Southeastern States Are Hit Hard By Recession

Southeastern States Are Hit Hard By Recession

The South, long synonymous with hyper economic growth, is going through a harrowing recession. Currently, 8 of the 15 states with the highest unemployment rates are in the South: North and South Carolina, Georgia and Florida are all reporting the highest rate in their state’s history. South Carolina posted the nation’s third-highest unemployment rate
for March — 11.4%, after Michigan and Oregon.

The downturn’s effects are visible everywhere: Harrah’s recently
halted construction of a $700 million casino project on Mississippi’s
Gulf Coast, leaving barely a set of pillars, and threatening the
recovery of an area battered by a series of hurricanes earlier this
decade. Meanwhile, bankers in Charlotte, N.C., are awaiting their walking
papers: No one knows how many of Wachovia’s roughly 20,000 employees
there will be cut in the company’s merger with Wells-Fargo. Or how
many of Bank of America’s 15,000 Charlotte employees will survive the
company’s plans to shed some 35,000 jobs nationally in the coming
years. “There’s a whole lot of uncertainty, especially around Wells,”
says Bob Morgan, president of the Charlotte Chamber of Commerce.

The auto industry woes are being felt here too. Over the last two decades,
Mississippi, South Carolina and Tennessee lured automakers with
relatively inexpensive land and lax labor laws. Now, Tennessee is
fighting the possible closure of a GM plant in Spring Hill, and Toyota
has already postponed the start of production of the Prius at a new
plant in Mississippi.

If there’s any city that symbolizes the boldness of the South’s
economic ascendance, and what’s at stake with its decline, it is
Atlanta. New condominium projects are scattered across this city’s
downtown. One of the most striking is the Atlantic Residences,
up the street from a faux Arc de Triomphe, a man-made pond, an Ikea
and a Target. A sign around the 46-story tower reads: “Luxury
residences from the $400s to $800s” … Spectacular penthouse from $1
million.” Just a few months before the building’s planned opening,
however, the appetite for such excess is disappearing.

Demand for more moderately priced homes is weak as well. Rajeev
Dhawan, director of the Economic Forecasting Center at Georgia State University in Atlanta, estimates that each year between 2002 and 2006, some 68,000 permits for new homes were issued here, even as only 30,000 jobs were being added annually. “Now,” Dhawan says, “it’s catching up.” The shrinking corps of real estate agents here are taking desperate measures, like offering two-bedroom condos for the price of a one-bedroom unit.

This city came to view the breadth of its industrial base as a shield
from economic downturns. But no sector is immune to this
recession, not even Atlanta’s core tourism industry. Occupancy at
Atlanta-area hotels is down 16.4%, and some are barely half-full,
partly because corporate travel has declined.

Atlanta’s growth bolstered the aspirations of cities and towns across
this region. But the recession is delivering a dose of sobriety, and
stoking fears in places like Allendale County, S.C., 200 miles away. Allendale County’s unemployment rate stands at
23.4%. Ronnie Jackson, the mayor of the town of Allendale, population barely 3,700, says the town’s decline started in the 1970s, when the old Route 301 was replaced by I-95 as the main connector to Florida. The town lost motels and restaurants, says Jackson, the mayor since last November. But the more recent closure of a nearby carpet factory, with the loss of
some 200 jobs, deepened the problems in the town and the entire

Folks in Allendale don’t have extra money to spend. So the town’s
already meager tax base is eroding. If any of Allendale’s 38 employees
leaves, there will be no replacement. Jackson’s dreams of a new police
station are dashed. Now, he fears many of the remaining residents will
leave. The other day, he showed up in town with two employment
applications to cut grass at a nearby nuclear power plant. “Loads of people came up to me grabbing applications,” Jackson says.
Still, he’s hopeful some of the federal government’s stimulus money will help
Allendale launch new projects. “Morale, it’s kind of down right now,”
he says, adding, “but hopefully, we can lift ourselves back up.”

Read TIME’s 1976 cover story, “The South Today”

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