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Local cities hit harder by recession

Monday, June 22, 2009
(Updated 7:51 am)

When it comes to the latest recession, not all areas are created equal.

That’s especially true in North Carolina , according to a new report from the Brookings Institution, a nonpartisan, public-policy think tank in Washington.

The report, which looks at the nation’s 100 largest metro markets, says that while no area has been immune to the economic downturn, the pain has been unevenly distributed.

It shows, for example, that the Greensboro-High Point area has been hit harder than the Raleigh or Charlotte areas.

Nationally, the Guilford County cities rank among the bottom third of metro areas based on the recession’s impact.

“When you look at things at the metropolitan level, you see 100 different recessions playing out across the country,” said Alan Berube , lead author of the report . “Greensboro’s recession is more severe than the Raleigh recession. Charlotte — for the period we are looking at — is somewhere in between.”

The report, called the MetroMonitor , suggests that — based on data such as unemployment, wages and housing prices — Raleigh would rank 32nd nationally while Charlotte would come in at 59 and Greensboro 73 .

Here’s the bad news from all this.

Generally speaking, the harder a metro area gets hit by a recession, the longer it takes to recover.

Berube said a recovery can be seen in two ways — when an economic indicator such as employment turns up rather than down or when an area regains all the jobs it lost during a recession.

For the first quarter of 2009 , the report says, Greensboro-High Point had an unemployment rate of 11.3 percent. That compares with an 8.8 percent rate

for the 100 metro areas and a 9 percent rate for the nation.

“The drop in jobs in Greensboro has been severe relative to most metro areas,” Berube said. “None of this means that it can’t and won’t turn the corner soon, but if the measure of success is recovering what the metro had, it has a long, long way to go.”

So why has the recession been so severe locally?

Blame the area’s continued dependence on manufacturing jobs.

“We still have a lot of manufacturing and continue to bleed,” said Don Jud , professor emeritus in the Bryan School of Business and Economics at UNCG . “I think you would say we have been pretty hard hit.”

In North Carolina, Jud said, only the Hickory area has suffered more in terms of employment losses than Greensboro-High Point.

For years, economic development officials have been trying to shift the area’s economy away from traditional jobs in tobacco, textiles and furniture to ones that are knowledge based.

Now, they say, the recession will prolong that transition.

“It’s hard to characterize where we are (in that effort),” said Pat Danahy , president and CEO of the Greensboro Partnership , an economic development group. “This recession is an outside influence that will lengthen the time substantially.”

Danahy believes the transition can be accomplished in fewer than 10 years.

As the recession has played out, Raleigh has fared better than Charlotte or Guilford County because it’s a center for state government and information technology and sciences, Berube said.

“These are industries that have not been hit as hard throughout the recession,” he said. “It’s not about where people live but what they do that accounts for their (area’s) performance.”

Charlotte has suffered more because it’s a financial center, an area also hit hard by the recession. Berube thinks the situation in the Queen City could get worse before it gets better.

Based on his own analysis, Jud thinks the Brookings report ranks Raleigh and Charlotte too high.

“Greensboro is probably where it should be,” Jud said. “But I’d put Raleigh right in the middle and Charlotte more toward the bottom.”

Berube doesn’t quibble.

“I would always defer to folks on the ground for understanding the dynamics in local economies,” he said. “We hope the value of what we are providing here is to paint a realistic picture of how (these areas) are doing compared to 97 other metropolitan areas.”


Contact Donald W. Patterson at 373-7027 or don.patterson@news-record.com

More information

For more MetroMonitor information, see www.brookings.edu/metro/MetroMonitor.aspx

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