GWEN IFILL: As the nation's economic woes mount, evidence of continuing trouble can be found in cities, where government workers are being laid off, in housing, where foreclosure rates remain high. The combination paints a bleak picture, with only the occasional bright spot.
One glimmer of hope for the U.S. economy came in the housing sector, which was bolstered by the peak home-buying season. Home prices rose for a fourth straight month in most major cities in July. That's according to the Case-Shiller index of 20 metropolitan areas.
But the housing market, weighed down in part by high foreclosure rates, is still weak. Overall, home prices are down this year. At the same time, a series of new reports have begun to show how much the economic slowdown has resonated throughout the country. A National League of City survey found that nearly a third of cities, crippled by declining revenues, will be forced to lay off workers this year.
Two-thirds of city finance officers are delaying or canceling infrastructure projects. And many say they have had to raise fees for city services, while cutting spending on public safety. New census data released last week also show that in many parts of the country household incomes continued to drop in 2010.
According to the Brookings Institution, incomes fell in more than 80 of the nation's 100 largest metropolitan areas. And unemployment levels remain high across much of the country, with regional jobless rates topping out well above the national average of 9.1 percent.
The highest unemployment figures can now be found in the South and the West, with the very worst rates located in Nevada and California. Workers in the beleaguered Rust Belt are still struggling to get hired, but the jobless rates there have eased somewhat.
So what do those numbers tell us about how troubled the economy actually is?
For that, we turn to Christopher Hoene, director of research at the National League of Cities, which surveyed municipal financial officers across the country, Dante Chinni, director of Patchwork Nation, a reporting collaboration with the NewsHour and others that examines economic, social and political trends, and Howard Wial, who directs the Metropolitan Economy Initiative at the Brookings Institution.
Welcome to you all.
Dante Chinni, I want to start by just asking you to walk us through this foreclosure map that Patchwork Nation has so helpfully provided us. And help us explain what it has to do with the state of the economy. Let's take a look at it over here.
DANTE CHINNI, Patchwork Nation: Well, the first thing you notice is, there's a heck of a lot of red, right?
GWEN IFILL: Which means?
DANTE CHINNI: Those reds -- those red counties are the counties with the highest foreclosure rates in the U.S. So those are places experiencing a lot of difficulty.
The thing that is actually most troubling about that map is a couple months ago, if you looked at it, the housing problem has been bad for a while, but it would have looked less red.
GWEN IFILL: Really?
DANTE CHINNI: In fact, the thing that is really significant about August, these August numbers, is there was an uptick in foreclosures. And as we have noted in some of the reporting we have done, the uptick has come in some places you don't want to see it.
It's come in places, these wealthy suburban areas, big-city, industrial, metropolis communities, we call them, and then these boomtowns that once were growing and now aren't. Why is that significant? It's significant because those places have higher-than-average median household incomes. And if they're seeing an uptick in foreclosure rates, they are going to be less willing to spend.
If they don't spend, it's hard for the consumer economy to get going. And without a consumer economy going in the United States, there really isn't much of an economy at all.
GWEN IFILL: A bad circle, as it were.
DANTE CHINNI: Yes.
GWEN IFILL: Howard Wial, let's talk about unemployment numbers, because we have also seen, to the degree to which the unemployment rate at 9.1 percent nationally is bad news, it's bad in specific regions of the country. Let's take a look at that. What are we seeing here?
HOWARD WIAL, Brookings Institution: Well, it's especially bad news in California, Nevada, and in Florida and some of the surrounding states.
And most of that problem begins and ends with housing. Housing and things that are related to housing, like construction, was a huge part of the economy of those places before the recession. They rode the housing boom. And they suffered from the crash of their housing markets and the rest of their regional economy has crashed with it.
GWEN IFILL: So there's no way that these things were separate? These things are all intertwined, as far as you can tell?
HOWARD WIAL: Absolutely.
GWEN IFILL: And then, of course, Chris Hoene, we go to the cities. There are all these stressors on the cities, which start with housing and property taxes, and expand how?
CHRISTOPHER HOENE, National League of Cities: Well, what Howard and Dante have outlined here plays out in city finances in a number of ways. First, their revenues are now down for several years in a row. That's fueled right now mostly by property tax revenues that are related to the foreclosure problems and the housing market problems that have just been outlined.
And they're also there because people aren't spending as much because consumer confidence is low. So the revenues are hurting. And in response, what cities are doing is they're cutting people. They're cutting personnel, because that's where a lot of the money is. They're delaying infrastructure projects because they have control of these major expenditures. And they're drawing down the reserves.
And the problem for the economy in all of this is that those are all decisions that exacerbate the overall effects on the economy. They're good, prudent budget-balancing measures, but they are not necessarily the best thing for communities or for recovery.
GWEN IFILL: And yet I was looking at your numbers. You have surveyed 272 municipalities, right? Fifty-seven percent said they're worse off now than they were in 2010. But last year, that number was 87 percent. So, in some ways, it's not good, but it's not as bad?
CHRISTOPHER HOENE: Right. Right. It may be the lone bright spot in some respects in our results.
And what we think it points to is, one, it could be a change in the curve, just like the housing numbers we heard earlier in terms of the summer numbers. But it also is just simply the fact that things got pretty bad the last couple of years, and it just may be the fact that they are saying, well, they're not going to get worse.
So our sort of baseline dropped a bit. And we have a ways to go before we're out of the woods. And they're saying things are getting markedly better.
GWEN IFILL: You know, you talked -- you mentioned in passing, Dante, that the foreclosure numbers had actually gotten better for a while. At least they had begun to look a -- they had lost the force of speed. And now it seems like they're getting worse again.
What happened? What changed that?
DANTE CHINNI: Well, there was this -- everybody remembers -- well, maybe not -- but this robo-signing problem we had, where banks were giving out too many foreclosures without doing the adequate paperwork.
GWEN IFILL: Right.
DANTE CHINNI: So everybody kind of took a step back for a while. And the foreclosure activity cooled off. And for a while, we have kind of been waiting for the other shoe to drop. Like, OK, we know there's a backlog. When is it going to happen?
The August numbers look like that, OK, we're going to start -- they're going to start coming again now. And, like I said, the thing that is most troubling about it is when we were waiting for that next wave to come through, the question is, where were they going to come?
And if they come in these places, it makes things very difficult. And just one thing about Case-Shiller, it's good. Hey, any -- we will take any good number right now.
GWEN IFILL: Right. Right.
DANTE CHINNI: But the thing that is a little disconcerting about it is their July numbers, because the Case-Shiller index lags a couple of months. That was before kind of when kind of everything took a dip in the summer again in August.
And, remember, those are closings that took place in May, June and July. That's the way it works, which means some of those closings were actually initiated even in like April, May, June. The question is, what's the next Case-Shiller index look like and the one after that? And I'm a little disheartened.
GWEN IFILL: A little pessimistic about that.
Howard Wial, let's look at that map again about unemployment, because different regions of the country have a different problem with this unemployment crisis. Let's look at the Southeast. What is going on there with all those -- I guess they're brown states down in the Southeast?
HOWARD WIAL: Well, as I said before, in Florida, the problem is housing.
To some extent, that spills over into Georgia, but there are other problems. Manufacturing, which has been a bright spot over the last year-and-a-half in places further to the north, hasn't recovered quite as quickly in the Carolinas and in Georgia, in part because those places didn't suffer from the crisis of the Detroit three automakers earlier, and so they're not getting the rebound of the Detroit three automakers now.
GWEN IFILL: Is there a rebound in the Rust Belt?
HOWARD WIAL: There is indeed a rebound. Even though you see Michigan has above-average unemployment, in some of the other areas of the Midwest, you see unemployment near or even below the national average. And that's being driven by manufacturing.
GWEN IFILL: So, actually, something is coming back. It's just not now. Other places are feeling the backwash of other -- of the same issues we have been talking about.
HOWARD WIAL: That's right.
GWEN IFILL: OK.
So, Dante, the increased foreclosures, it seems to me that in some way they must dovetail with some of the numbers we have been hearing about increased poverty. Is there a connection?
DANTE CHINNI: Well, I think that the increased foreclosures, I'm not sure how much they're leading to the increased poverty numbers, but they're definitely leading to the increased unemployment numbers.
And I think that it's hard for people to understand. Foreclosures are bad in a lot of ways. They're a huge psychological factor in terms of how you spend money.
GWEN IFILL: Right.
DANTE CHINNI: But, like, some of these communities that I go to, -- I go to these communities and I go out and visit them. You had an entire economy that was built on housing.
So I did, like, carpentry work, and you did landscaping work, and somebody else did HVAC work. And we all kind of made a lot of money during the boom. And we were all just kind of trading money with each other. And it seemed like things were going to be good forever. So we all bought houses bigger than we probably should have. And then the music stopped.
And the housing values fell. And the unemployment rate goes up. And it's -- the compounding factor is, the unemployment rate gets higher. People can't afford to move anymore, so they're kind of stuck in a place where the unemployment is high, the unemployment rate is high, because they can't move and go someplace else for a job. It's really -- the -- it's really a pernicious effect on the entire economy.
GWEN IFILL: So, Chris Hoene, we have this deadly merry-go-round of bad economic news, especially in cities, which do have a to deal with a lot -- with a disproportionate amount of the urban poor.
What are they doing or what can they do to try to get off of that?
CHRISTOPHER HOENE: Well, a lot of what they do is try to connect different sectors of the economy with other parts that might be growing. So, a lot of what cities need to do in the case of these foreclosures or the vacant properties that they're dealing with is, they need to map them and know where they are.
They need to then track that with where the people that have lost jobs are and look and see where there might be some job growth or industry growth, where that might be occurring, so if there's some manufacturing growing, and connect people with skills to sectors that might be growing, connect people that need housing to places where there might be housing.
A lot of it is about putting the right people in the right room together at the right time.
GWEN IFILL: But isn't there government job loss, too? Don't these layoffs have some sort of effect?
CHRISTOPHER HOENE: Well, absolutely. Since the peak of local government hiring in 2008, cities and counties and other local governments around the country have cut about 550,000 jobs.
And we likely have a little ways to go yet before we turn the corner. So, in some respects, their own budget-balancing decisions are only exacerbating the larger problem nationally.
GWEN IFILL: Howard Wial, is there a bottom that is in sight? And if so, who is poised to recover first?
HOWARD WIAL: Well, I don't see a bottom for the government budget cuts in the short term.
Right now, it looks like the places that are recovering the most strongly are some of the places that weren't hit that hard during the recession to begin with, so the energy belt from Texas up through North Dakota, which is still riding out an energy boom, and hadn't suffered big government job cuts until much more recently, and then some of the outer parts of the Northeast off the coast.
You don't necessarily see that on the map, because you have states like New York and Pennsylvania that mix different regions.
GWEN IFILL: Right.
HOWARD WIAL: But they also are recovering pretty strongly. And even -- as I said before, Michigan, the Upper Midwest, even though they have a long way to go before they get back to where they were before the recession, they have a huge hole to dig out of, they're recovering pretty strongly right now on the strength of the rebound of the domestic auto industry.
GWEN IFILL: Dante, where do you see rebound possibilities?
DANTE CHINNI: I don't know. It's...
GWEN IFILL: Oh, really?
DANTE CHINNI: It's -- when you look at it right now, I just feel like we're going to be -- you know, it's interesting talking about what's happening in the cities.
Yes, we're not declining anymore, so maybe they feel it's not getting any worse. But it feels to me like we're going to be bumping along here for a while, because I don't know what pulls us out. I mean, the one thing that does appear, places around with many educated people and people in the high-tech sector seem to be doing OK, fairly -- fairly well.
I mean, even if you look around Georgia, Atlanta may not be doing that great, Fulton, but the counties around there are still doing OK. Counties around Columbus are doing OK. You need places with tech, education, health care. Those places will probably -- with strong economies in those areas, probably do a little better first.
GWEN IFILL: Dante Chinni, Howard Wial, Chris Hoene, thank you all very, very much
HOWARD WIAL: Thank you.
DANTE CHINNI: Thanks.
CHRISTOPHER HOENE: Thank you.