The Nine American Cities Nearly Destroyed by the Fed

The Nine American Cities Nearly Destroyed by the Recession

January 19, 2012

24/7 Wall St. - The nation continues to be mired in an anemic, jobless recovery. And according to a report commissioned by the United States Conference of Mayors, and prepared by IHS Global Insight, many regions in the country still continue to lose jobs. Of the 363 U.S. metropolitan regions reviewed by IHS, only 61 will fully recover all the jobs that were lost during the recession by the end of this year. The rest will recover far fewer — the average city will only recover roughly 40% of jobs lost from peak employment.

24/7 Wall St. examined the nine metropolitan regions that are projected to recover less than 5% of the jobs lost during the recession by the end of 2012. These cities, in particular, were hurt by the housing crash, the loss or decline of an industry, and a reduction in government services and jobs.

Many of the cities that will recover the least jobs by the end of this year experienced particularly heady housing markets through 2006. As a result, they also had among the worst housing crashes in the country. In Reno-Sparks, Nevada, median home values dropped nearly 40% between 2007 and 2010. Five of the nine cities on this list had a major decline in housing, with four markets losing 25% of their median home value.

According to the Conference of Mayors’ report, many cities that rely heavily on merchandise exports, such as the automotive-based Flint, have been suffering as manufacturing businesses continue to move overseas. In 2005, nearly 10% of the Flint Michigan’s economy was based on exported goods. As of 2009, the number dropped to just 3.2%. Over that time, the value of the city’s annual exports dropped by roughly $850 million, or 70% of its original value.

Many cities were also hurt and will continue to be hurt by government cutbacks. While most industries will add jobs this year, the government sector will actually continue to shed them. Because of increasingly austere budgets, IHS projects that 196,000 government jobs will be lost by the end of 2012. For several cities on our list, like Carson City, Nevada, a high percentage of government employees comprise the total workforce. Between June and November of last year alone, Carson City laid off over 600 city workers.

24/7 Wall St. examined the cities in the U.S. Conference of Mayor’s report that were projected to regain the smallest percentage of the jobs lost during the recession by the end of this year. 24/7 Wall St. reviewed additional data collected by IHS and from the Census Bureau and Bureau of Labor Statistics to measure the impact of the recession on the nine cities that are projected to recover the least jobs. A full methodology is at the end of the article.

These are the nine American cities nearly destroyed by the recession.

9. Norwich-New London, CT
Pct. jobs recovered: 4.3%
Q4 2012 jobs: 127,600
Pre-recession jobs peak: 137,100
Recession jobs trough: 127,200
Pct. jobs lost: 7.2%

After losing nearly 10,000 jobs during the recession, the Norwich-New London metropolitan area still has not made any positive recovery. The area will recover only 400 lost positions by the end of 2012, according to the IHS. As a publication by economists at the University of Connecticut, The Connecticut Economy, explains, New London and New Haven are having the most economic difficulty of all areas within the state. The Electric Boat shipyard, a submarine manufacturer, and pharmaceutical company Pfizer Inc. are responsible for many of the area’s layoffs, the report states. In addition, the recent legalization of casino gambling in Massachusetts has hurt the local gaming industry.

8. Brunswick, GA
Pct. jobs recovered: 4.1%
Q4 2012 jobs: 40,400
Pre-recession jobs peak: 46,100
Recession jobs trough: 40,200
Pct. jobs lost: 12.7%

The Brunswick metropolitan statistical area lost nearly 6,000 jobs, or 12.7% of its workforce, between the fourth quarter of 2007 and the end of 2011. Located on the coast of Georgia, Brunswick has relied heavily on its port status and exports, which account for 18.4% of its economy. According to IHS, continuing global problems, especially in the Eurozone, will be damaging to exporting cities as demand for goods wanes. By the end of this year, the metro region will only regain 200 of the lost jobs.

7. Abilene, TX
Pct. jobs recovered: 4.1%
Q4 2012 jobs: 61,900
Pre-recession jobs peak: 68,000
Recession jobs trough: 61,700
Pct. jobs lost: 9.3%

At its employment peak, Abilene had a total 68,000 jobs. But after losing 9.3% of the jobs, it will reach 61,700 jobs at its low point this quarter. Come the fourth quarter of 2012, Abilene is only expected to recover 200 of those lost jobs. According to the Texas Workforce Commission, the majority of jobs lost over the past were in education and health services. Despite the area’s job losses, it maintains an unemployment rate of 6.2%, which is well under the national rate of 8.5%.

6. Wichita Falls, TX
Pct. jobs recovered: 3%
Q4 2012 jobs: 57,500
Pre-recession jobs peak: 62,200
Recession jobs trough: 57,300
Pct. jobs lost: 7.8%

By mid-2012, Wichita Falls, Texas is projected to lose 4,900, or 7.8% of its jobs from its peak employment in 2007. By the end of the year, IHS projects it will recover just 200 positions. However, unemployment continues to shrink in the area, indicating that people are either leaving the region or giving up on looking for jobs. Population has declined roughly 3% since 2000, while the value of exported goods has dropped substantially.

5. Flint, MI
Pct. jobs recovered: 2.8%
Q4 2012 jobs: 131,700
Pre-recession jobs peak: 151,300
Recession jobs trough: 131,100
Pct. jobs lost: 13.3%

Flint’s economy, which is primarily based on auto manufacturing, has been suffering for a number of years. In the first quarter of 2007, employment reached its peak with over 151,300 residents employed. By the end of the first quarter of 2012, IHS projects employment to reach a floor, after a loss of over 20,000 positions. Recovery, is seems, will also be slow as only 600 jobs are projected to be recovered by the end of the year, or just 2.8% of jobs lost. The value of exports from the region has dropped 81.9% since 2005 — one of the largest decreases in the country. This, of course, has had a huge effect on Flint’s economy and population. Poverty rate in the area has risen to 21%, one of the worst rates in the country.

4. Champaign-Urbana, IL
Pct. jobs recovered: 2.7%
Q4 2012 jobs: 105,400
Pre-recession jobs peak: 114,200
Recession jobs trough: 105,100
Pct. jobs lost: 7.9%

Unlike much of the country, unemployment in Champaign-Urbana actually increased from 9.1% to 10% between June and November of 2011. The region’s employment peaked late, in the third quarter of 2008, when 114,000 residents were employed. By the second quarter of this year, IHS projects the region to lose 7.9% of those jobs. Through the rest of the year, the area will regain only 2.7% of jobs lost. Many of the jobs lost in the area have been government jobs, especially in the education sector, which were cut due to budget constraints.

3. Santa Barbara-Santa Maria-Goleta, CA
Pct. jobs recovered: 1.9%
Q4 2012 jobs: 160,500
Pre-recession jobs peak: 174,300
Recession jobs trough: 160,300
Pct. jobs lost: 8%

As of the first quarter of 2012, the Santa Barbara-Santa Maria-Goleta metropolitan statistical area is projected to lose 14,000 jobs, or 8% of its employment peak of 174,300 person workforce. By the end of this year, just 200 of those positions might be recovered, according to the report. The region has suffered greatly from the housing bust. Its housing market has not yet fully recovered, which has also hurt major industries such as construction.

2. Reno-Sparks, NV
Pct. jobs recovered: 1.6%
Q4 2012 jobs: 187,600
Pre-recession jobs peak: 225,200
Recession jobs trough: 187,000
Pct. jobs lost: 16.9%

Between 2007 and 2010, the median home value in Reno-Sparks, Nevada declined 37.4%, the 13th biggest drop in the country among metro areas. The problems of the recession have plagued states in the southwest, which once had booming housing markets, arguably more than any other part in the country. From the beginning of 2007 to the third quarter of this year, jobs are projected to decline by 38,200, or 16.9% of the workforce. And according to the report, only 600 jobs, a mere 1.6%, will be recovered by the end of the year.

1. Carson City, NV
Pct. jobs recovered: 0%
Q4 2012 jobs: 28,200
Pre-recession jobs peak: 33,300
Recession jobs trough: 28,200
Pct. jobs lost: 15.1%

Carson City, Nevada has the dubious honor to be the only metropolitan area that is not projected to recover any jobs at all this year. The region has lost thousands of jobs during the recession, and will continue to lose them through the end of 2012. By the end of this year, the region is projected to lose 4,800 jobs from the beginning of 2007, according to the report. It is the only area not to reach a bottom this year so that it could start recovering. Between June and November of last year, the region lost roughly 600 government jobs. Between 2005 and 2009, the metro region’s exports dropped $94 million, or nearly 40%.

Methodology:

24/7 Wall St. obtained much of the information used to evaluate the metropolitan statistical areas directly from the IHS Global Insights report. The global information company compiled median household income and export merchandise figures from the Census Bureau, employment data from the Bureau of Labor Statistics, and home price data from the Federal Housing Finance Agency and Census Bureau. 24/7 Wall St. also considered change in home values between 2007-2010, median income, and poverty rates from the Census Bureau. The calculation of job recovery, upon which these metro areas are ranked, is based on Bureau of Labor Statistics job estimates. Jobs were rounded to the nearest thousand. The percent recovery and percent jobs lost is based on the full BLS calculated employment values.

Blame the Fed for the Pension Crisis Because They Engineered It