Across Patchwork Nation, Harsh Economic Realities Hit Home

BY dchinni  July 5, 2010 at 12:51 PM EDT

For those hoping for a quick economic turnaround, the last few weeks have been a cold splash of water in the face. A string of bad housing reports and bad unemployment news have even optimistic economic forecasters shaking their heads.

How serious should the concerns for the economy be? Patchwork Nation, which regularly monitors key economic indicators, sadly, is not surprised by the latest stream of bad news and it doesn’t see a sudden recovery ahead.

The U.S. economy is made of smaller local economies around the country (we identify 12 of them in Patchwork Nation) moved by different forces. And for the last year the unemployment rates in most of our county types — particularly those key to a thriving consumer economy — have remained stubbornly high. In fact, since last year unemployment rates have increased in most every county.

The big city Industrial Metropolis counties, wealthy Monied ‘Burbs and growing exurban Boom Towns, have the higher disposable incomes that could spur spending and help heal the economy. But the unemployment rate in all of them still hovers around 9 percent.

And as we have noted here in the past few months, some of those recovery signs were based on one month’s information and some of the “good news” itself seemed to hide deeper problems. Taking the temperature of some of Patchwork Nation’s communities on the July 4 weekend offers further reason for pause.

Not Many Bright Signs

If there is a community in America where one might expect to find a sunny view, it is probably Los Alamos, New Mexico. The job base, propped up by the local government lab, is stable and seems safe overall, but still there are worries.

Bill Enloe, chairman and CEO of the Los Alamos National Bank, says the beginning of year felt better for those living on top of the mesa near Santa Fe, but things have since soured a bit. “There was a bounce in the affordable housing area, fueled by the tax incentives, but since they expired that had lost its steam. The rest of the Real Estate market continues to be very slow,” he writes in an email. “It seems the concerns over Europe, the deficit, the weak stock market and how we are going to pay for health care is overwhelming any of the positive news.”

Los Alamos, full of hyper-educated scientists, is the kind of place where people pay close attention to financial news from overseas — a place where “concerns of Europe” is immediately understood as debt troubles in European economies. But the fact that Los Alamos feels concerned is a sign of how high up the income and education ladder the concerns run.

Down in Clermont, Florida, an aging Emptying Nest community outside of Orlando, Ray San Fratello, says he sees some better news in the form of new businesses, but his 16-year-old daughter and her 18-year-old boyfriend have not been able to find summer jobs.

“Many people who thought they were going to be ‘retired’ and live the good life have had to pick up part time work themselves to help pay for increased health care costs or just for the basics of purchasing groceries or to be able to keep up a golf membership,” writes San Fratello, president of the South Lake County Chamber of Commerce. “Just not enough jobs to go around.”

Meanwhile, some of the construction jobs that employed many in the area around Clermont have come back, but San Fratello wonders for how long? “Of the 322 residential business permits let out from Jan – May in the entire county, 60 percent are in Clermont. Clermont also has nearly 4000 homes previously permitted that are just sitting in the pipeline waiting for things to open up and there is 2 million square feet of commercial, retail, and office permitted and either being built or planned to be built,” he writes. “This is a lot of capacity to come online. Too much, in my opinion.”

If You Build It…

That last point is a key one. Much of the good times before the current recession came from the housing boom and some communities benefited from it more than others.

Take Eagle, Colorado, a Boom Town west of Vail that saw its population double with a massive development at the beginning of the last decade. That growth has ended and the town is now trying to figure out what’s next, says Kathy Heicher, former editor of the local weekly newspaper.

“Things aren’t good here. Building projects are few and far between. I hear local contractors complaining that all they do now is bid projects — and they are getting outbid by people willing to work for almost nothing. I don’t think the layoffs from local government are over yet,” she writes in an email.

And in Eagle, one can see the larger impacts of the housing slowdown as the problems ripple through the entire local economy. “The nursery guy I buy bedding plants from told me today that he could see this summer wasn’t going to be good, so he did not hire the crew he usually has,” Heicher writes.

Yes, that’s just one crew. But it’s also just one shop in one industry. Around the town there are a lot more stories like that in carpentry and HVAC and pest control.

Take that story and multiply it across hundreds of similar towns in the 380 Boom Town counties across the United States and you get a sense of the long-term problems for the economy.

The Boom Towns have an especially hard road where housing is concerned — think of places like Las Vegas, Nevada, and Riverside, California, where the foreclosure problems run deep — but other places have different issues. Many of those Monied ‘Burb communities are suffering from the downturn in manufacturing, and the small-town Service Worker Center counties depend on outside dollars from the ‘Burbs and Boom Town to flourish.

There is nothing that says the economy won’t eventually emerge from its current struggles, but there are no signs of dramatic improvement on the horizon. The economy’s current troubles look deeply ingrained and broadly spread.

Dante Chinni is the director of the Patchwork Nation reporting project.