Like most economists in the Southeast, Professor Margo is optimistic that the current recovery is more than a blip.
"This is going to be a sustainable recovery," he says.
"But I would be very surprised ... if growth will be anything like what we had in the unusually long recovery" of the 1980s.