It was one of the most jarring articles I've ever read in my 27 years in Charlotte.
"Think you'd rather ride out the recession in Charlotte than in Rust Belt cities such as Buffalo or Pittsburgh?" the Charlotte Business Journal's Adam O'Daniel wrote in an article published Feb. 13. "Think again."
Of the 49 metro areas with more than one million residents, Charlotte's unemployment rate ranks 45th, just above Detroit and Las Vegas, the Business Journal reported. The metro area's unemployment had reached 8.9 percent (Mecklenburg's is 8.3 percent), a higher rate than cities like Pittsburgh (6 percent) and Buffalo (7.2 percent).
The chilling thing about this is that the Charlotte area is posting these numbers at a time when bank and financial institution layoffs have only just begun. Thousands more jobs, many of them high-paying, will be shed over the next 18 months as Bank of America and the combined Wachovia/Wells Fargo kick tens of thousands of workers off their payrolls.
That has two well-respected economists predicting double-digit unemployment rates in the Charlotte market. One of them, Wachovia Corp. economist Mark Vitner, recently told the Business Journal that he expects to see unemployment hit an unthinkable 12 percent.
Layoffs across a broad spectrum of businesses are responsible, Vitner told me in a recent e-mail. So is continued strong labor force growth.
"Recent relocation data shows the Charlotte region ranks near the top of all regions for relocations," Vitner wrote. "It seems that all of the wonderful publicity Charlotte has gotten over the past few years is still encouraging job seekers to relocate here, even though the economy has slowed. Long term that will probably be a wise decision, but in the short term it is driving the region's unemployment rate up."
Whatever the reason for the unemployment, it still adds up to a potential level of pain Charlotte hasn't seen in decades, if ever in the modern era.
There's more.
In a separate article, the Business Journal also recently reported that a "shadow rental market" exists Uptown. Condo owners who went in as investors and can't flip their condos are now attempting to rent them out. After the Novare Group managed to sell just 60 of the 462 condos it has in the Catalyst tower in Third Ward, it has decided to lease hundreds of them instead. In the midst of all of this, another 1,473 apartments will come online soon in SouthEnd, the Journal also reported.
That will more than double the supply of rental property in Uptown at a time when hundreds of condo owners are fighting for renters. The result is a downward pressure on rental prices of hundreds of dollars.
Those who have visited one of Uptown's new condo developments lately, in particular those completed in the last year, know they are eerily empty, with sporadic units occupied by renters and few owners to be found.
As rents dip -- which they inevitably will continue to do if unemployment grows as predicted -- a wave of foreclosures will hit the overbuilt Uptown condo market over the next two years. Investors stuck with these properties, thus, will lose a rental battle over a shrinking pool of tenants.
So far, the Business Journal is the only local media outlet to report the unthinkable -- that Charlotte could struggle through a 1970s-style slowdown that will put it in a tailspin for several years, if not longer.
No one else has taken a serious look at Charlotte's immediate future in a way that takes current trends to their possible logical conclusion. Perhaps, for now, that's a good thing.
Though no one's saying it yet, if Vitner is right, it will take years for Charlotte to fully recover. The Queen City will have to do more than emerge from a recession. It may have to redefine itself by aggressively recruiting new business sectors in a post-bank world. And that could mean remaking Uptown and answering serious questions, like who will live and work there, and who they will live and work for. Of the 58,000 jobs in the Uptown zip code in 2007, 16,305 were in finance, insurance and real estate. In other words, many are bank jobs or jobs dependent on banks. Another 24,706 are service jobs, the bulk of which are white collar, according to the Charlotte Chamber. How many of those are bank-dependent is unclear.
For now, all this is percolating beneath the surface as Charlotte's leaders contemplate weighty issues, like whether the rows of newspaper boxes Uptown look gaudy, and what to do about it.
We should enjoy it while it lasts.
