ORLANDO, Fla. – We first heard the term decades ago: The “Sun Belt” was just starting a run of phenomenal growth – and no wonder. It conjured a sunny state of mind as well as a balmy place on the map.
Everybody, it seemed, wanted a spot in the sun.
Industries such as aerospace, defense and oil set up shop across America’s southernmost tier, capitalizing on the low involvement of labor unions and the proximity of military bases that paid handsomely, and reliably, for their products and services.
Later, San Jose, Calif., and Austin, Texas, developed into high-tech nerve centers; Houston grew into a hub for the oil industry; Nashville, Tenn., became a mecca for music recording and production; Charlotte, N.C., transformed itself into a center for low-cost banking and finance. And then there were the new Dixie Detroits: Canton, Miss., Georgetown, Ky., and Spartanburg, S.C., that began rolling out Titans, Camrys and BMWs.
For a generation or more, the Sun Belt thrived like no other region in America – a growth so steady it felt as though the boom would never end. But now it has, replaced by a bust that has left some swaths of the region suffering as severely as anywhere in the current recession.
What brought the dark clouds to the Sun Belt, and are they here to stay?
Interviews with economists and demographers across the region, and data from The Associated Press Economic Stress Index, a month-by-month analysis of foreclosure, bankruptcy and unemployment rates in more than 3,000 U.S. counties, suggest that the answers are not all encouraging.
‘Fullest bloom’
Some cities – Las Vegas, Phoenix and Fort Myers, Fla., are good examples – hitched their floats to housing bubbles and got caught up in development that depended largely on, well, development itself, rather than sustainable, scalable, productive industry, economic analysts say.
It’s in these places where the economic meltdown “will likely find its fullest bloom,” Richard Florida, the urbanist and author, wrote recently in an Atlantic Monthly article titled “How the Crash Will Reshape America.”
AP Stress Index figures, which calculate the economic impact of the recession on a scale of 1 to 100, illustrate how the downturn has played out in some of these communities:
•In Maricopa County, home to Phoenix, the Stress Index more than doubled from 5.12 at the beginning of the recession in December 2007 to 12.67 in March 2009, worsened by a foreclosure rate that nearly tripled.
•Mounting foreclosures in Las Vegas’ Clark County drove up its Stress Index score from 10.5 at the start of the recession to 19.3 in March 2009.
•In Lee County, home to Fort Myers, unemployment has doubled and foreclosures have soared 75 percent since the recession began, lifting its Stress Index from 10.5 to 19.98.
The boom in parts of the Sun Belt was, in many respects, a growth machine that banked on wishful thinking, on the hope that an unending stream of new arrivals would forever inject their money into construction and real estate.
In the Sun Belt’s newer, shallow-rooted communities, the roadkill is most evident: Where once there were “boomburbs,” there now stand “ghostdivisions.” Where property-flipping was once almost a middle-class sport, joblessness and “For Sale by Owner” signs reign.
The fallout is traceable in other ways, too. Nevada – the only state with a lower proportion of native residents than Florida – has seen net migration plunge 61 percent in two years; Arizona, 55 percent.
Were it not for immigrants, many of them from Latin America, and for fertility, the Sunshine State would actually have lost population last year – an “astounding development in the Florida experience,” says Bill Frey, a senior fellow and demographer at the Brookings Institution in Washington, D.C.
Obsolescent model
The housing bubble in many places revealed an obsolescent model of economic life, in which cheap real estate encouraged low-density sprawl and created a workforce “stuck in place, anchored by houses that cannot be profitably sold,” Florida wrote in his March article.
What to do? Scrap policies that encourage homebuying, he suggests, and give incentives to more mobile renters who can go where the jobs are.
In the digital age, he says, industries will likely cluster in “mega-regions” of multiple cities and their surrounding suburban rings (e.g., the Boston-New York-Washington corridor). These areas will surge, lifted by the brainpower of educated professionals and creative thinkers that turn out “products and services faster than talented people in other places can.”
But if expansion is now halted in the Sun Belt’s “sand cities,” where will the tax money come from to pay for college upgrades?
Like Looney Toons characters who, suspended in mid-air, look down to behold they’ve run off a cliff, officials in Arizona, Nevada and Southern California are scrambling to reverse course – either by scrapping government services they’d promised or, at the very least, by increasing taxes to pay for services created in expectation of bigger suburbs, exurbs.
Phoenix is in this fix. Shocked by a 33 percent plunge in home values between October 2007 and October 2008 alone, the city is running a $200 million budget deficit, a shortfall that’s only expected to grow. (It has petitioned the federal government for funds.)
California has an even wider hole in its battered canoe.
At a time when many resident retirees are in no mood, or shape, for tax increases, “they’re having to raise taxes or cut back services, both of which are making moving to California a lot less desirable than it has been in previous decades,” says Anthony Sanders, a professor of finance and economics at Arizona State University.
Warren Brown, a demographer at the University of Georgia, notes that the Sun Belt’s unbridled growth in the ’80s and ’90s was “unsustainable, bound to cool off,” and not just because of bursting housing or migration bubbles.
The limits of natural resources were poised to put the brakes on development anyway. “Long before we run out of land, we’ll be running out of water,” he said.
Optimistic Florida
Doomsaying pundits have played the Sun Belt dirge before.
In 1981, for example, Time magazine declared Florida, a “Paradise Lost.” The state then embarked on an epic boom, in which the Miami-Fort Lauderdale-West Palm Beach corridor ballooned into the seventh-largest metro area in America.
Granted, today’s news from the Sunshine State is hardly cheery: It ranks near the top in foreclosures and near the bottom in high school graduation rates. There’s a water crisis, an insurance crisis, a budget crisis.
Stan Smith is a professor of economics and director of the Bureau of Economic and Business Research at the University of Florida. Smith says tourism, the “momentum” of decades of population growth, and already extensive networks of personal connections will again draw more migrants to Florida.
Frozen credit won’t last, he says. Real estate price declines – as much as 70 percent in some Sun Belt counties – will entice buyers.
Recovery will take time, though, and few economists see significant growth in the Sun Belt soon. Steve Malanga, a senior fellow at the Manhattan Institute in New York City, agrees that states that have piled up surplus housing “are not going to solve it in this budget cycle or the next budget cycle. It’s going to be with them for five, six, seven years, no doubt about it.”
And yet, to say all areas across the Sun Belt are in for long-term decline is simplistic, he says. Scanning the most recent employment maps put out by the Bureau of Labor Statistics reveals “a ‘belt’ in the middle of the country – Texas is part of it – that is doing quite well.”
Out of the nation’s 100 fastest-growing counties, the majority were in Texas (19), Georgia (14), North Carolina (11) or Utah (nine), according to U.S. Census figures last year. Raleigh-Cary, N.C., and Austin-Round Rock, Texas, were the nation’s fastest-growing metro areas.
“Obviously, the best situation is a state that hasn’t had a residential meltdown, still has a low-cost advantage, and has a weather advantage,” Malanga says. High-tax states, such as California, are going to take longer to rebound.
