Spring 2010

It's Time to Toss the Stinking Recession in the Dirt and Let it Rot

Mike Randle, Editor

Something has been stinking up the South and it's not the oil in the Gulf of Mexico. Nope, this stink has been wafting around a lot longer than the oil from the BP blowout in the Gulf. What's been stinking up the South since 2006 has been the economy. And when the economy stinks, economic development, or more specifically, job creation, is even stinkier.

If the numbers that we are seeing here at Southern Business & Development are any indication -- including the data that is contained in the 2010 SB&D 100 story featured in this edition (page 28) -- then we can bury the Great Recession in the dirt and let it rot. It's finally dead. And as the owner of Southern Business & Development and its three Web sites, I say "Hallelujah, the Great Recession is dead!"

We certainly wouldn't be claiming that the aforementioned mephitic economy can now be buried unless we had the numbers to prove it. Let's start with reaching the bottom, which is required before anything bounces back. If you study the numbers in this year's SB&D 100, you will be convinced that the South's economy finally reached the bottom in 2009. More specifically, we maintain that the bottom was reached in the late summer or early fall of last year, which means most of the year was a bust for economic development organizations in the South.

Prior to mid-2009, our numbers show that job generation in the South struggled every year since 2006. That doesn't mean that we believe the recession began in 2006 as opposed to late 2007, the time frame agreed upon by many as the official start of the Great Recession. But our 2006 and 2007 numbers, which can be found in this year's SB&D 100 report, clearly indicate that the Great Recession really got its start in 2006 when the SB&D 100 lost over 10,000 jobs. It lost another 10,000 jobs in 2007.

The most important number that tells us that we reached the bottom last year and now we are rebounding is the number 368. That is how many projects were announced in the South in 2009 with 200 jobs or more and/or $30 million or more in investment. It is the lowest total of deals meeting or exceeding those thresholds since the SB&D 100 was first published in 1994. How do we know that number won't drop again when we publish this edition next year? Well, by our count, we are well ahead of last year's big project pace as of June 15. In fact, unless there is a significant setback for some reason, we predict the South could add as many as 100 major projects this year, giving it over 450 in the 2011 SB&D 100.

Other data supporting our claim that the Great Recession is dead, therefore cannot stink up the South any longer can be found in our Around the South section, which begins on page 10. In April of this year, there were 1,856 mass layoffs in the U.S. In April 2009, there were 2,663 mass layoffs. That's a significant drop in large job loss events. Yet, in April of this year, of the 1,856 mass layoffs in the U.S. only 369 occurred in the South, or just 20 percent of all mass layoffs in this country. That's impressive considering the South is home to so many more corporate and industrial operations than any other U.S. region. It's even more impressive when you consider over 40 percent of the nation's population lives in the South.  

Further proof that the bottom was reached in 2009 and recovery is well underway in 2010 can be found by studying some of the state performances in this issue's SB&D 100. Several states posted record lows in terms of points and total projects in the SB&D 100 report that is contained in this issue. Take Mississippi for example. The Magnolia State had a stinker of a year last year, ringing up only 45 points in the 2010 SB&D 100. The 45 points represents a record low for Mississippi. But, more than another other state, Mississippi is the poster child of the end of the Great Recession and the beginning of the Great Recovery. So far in 2010, it has already more than doubled its 45 point total and the year isn't half over yet.

Now that the recession is dead and we can breathe a little easier, let's hope that there is a much longer recovery than what we saw between the recession of 2001-2002 and this last one that we believe began in 2006. Because if you study total jobs created by the SB&D 100 each year since 2001 (turn to page 28), you will clearly see that between 2001 and 2009 there were really only two good years (2004 and 2005) of job creation from large projects in the South. If we can't do better than that over the next 10 years or so, that will really stink.

mike@sb-d.com

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