JEFFREY BROWN: Back in September, as the financial crisis was just beginning to be felt, we talked with four business journalists from around the nation about what they were seeing. Three months later, and a whole lot of economic turmoil later, we’ve brought them back.
Kathy Kristof is a syndicated personal finance columnist in Los Angeles. Her column appears in the L.A. Times and elsewhere.
Keith Reed was a business reporter for the Cincinnati Enquirer when we last talked to him. He’s now in Cleveland, still writing about economics, and serving as editor of Catalyst Ohio magazine.
Shirley Leung is business editor for the Boston Globe.
And Doug Smith is a reporter for the Charlotte Observer.
Well, Kathy Kristof, I know things are worse, but in what particular ways is it most being felt where you are?
KATHY KRISTOF, personal finance columnist: The big thing is job losses. We’re seeing those pretty much everywhere right now. And where three months ago you still had little signs of light, right now, job losses are hitting virtually every industry. There are cutbacks. People are scaling down. People are spending less. We’re just seeing this filter through pretty much every segment of the economy.
JEFFREY BROWN: Any particular segments that stand out there that are most important?
KATHY KRISTOF: You know, our big segments are real estate and financial services, and they’ve just been crushed, absolutely crushed. You know, we’re one of the foreclosure capitals of the world, and we don’t say that proudly.
So, yes, our real estate and financial services sectors are probably the worst, but, like I said, it’s everywhere. It’s in small businesses. It’s in retailing. It’s in trade. Just everywhere you look, it looks really bad.
JEFFREY BROWN: Keith Reed, we just heard a debate about the auto industry and a potential rescue there. Is that still the biggest single factor where you are?
KEITH REED, Catalyst Ohio Magazine: Absolutely. It’s huge here. As a matter of fact, General Motors made an announcement just yesterday that they were going to lay off about 100 more workers from a plant here just outside Cleveland in Parma, Ohio.
That plant has already seen or has already suffered the announcement of about 1,500 job cuts. That’s in addition to both Ford and Chrysler saying that they’re going to extend their normal January shutdowns of some of their plants in this area.
The news is not good whatsoever. I have to really echo Kathy’s sentiments that things have just — have only gotten worse since the last time we’ve talked. At least, back in September, there was a little bit of hope, a little glimmer, at least maybe not here in northern Ohio, in southern Ohio, closer to Cincinnati, where they’re a little bit more insulated from some of the manufacturing job losses, where the economy is a little bit more diverse, that there was some glimmer of hope.
That has been all but extinguished all over the state of Ohio and throughout the Midwest, especially the Great Lakes region. Anywhere near the auto industry, you’re just looking at tremendous job losses. And the news out of Washington today was not enough to save some of those jobs that we’ve already heard have been cut.
Job losses hitting every industry
JEFFREY BROWN: And, Shirley Leung in Boston, when we last talked, you were saying how the financial sector problem would -- I think you were looking into the future -- would impact start-ups, commercial real estate. What's happened since?
SHIRLEY LEUNG, Boston Globe: Well, even though we're in the middle of a major snowstorm in Massachusetts, we're sounding like California, huge job losses. Massachusetts shed about 8,000 jobs just last month, highest unemployment rate in five years.
I mean, we are -- the state unemployment centers are so flooded with claims, there are long lines out the door. It takes 30 minutes to file first-time claim on the phone.
And just like California, our pillars of the economy are really hit hard. The financial sector, all the major employers here, Fidelity, State Street, Wellington have announced layoffs. Just today, Sovereign Bank, Citizens, 1,900 job cuts today alone.
Hospitals are also -- you know, you think people get sick, they still need to go to the hospital. Well, hospitals are feeling it in the recession. Patient admissions are down, as people put off elective surgery. Their investment incomes are off. They're laying off. They're pulling back on expansion.
And lastly, higher education. Endowments are being hit hard. Even deep-pocketed Harvard is putting in a hiring freeze and pulling back on expansion.
JEFFREY BROWN: And, Doug Smith, in a major banking center where you are, you were just beginning to feel this kind of spread out a few months ago. What's going on now?
DOUG SMITH, Charlotte Observer: Well, it's certainly gotten a lot worse. Wachovia, one of our major banks, is being acquired by Wells Fargo and will lose its independence. Bank of America is merging with Merrill Lynch, but it's also announcing plans to cut 35,000 jobs over three years. Some of those will definitely affect Charlotte.
Wachovia's acquisition is also expected to reduce employment. Nobody knows exactly how many numbers yet, but it will probably be in the thousands. And certainly everyone here is nervous, as big banks drive so much of the economy and the fear just filters all through.
You know, we're starting now to see it affect things like schools and transit. The school system will have to cut its budget some. The transit system is going to have to cut back on service.
And even -- we should have expected it, but we didn't, the NASCAR teams. We have 90 percent of the race teams in the Charlotte area are now having to cut back. Some of them are laying off and could lose a thousand or more jobs in that industry because the sponsors, General Motors being one of them, are pulling back on them.
Schools and services cut
JEFFREY BROWN: You know, something you just said is something I want to talk about. I'll start it with you, Doug, just this notion of the way local governments are being impacted and services are starting to be impacted. You say you feel it with the schools. What other ways do you feel it?
DOUG SMITH: Schools, the transit system, you know, we've had a very successful debut of a light-rail system. And now that service will have to be cut back some. The people think they can still run it effectively, but the sales tax has affected that more than anything else. It's supported by sales tax.
And the state transportation department will cut back on road building. Some of the big projects that have been planned will be delayed longer or just won't get done at all because the gasoline tax collections are down.
JEFFREY BROWN: Kathy Kristof, do you feel those budget cuts where you are?
KATHY KRISTOF: Well, our legislature is still bickering over exactly how we're going to close our budget gap, but the budget gap is huge. And so it's very clear that we're going to either have to start actually having cutbacks in the public sector, which you don't see very often, and service cuts in the public sector, or we're going to have to have huge tax increases. And so, either way, there's a lot more pain to come.
JEFFREY BROWN: How about in Boston, Shirley Leung? Do you feel that at the local level in terms of city and other services?
SHIRLEY LEUNG: Yes, Governor Patrick here has already announced the state will have to trim a million jobs and slice $1 billion out of the budget. He's looking at all sorts of programs.
Also, the speaker of the house here said that -- warned states that they could expect up to 10 percent cut in local aid to the towns and municipalities here.
And, also, the Globe broke a story just a few weeks ago about how town pension funds are woefully underfunded. And to keep them funded, they'll have to cut programs like schools and transportation projects.
JEFFREY BROWN: Keith Reed, what about where you are, in terms of public services?
KEITH REED: Public services are going to be drastically impacted. Our legislature will begin to meet next month and into February to look at a budget. They're expecting a huge shortfall statewide at the same time that the governor, Governor Strickland, is expected to roll out a huge education reform plan.
That plan is going to have to hinge on new funding for -- new formula for funding public education in Ohio. That's going to be very difficult to come to with the shortfall that the state is looking at.
Also, the municipalities in Ohio are being affected. Down in Cincinnati, the city manager has actually put on the table, floated a proposal under which taxpayers might actually have to pay a fee to have their garbage collected. That's obviously been met with a whole lot of skepticism and a lot of anger from residents of Cincinnati.
But, you know, what do you do when you've got a budget shortfall? People are losing jobs. Your tax base has already dwindled because so many homes are in foreclosure. You know, cities and towns and statewide revenues are just down, and governments have to cut back.
No bailouts for American consumers
JEFFREY BROWN: What about that -- just picking up on that notion of anger in public sentiment -- I'll start with you, Keith. It's harder to gauge sometimes how the public is feeling.
But we had a discussion last night on the program about regulation, and President-elect Obama used some pretty tough words about lack of adult supervision. We've had the financial institutions get some help and some sense that they're not really passing that on.
Can you -- you've had, of course, the auto industry debate where you are. Can you gauge public sentiment at this point?
KEITH REED: Oh, yes, people are tremendously angry. People are not mincing words. I've heard people in the last few weeks say some things that I could not repeat on the air, maybe even if we were on HBO. I mean, people are very, very angry.
It seems that every time you turn around, somebody from Wall Street, somebody from Detroit, the folks on Capitol Hill are meeting about a different bailout of a different industry. And, you know, people are losing their jobs all across the country. They're upset.
You know, some people are -- you've got to remember that this thing has been going on for quite some time, this recession that we've been in, since 2007 now officially. There are a lot of people who've been out of work who are at the end of their unemployment benefits and they hear that taxpayer money is going to Wall Street, taxpayer money may go to Detroit. And they don't know how they're going to pay their mortgage or pay their rent or maybe they've already lost a house.
People are tremendously, tremendously upset. They don't see any solutions coming from Washington. They don't see any solutions coming from Wall Street. And they don't see any end in sight.
It's hard to be optimistic whatsoever, especially at a holiday season when you're losing your job and you don't see any solutions coming from your government.
JEFFREY BROWN: Shirley Leung in Boston, what are your reporters hearing from people?
SHIRLEY LEUNG: People are very angry, just like Keith said. I mean, I think it is very hard to see, you know, auto executives fly in on their private jet to ask for a government handout. I mean, the second time around, they were smarter and came in their hybrids.
And, also, right now, Wall Street is still giving out bonuses, a year when people -- they started -- they were very much part of the mortgage-backed securities debacle. Some of them probably aided Bernie Madoff and his $50 billion -- knowingly, I should say -- aided that $50 billion Ponzi scheme.
And here we have -- there's no bailout for consumers. I mean, Wall Street is still getting a bonus. I mean, they really should -- no one should get a bonus. The money should be poured back to help people stay in their homes. I think people feel pretty helpless.
JEFFREY BROWN: And, Kathy Kristof, you know, several of you have mentioned the retail season that we're in. We're just before the holidays here, the heart of what should be the big retail season.
One of the things you do is help people with public finance -- their own -- I mean, private finance, excuse me. What are you seeing at the malls? Are you going around yourself? What are your friends saying?
KATHY KRISTOF: Well, you know, people are in the malls, but they're buying less and they're buying on sale. People are being very frugal, because I kind of see the anger is being almost yesterday's story, and today what I'm hearing from people is a certain amount of fear.
You know, not only do they know that the economy is really bad right now; they're really worried about what it's going to be like next year. And I think you're seeing a fundamental shift from a consumer who couldn't spend enough to a consumer who's really very reluctant to spend.
And because so much of the economy is driven by consumer spending, you're seeing the effects of it everywhere. The consumers that you talk to today, what they're trying to do is pay off their debt. And over a long haul, that's really healthy. That will mean that, when this economy comes back, it will come back in a healthier fashion. But it also means that it's probably not going to come back any time soon.
JEFFREY BROWN: All right, well, I want to thank all four of you for joining us again. Doug Smith, Shirley Leung, Keith Reed, and Kathy Kristof, thanks very much.