So this is what a “jobless recovery” looks like. Pretty ugly.
Hopefully, next year we’ll see more of a recovery and fewer jobless. The good news is that many economists are predicting just that.
But let’s not get ahead of ourselves or we’ll neglect the local business stories that made this year memorable. There were plenty.
Without doubt, nothing comes close in importance to the double whammy of high unemployment and record foreclosures. They continue to inflict pain and undermine any positive force that’s searching for traction.
Three years after the recession started, joblessness remains stubbornly high at 10.1 percent in the state. What’s more, the problem of long-term unemployment keeps getting worse. Those who have been out of work for at least 27 weeks now comprise 53.7 percent of the jobless, the state labor department said. A year ago, they represented a third, which was already high by historical standards.
Without work, many homeowners can’t pay their mortgages. So metro Atlanta’s foreclosure problem keeps clobbering the housing market. Notices of foreclosure rose 8.6 percent this year, handily breaking last year’s record, according to Equity Depot. They’re up 60 percent from 2008.
When there are thousands of foreclosed properties on the market, prices have nowhere to go but down. The median sales price for existing single-family homes, for example, fell to $109,000 in October. That was down 10.6 percent from a year earlier, according to National Association of Realtors. Sales volume fell 22 percent.
When’s the housing market going to recover?
In some metro areas, it will unfortunately take years.
Other major stories in 2010 included:
Let’s not forget what caused our current economic mess — the financial crisis stemming from bad bets on real estate.
Georgia is still leading the nation with 51 bank failures since August 2008. This year, 21 Georgia banks have failed so far, second only to Florida.
There was some positive news. The number of bad loans on banks’ balance sheets declined, and about half of the state’s banks made money through the first nine months of the year.
Banking experts predict more consolidation in 2011 — either through additional failures or because healthy banks buy weaker ones.
State and local governments, as well as school systems, cut programs, laid off some workers and furloughed others this year. And it looks like there’ll be more of the same next year. By one estimate, the state alone may be looking at a budget hole in the $2 billion range.
Gov.-elect Nathan Deal already has warned schools about further cuts — even though k-12 education is not on the positive side of the ledger when company CEOs are thinking about whether to relocate here.
Our much ballyhooed higher education system has delivered larger classes, higher tuition and fewer professors for many students. Expect next year to be worse, with the popular HOPE scholarship under the gun. HOPE has kept many of the best and brightest in the state, but the Lottery-funded program will be changed. The only question is how.
There’s some good news on this front. After kicking the can down the road for years, the Legislature finally passed a measure this year that could help alleviate traffic congestion.
Congestion has been one of the key hurdles for metro boosters to overcome as they try to lure more companies — and jobs — here.
That could begin to change in 2012, when metro residents vote on whether to approve a 1 percent sales tax that could fund an estimated $6 billion to $7 billion in transportation projects. The process of selecting those projects already has begun.
Major Coke move
Coke waited 124 years before making a deal as big as the one it consummated this year.
For some $12 billion, Coke took over the North American operations of what was its biggest bottler, Coca-Cola Enterprises.
The major strategic move by Coke CEO Muhtar Kent was done to rationalize a complex distribution system that remained too costly and inefficient for the competitive North American market. Some 59,000 employees were transferred from CCE to Coke, which is hoping to shave about $280 million from annual costs over time.
AGL’s strategic merger
Earlier this month, AGL Resources announced a $2.4 billion acquisition of a huge Illinois utility, Nicor Inc.
When completed, the once parochial Georgia gas company will become the largest gas-only utility holding company in the country.
The acquisition will nearly double AGL’s size. Nicor serves more than 2 million gas customers in northern Illinois, excluding Chicago. AGL currently has 2.3 million customers in Georgia, New Jersey, Virginia, Florida, Tennessee and Maryland, after a series of acquisitions several years ago.
The move caps a nearly two-decades transformation of AGL, from a conventional Georgia-regulated monopoly to a holding company with a growing portfolio of deregulated businesses across the U.S. natural gas supply chain.
Delta wins union votes
Delta Air Lines will continue to be the industry’s most lightly unionized carrier, following victories during four separate representation elections this fall.
Delta defeated unions seeking to organize flight attendants, baggage handlers, stock clerks and customer-service employees.
Barring orders for new elections, the pilots will remain the only large group represented by a union.
Sea Island bankruptcy
One of Georgia’s most renowned and upscale resorts, Sea Island, succumbed to its owner’s grandiose vision and the real-estate meltdown.
Bill Jones III, whose family had owned the iconic resort for more than 80 years, was forced to file for bankruptcy for the Sea Island Co. Two competing investor groups then joined forces to buy it in a bankruptcy auction this fall.
A coalition of Oaktree Capital Management, Avenue Capital Group, Starwood Capital and Anschutz Corp. jointly bid to acquire the beleaguered resort — including its luxurious Cloister and Lodge hotels and four golf courses — for $212.4 million.
This holiday and beyond
Could it be true? Could this holiday end up being the best shopping season in years?
The full season’s numbers are not in yet, but it certainly is looking that way. And overall retail sales have been strong during the past several months.
The consumer is starting to feel more confident. That could pry lose some of the $2 trillion in cash that U.S. companies have been sitting on, waiting for consumer demand to ignite.
If it has, then next year could be considerably brighter than this one.
Here’s to 2011, the year the economy will hopefully create a new storyline — one with a lot more jobs and far fewer people losing their homes.
- Henry Unger, The Biz Beat
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