Many Metros to See No Job Growth as Mortgage Crisis Worsens
MIAMI, June 20 /PRNewswire-USNewswire/ -- A new economic report
released Friday, June 20, during the U.S. Conference of Mayors Annual
Meeting in Miami reveals that U.S. economic growth for 2008 has weakened
considerably, while unemployment and consumer prices have risen sharply.
Though it remains to be seen if this ends up being classified officially as
a recession, the report reveals that there is no question that the economy
is suffering more than just a mid-cycle slowdown. According to the report,
a sustained recovery is not expected until mid-2009 at the earliest.
The economic forecast for the nation's 363 metro economies -- which are
made up of cities and suburbs -- will remain sluggish at best and will slow
to 1.4%, almost one-third below last year's rate of 2.0%, and half of the
average growth rate for the last three years of 2.8%. While metro areas,
which are the engines that drive the nation's economy, have helped prevent
a more severe downturn, there is no doubt that they are bearing a heavy
burden as a result of the current economic weakness.
"Our findings highlight how critical U.S. metro economies are to the
future economic security of this nation," said U.S. Conference of Mayors
President, Trenton Mayor Douglas H. Palmer. "When our cities and suburbs
grow, the nation prospers; when they struggle, the nation struggles."
The report, prepared by Global Insight, also finds that unemployment
growth for 2008 will remain sluggish as well with only a 0.4% increase.
One-third (113) of U.S. metros will experience actual job declines this
year. The projected gross metropolitan product (GMP) growth of 1.5% for
2009 will continue this sluggish performance.
The sluggish growth among metros in the current slowdown compounds the
fact that many metros are suffering from a prolonged employment downturn.
Almost 86 % of the nation's jobs were generated in U.S. metro economies.
The report finds that 80 metros have not regained the jobs they lost since
the last recession in 2001. Additionally, 71 metro areas will not see any
gains in employment for the entire decade. Over half of these metros, led
by Detroit and Cleveland, are located in the Midwest.
Combined, the 80 metros that have not fully recovered their jobs begin
this slowdown with more than 900,000 fewer jobs than at the start of the
2001 recession, including Detroit, down 163,500 jobs and San Jose, down
155,000 jobs.
Furthermore, the report forecasts that the housing crisis continues to
worsen. It predicts that in 2008 housing starts will reach an all-time low
of 930,000 starts. Existing home sales and housing values will continue to
decline throughout the year as foreclosures continue to grow. Metro-area
housing values are expected to tumble nearly $1.46 trillion this year,
worse than the previous November 2007 forecast of $1.2 trillion. Almost all
metros, 336 out of 360 (93%) are expected to see some sort of decline in
home values, led by the Los Angeles metro, followed by Washington, DC, San
Francisco, and Riverside. Foreclosure activity is expected to rise to 2.2
million homes, representing a property value of $488.4 billion.
"These forecasts make it even more urgent that Congress and the
President complete mortgage foreclosure legislation as soon as possible,"
Palmer said. "The nation's mayors, again, strongly urge the mortgage
industry to increase and accelerate its efforts to prevent foreclosures.
The overall situation is not getting better."
The report concludes that the flow of goods and services among metro
areas is comparable to trade flows between nations. In 2007, nearly 92%, or
$207 billion, of the nation's real economic growth occurred in U.S. metros.
New York ranked first among all U.S. metros, with a $1.2 trillion economy,
followed by Los Angeles, Chicago, Washington, and Houston.
U.S. metros, when compared to nations, continued their predominance in
the global economy by comprising 40 of the largest 100 international
economies. New York metro ranks 12th in the world, larger than the
economies of India, South Korea, or Mexico; Los Angeles ranks 18th, larger
than Turkey; and Chicago ranks 20th, larger than Sweden, Belgium, or
Indonesia. Compared to previous rankings, New York dropped from 10th to
12th, overtaken by Brazil and Russia.
Additional key findings include:
-- In 2008, 142 of 363 metros (39%) will register below 1% real GMP
growth, 33 (9%) of those actually contracting.
-- More than 70% of the nation's metros in 2008 are expected to record
less than 1% job growth, the rate that is typically needed to absorb new
entrants into the job market.
-- Metro area job growth will improve only slightly to 0.7% in 2009; 73
metros will still see job declines next year.
-- The largest real GMP gains in 2008 will come from New York, $20.62
billion and Houston $9.96 billion; the fastest growing will be Houma, LA
(5.2%); Odessa, TX (5.0%); and El Paso, TX (4.4%).
-- Peak-to-peak employment gains (the difference between the current
job level peak and the employment peak prior to the 2001 recession) were
led by Phoenix at 307,100 jobs; Houston at 298,300; Washington at 289,400;
Riverside at 233,800; and Miami at 220,600.
-- Metros with the largest peak-to-peak job declines were Detroit, down
163,500 jobs; San Jose, down 155,000; San Francisco, down 113,700; Boston
down 72,700 and Cleveland, down 59,700.
This Metro Economies report was prepared for the U.S. Conference of
Mayors and it's Council for the New American City by the economic
forecasting firm, Global Insight Inc. You can download the entire report
from the U.S. Conference of Mayors website at http://www.usmayors.org.
The U.S. Conference of Mayors is the official nonpartisan organization
of cities with populations of 30,000 or more. There are 1,139 such cities
in the country today, each represented in the Conference by its chief
elected official, the Mayor.
SOURCE U.S. Conference of Mayors
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Related links:
http://www.usmayors.org
CONTACT:
Elena Temple, +1-202-861-6719,
etemple@usmayors.org, or Carlos Vogel, +1-202-861-6708,
cvogel@usmayors.org, both of U.S. Conference of Mayors
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