TOPICS > Economy

What the economic rebound looks like around the country

July 30, 2014 at 6:11 PM EST
The American GDP grew at a 4 percent annual rate in the second quarter of the year, surpassing most predictions. But will the upward swing continue? Jeffrey Brown gets a snapshot of economic recovery around the country from Shirley Leung of The Boston Globe, Mark Vitner of Wells Fargo and Tom Binnings of Summit Economics.
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JUDY WOODRUFF: The U.S. economy rebounded strongly in the second quarter of this year, better, in fact, than most predicted. New numbers out today showed the gross domestic product grew at a 4 percent annual rate. That’s far better than this winter, when the economy seemed to slump and shrank by about 2 percent. Still, those numbers don’t quite tell you what it feels like in different parts of the country.

Jeffrey Brown gets some regional views.

JEFFREY BROWN: In addition to today’s numbers, the overall jobs picture has improved of late, averaging a more than 200,000 increase for five straight months. But again, questions: What kinds of jobs? And how long-lasting is the upward swing?

We get a snapshot of three parts of the country, from: Mark Vitner, managing director and senior economist at Wells Fargo in Charlotte, North Carolina, Tom Binnings, senior partner at Summit Economics in Colorado Springs, Colorado, and Shirley Leung, a business editor at The Boston Globe.

And, Shirley, start us off here. Do the numbers showing an upswing jibe with what you see in the Northeast? What sectors are better? What is still lagging?

SHIRLEY LEUNG, The Boston Globe: Yes.

In Massachusetts, the economy has been going very strongly, and today’s numbers, you know, look like the kind of same upward growth. And — but one of the things that we’re seeing here and we continue to see is that the growth is very uneven. You know, greater Boston folks who work at tech or hospitals do very well. If you’re out beyond kind of the greater Boston, into the western part of Massachusetts or southern parts of Massachusetts, where you don’t have those kind of sectors, the unemployment rate is quite high.

JEFFREY BROWN: Mark Vitner, I know you look widely around the country, but start with the Southeast, where you are. What do you see?

MARK VITNER, Wells Fargo: Well, the Southeast really gained momentum over the last year. And I think it’s pretty typical of what we have seen in the country.

The first four years of the recovery, we were barely making 2 percent growth. The last year, it’s been about 2.5 percent. And we have really seen job growth pick up in North Carolina, in Georgia, in Florida, parts of Tennessee, but it is more urban-oriented.

The big areas, Charlotte and Raleigh, Atlanta, Nashville, all the big Florida metro areas, Orlando, Miami, Tampa, are all doing exceptionally well, but the rural areas are mostly lagging. And a few of the big cities that are more closely tied to the government are still pretty sluggish because of the effects of sequestration.

JEFFREY BROWN: And Tom Binnings, Colorado, the larger Mountain region, what’s driving the growth there and where is it heading?

TOM BINNINGS, Summit Economics: Well, I would just echo what everyone else has said. The Denver metro area, Salt Lake City metro area, they’re doing well and have been doing well for several years now, robust growth, employment growth.

And then you get into the outlying areas or the second- and third-tier communities and cities, and the growth is lagging.

JEFFREY BROWN: And, Tom, what about jobs? Is that the same picture? Does that fit into what you’re talking about?

TOM BINNINGS: Oh, absolutely.

The job growth is really very strong in Colorado as a whole, but that’s because of the Denver metro all the way to the Wyoming border, a lot of it in professional services, professional technical services. We do have a vibrant construction industry, a lot of growth there in the last couple of years, accommodations and food service.

So our growth is pretty broad-based through –  throughout the different economic sectors.

JEFFREY BROWN: And, Mark Vitner, when you look around the country, do you see other large regions that are a little slower than yours, or is it uneven regionally?

MARK VITNER: It is uneven regionally.

I think that there are large parts of the Northeast that are still growing at a very sluggish pace. When you get away from Boston and New York City, growth is really, really sluggish. Atlantic City is really having a tough time right now, as is a good part of New Jersey.

Detroit is doing better in the auto sector, but you get away from that and things haven’t picked up all that much. There’s a real contrast between the areas that have vibrant energy and technology sectors and the areas that don’t. Seattle, San Francisco, Austin are some of the fastest growing metro areas in the country.

JEFFREY BROWN: Shirley, I gather The Globe did a poll recently looking at people’s attitudes about the economy. And you found some disconnect, right, between the growth and whether people really are experiencing it.

SHIRLEY LEUNG: Yes, I mean, absolutely. The job — unemployment rate is 5.5 percent here. And, you know, the housing market here is — a lot of parts of it in greater Boston have recovered, more than recovered. They have actually surpassed the peak from 2005.

But in a recent survey, eight out of 10 voters say that they feel that their personal financial situation is worse or the same compared to last year. I think half the respondents in our survey said that they’re cutting back on basic necessities. I think also people are dining out less, and they’re really cutting back on discretionary spending.

JEFFREY BROWN: Is there any sense, Shirley, of why, I mean, what’s causing that disconnect?

SHIRLEY LEUNG: I think they’re just nervous about what — I think they’re a little nervous about their job still. I think they’re nervous about what’s happening in Washington and kind of the — really the political future of the country.

And just I think the stock market is reaching some, you know, new highs, and they’re not sure why, and they’re not sure they’re — why — they’re going along with it, so I think there is just a lot of uncertainty.

JEFFREY BROWN: Tom Binnings, do you have a sense of public sentiment out there in that region vis-a-vis the economy?

TOM BINNINGS: Well, yes, I do.

I think it’s more positive, but there’s still caution. A lot of it has to do with the I think aging baby boomers, with retirement looming ahead, and just sort of trying to forecast their own futures. And then we get a lot of young people moving into Colorado, and they’re generally optimistic.

But, on the other hand a lot of them are bringing with them a lot of student debt, so they’re challenged in that regard.

JEFFREY BROWN: Mark Vitner, what about housing? That’s come up in this discussion, but it’s such an important sector for so many people.

MARK VITNER: Well, it is really stuck in a hard place right now. I think that it fits in with your previous question when you’re asking about the uncertainty and uneasiness that people are feeling.

Older households are staying in place. Maybe they had an interruption in their employment, and that’s hit their savings, and they’re worried about how they’re positioned for retirement, so they’re not selling their home and relocating or downsizing. And at the other end, the younger households are having a tough time getting started.

They graduated into a very weak job market. Many are working part-time jobs or are working outside their chosen field. They have huge student loan debts. And they’re just — they’re choosing to rent, rather than buy.

And so — so we’re really having a tough time getting any forward momentum in housing. It’s true in the South and it’s true in most parts of the country. There are some exceptions. There are a few markets where housing is doing very well. We Salt Lake City is one, parts of the coastal region of California, Orange County in particular. San Diego is beginning to see things pick up, but it’s very spotty.

JEFFREY BROWN: And, Tom Binnings, of course an important sector where you are is the energy industry.

TOM BINNINGS: Well, the energy sector, it’s not as important as sometimes we think in Colorado, but it’s concentrated north of Denver in Weld County. And of course that’s doing well, but it’s not what’s driving the economic growth in the Colorado region, in the Mountain region.

So housing — the housing is actually booming in Denver right now, but it’s more higher-density housing vs. traditional, and a lot more rental housing, as was mentioned, difficulty in people qualifying to buy, and developers having a difficult time developing for purchase.

JEFFREY BROWN: Well, Shirley Leung, just as we get in our last couple of minutes here, I just wonder, is there a sector or maybe even a local business that you like to watch as your bellwether to tell you how things are going?

SHIRLEY LEUNG: Oh, that’s a really good question.

I guess I like to — you know, one thing we — one thing I have been watching closely is restaurants and just hospitality, because that’s about discretionary spending. And we actually have had a lot of new restaurant openings. And you didn’t see that a lot. You saw more restaurants closing during the recession. And so I feel like, even though people are cautious about eating out here in our survey, I think restaurants feel comfortable enough that I feel like a lot of new restaurants are opening all over the city now.

JEFFREY BROWN: Mark Vitner, I know you take a real wide look at the country, but is there one store or a company that you like to look at?

MARK VITNER: Well, there’s not so much one store or company. I look at sectors.

And I watch retailing very closely and look at what’s happening with different retailers, looking at what’s happening with the furniture stores. Their business has been very, very good. And you look at what’s happening with the discounters, and they’re struggling. And I think that’s where the split is really occurring among consumers. Lower-income and lower-middle-income households are really having a tough time, because while inflation is relatively low, food and energy prices are up a little bit more than the overall inflation rate, and wages aren’t rising anywhere near as rapidly.

So, they are really getting squeezed.

JEFFREY BROWN: All right, well, that’s a little downer to end on, but we do have to leave it there.

(LAUGHTER)

JEFFREY BROWN: Mark Vitner, Tom Binnings, and Shirley Leung, thank you, all three, very much.

MARK VITNER: Thank you.

SHIRLEY LEUNG: Thanks.

TOM BINNINGS: Thank you.