Relax. It’s Not That Bad. Mostly
Before I could ask Wachovia Senior Economist Mark Vitner a question, he asked me one: "You writing a piece about Charlotte, the Superman economy of the world, that unless Kryptonite comes up it's just not going to run into trouble?"
He was being sarcastic (I think). Because if you ponder for just a moment this city and its economy, you might expect to see bankers leaping off bridges and "for sale" signs littering neighborhoods. Consider:
Our two big banks are in serious pain, which trickles down to all the law firms and other businesses that support them. We are a car-driven city, and gas prices are through the roof. In other cities nobody can sell their houses, which means they can't move here. Our airport, which offers service to more places than a city our size deserves, is dominated by an extremely shaky airline. And our NBA team stinks (sorry, I was on a roll).
But, outside of the investment banking cubicles and corner offices, Vitner's quip does sum up the attitude in Charlotte. The Ken Thompson firing rattled us, and we all bitch about gas prices, but still we think, "Recession? That's for other cities."
At least one national publication agrees. Forbes magazine ranked Charlotte ninth on its list of recession-proof cities. Vitner's not buying that.
"I'm not quite sure that's actually all that truthful," he says. He points out that our vaunted real estate market is actually in decline—housing prices have fallen about 3 percent since the peak in March. The banks are laying people off. Unemployment is up here. And, he adds, "gas prices are $4 a gallon here, too."
Even Charlotte Chamber President Bob Morgan, who's paid to be positive, won't claim that recession can't strike Charlotte. "I don't think we're immune to anything," he says. But he says that the diversity of our economy is keeping us above water.
"We are not a one-industry town," Morgan says. "Our growth has never been like that of Houston, for example. When energy prices are up, Houston's growth is double digits. And when energy prices are down, Houston crashes with the price. Yes, banking is our leading industry. No industry brings more net wealth into our economy than banking. However our economy is remarkably diverse."
He says that transportation and shipping make up the second largest portion of our economy, and that area is holding up nicely. Vitner adds that high fuel prices, which would seem to hamper the industry, may actually help us.
"With higher energy prices," he says, "it's more important for distribution centers to be located in areas that have less traffic congestion and are closer to the consumer. A lot of folks are rethinking whether they want to put a facility in Atlanta, and the coast is too far away from consumers. So we're seeing that Charlotte is becoming a more favored location because of its more central location on the Eastern Seaboard."
The collapse of US Airways—and the subsequent disintegration of the Charlotte hub—has long been the nightmare scenario for local booster types. But these days, "there's less uncertainty around US Airways today than there's been for quite some time," Vitner says. Talks of a Delta merger—which would have been disastrous for Charlotte—are dead. The only merger that's even a blip on the horizon is with United, and that would be a boon for the city, potentially doubling the size of the airport.
But what's really fueling our local economy is growth—people are still moving here in droves. "We've had record population growth the past two years," Vitner says. Morgan expects our population to continue growing at a yearly 3.5 percent clip for the next two decades, putting the metro pop at more than 4 million by 2028. Vitner says that growth has nothing to do with banking. "It's being driven by NASCAR or Lowe's or smaller businesses that are locating here because of the excellent airport and highway access."