Pine Belt Economy

[Judge Bustin]

For months I have listened to the "Today" show and evening newscasts talk about the dire economy. Most reports cite national numbers for falling housing sales, the high number of foreclosures, increasing joblessness, the larger than ever amount of consumer debt, the bust of sub-prime lending and the EXTRAORDINARY high price of oil as evidence of a near-recession.

But -- interest rates are good and Black Friday sales were very very strong. Construction in the Pine Belt, particularly commercial construction, is booming.

Are the negative reports part of a "conspiracy" to get a Democrat president elected? Are the negative reports accurate? Is it just a cycle that will turn in a few weeks/months?

Is the Hattiesburg area experiencing a near-recession? What are you MHers experiencing?

One of our fellow MHers has done some extensive researach regarding Pine Belt housing sales -- see www.hattiesburgrealestatestats.info (http://www.hattiesburgrealestatestats.info) -- and it looks like housing sales are still good in 2007, contrary to the naysayers.

I'd like to know what y'all are seeing in your businesses, professions, neighborhoods, etc.

Judge Bustin

[fuzzis]

I see construction slowing down and construction companies now bidding on projects that they wouldn't have touched a year ago...because they need the work. Their bids are coming in high, but they are coming in.

[Scarlett O'Hara]

I had a realtor tell me just the other day that homes weren't selling for as much as they were several months ago (in Oak Grove). I found this unbelievable since there is so much going up on 98.

[RGDoherty]

I agree with Hawk, We're stronger than many parts of the country, but that's because our housing prices have always been lower than in other parts of the country. I know in Miami where I fish the canals, houses that might draw 65K in Hattiesburg sell for 300 to 500K and don't even start on Southern California. Our cost of living will be our saving grace. Having said that, companies are looking to trim out excesses. And yes excesses are not just expenderatures but some lower performing employees. I find over my time in the work force this is a cycle that runs about every 10 years or so.

[chaz]

All respect to the work put into that page, it discusses only number of homes sold. It doesn't deal with any price trends of closed sales, trends in seller concessions, price reductions, or days on market. DOM is only listed for 2006.

A simple recitation of a few relevant facts and not a true analysis of market trends.

[bscharwath]

It's still under construction so any suggestions are very welcome....

I had not thought about sellers concessions but I think I can average those out. Great idea!

please keep the suggestions coming

[mi_nombre_es]

We may look stronger in the numbers but there is one number that most aren't taking into consideration, Expendable Income per household. Now a days, most families are a 2 parent working family (over 85% in hattiesburg, give or not, unsure of actual number atm). As these families work more and more, they are slowly getting behind. Here's a few reasons why:

1. Expendable Income is slowly being erroded by Inflatation! In 2006, the average pay raise was around 1.1% (Source: Money Magazine). In 2007, the projected pay raise is to dip to an even 1%, if workers get that. In 2006-2007 (to date), inflatation has been increasing at a nice constant 2.7% a year. As you can see, slowly the expendable income per household is being taken away for cost-of-living and increasing costs.


2. The extend of ARM Mortgages and other types of non-fixed mortgages. As the ARMs correct themselves over the next couple of months, not only will we see more families in distress sales but more families will be foreclosed due to lack of income to maintain their current lifestyle (including house). Those who can afford to maintain it, will find their expendable income decreased vastly due to the correction adding between 75-110% to the cost of their monthly mortgage payment. Realisitically, it would not be uncommon to see people with an option ARM to get to month 29 (correction point) paying $1000/month for their mortgage, but it jumps to 1900-2000/month. Think about if your household upkeep jumpped up another $1000 a month? Could you handle it?


3. Increasing Gas prices are putting a serious crunch on everyone, including pine belt residents. If you are unsure if they are affecting us, check out the Hattiesburg American, they have run articles about the increasing gas costs affecting resident travel and ability to go places. Also, increasing gas prices are hurting business. Products are now costing more to ship and the retailers have to pass that cost on to the consumer in order to maintain profitability. Now this doesn't directly decrease expendable income per household, but it reduces the purchasing power of each dollar that is expendable in a household's income.

4. Credit Cards. most people aren't discinpled enough to pay them off on time. They accur soo much debt, they need to refi, debt stack...etc. Credit Cards create a temp. expendable income per household, but the long-term effect of credit card debt to an expendable income is unreal. Think of the rule of 72, which states that you take your interest rate, whether debt or investment, divide it into 72, that is how many years it takes to double that debt/investment. So if the average American family has the $9,500 in credit card debt and don't pay anything on it. They default all of them (36% interest on some of the higher end ones), and don't touch them for 10 years (I've seen much worse..). This is what will happen:

2007. 9,500 (Since 36 goes into 72, 2 times, that amount doubles everyone 2 years).

2009. 19,000

2011. 38,000

2013. 76,000

2015. 152,000

2017. 304,000

If you have 304,000 in credit card debt, how does that affect your household income if the min pay (currently 2.2%) is 557 dollars a month!?


Now your asking, How does this affect everyone directly? As the expendable income goes down, consumer confidence goes down. This leads to lower retail production, dips in the stock market. Lastly, it leads to layoffs and possible recession.

The Median Income for a Mississippi resident is $25,000/year pre-tax. Who actually has expendable income?

[firefly]

Regarding the gas situation: let's go back to the horse & buggy days!:laugh:

[Guru]

I think Hawkeye, RG and Nombre have it about wrapped up. Not much more to say.
A couple of things that bother me, and not from their posts but from the general public, is that people have not payed much attention to these signs if they personally have not felt the bite yet.
Of course it's not the time to be a high roller just to feed the economy and that would put off doubts but I hear some people talking without a concern at all. Addiction to spending, Consumerism, seems to be more of a standard now than 20 years ago. Perhaps it's an evolution.

Another thing that concerns me is the effect of the troops that will return from overseas and how this is going to impact the economy. Please don't confuse that statement with human compassion. I'm simply saying that those that return will have their jobs back (some won't) and the jobless rate will escalate with those people that have been filling in being pushed back out. If these excesses in the working population continue to be a normal correction cycle being weeded out as witnessed about every 2-3 years now as opposed to what used to be every 5-10 years, then to me this should be a sign for more people to accept planned parenthood in a more robust way. Forward planning education for critical economics seems not to be a concern in the education of younger people IMO.
From my perspective and experience we are moving toward a working population downshift via corporations that have learned to hedge their unemployment burden upfront instead of bloating their growth goals in the planning stages.

Oil is ... what it is. If the war overseas should end of course that will mean that the daily requirement on this Earth will decrease; at least in terms of what the demand is this day. Since the major owners of refineries now have announced plans to perform upgrades that will increase throughput (roughly 20-30% from figures I receive) then any bottle neck effect there should be eased.

Hattiesburg economy explained to me many years ago is very diverse and has been it's saving grace. The outlying areas of course are a different matter. This is what leads the trend for people to hang around metro areas to be where the action and the comfort is. Should things progress to a point where life would regress to more immediate financial worlds versus the commuting lifestyle then there could be some definite discomfort from this. In a very extreme way or event cycle, white flight and the change in revenue producing % vs. changed demographics of geography could be a factor if the crunch on commuters could be painful enough to force us to live off a different cash cow than this country has historically experienced.

A beacon to me would be the reaction of energy prices in terms of the war overseas and the increased refinery throughput which will neither happen today.

[TheCapitalist]

Great points all. Most center on the housing/ construction industries. We have been building houses and apartments out the wazoo for a while now. This industry is a victim of overbuilding coupled with a down turn brought on by lending practices and people over extending themselves with credit, mortgage and consumer. Hattiesburg has traditionally weathered this better than the country as a whole.

That being said, every four years the media begins telling everyone how bad the economy is. Going to hell in a hand basket. 3 months after the election, everything is great. I guess i've been around too long, but it always happens. Remember George Bush I? Before Clinton went in, it was the worst economy in 20 years. Two months after Clinton took office, we were in the money. Right. The stock market doesn't like uncertainty. It will falter until we know who the next president is. If the socialist party takes over, the market can expect higher taxes, greater regulation, soak the rich class envy situations, etc. Maybe even nationalizing private businesses such as health care, etc. like chavez did with the oil wells and media outlets.

Rising costs of goods and gasoline and lowering dollar values are real factors, however.
In my business, i have been a little slower. That being said, the competition has tripled over the past couple of years. I still have as much as i can do without hiring another person. In the service business, a few days can be slow, then explode. Hard to predict.
I see the reports on the economy, then i see all the people lining up to blow money on cheap gadgets for Christmas, fighting in line and in the parking lots to spend money!
When i see the same lines for FOOD, I might feel differently (and I don't mean Chesterfields, Chilis, Wentzells,etc.)

[James Moore]

Speaking as a local retailer, our business continues to grow. Bicycles are for most folks a recreational item and the sale of new bikes is usually the first to show signs that a recession is occurring locally. Discounting the fact that our business goes in cycles - bad joke - sales for the year indicate no slowing of growth.

What could be a hint of hard times is the fact that by this time of year our repair business has slowed to a trickle. I observed last week that the mechanic has been fully occupied which could mean that the fair weather just has not shut down outdoor activities or it could mean that folks are opting to invest in repair and upkeep of older products rather than splurge on new.

I'm no doubt one of the few retailers that sees opportunity in rising gas prices. I'm just as annoyed by the 5 and 10 cent increases as the next fellow but let gas hit $5 per gallon and I'll be hiring extra assemblers. I put an even $80 in the Expedition last Wednesday and the gauge shows empty after only 4 days of in town driving. I've even weighed the risk of broken bones at the age of 51 and considered using my Triumph motorcycle for some trips.

Our growth has allowed us to expand into the remainder of our building after the other tenant found a new home. Minimal work was required to prepare the new space for our expansion but as I was painting the new area yesterday I saw a sight that might be the truest hint of our local economy's direction. A remodeling contractor pulled up thinking no one was on the premises and spent several minutes peering into the window of the empty space. He appeared to be seeking his next job.

James Moore
Moore's bicycle Shop, inc

[bscharwath]

OFF TOPIC BUT....

MY 2.5 year old sits on her pink tricycle from Moore's everyday ringing the bell. She can ALMOST reach the petals. I'm going to be in big trouble this Spring cause it won't be long before she figures out what those petal do. :-)

[bpitt]

I am a Realtor. Business is SLLOOOWWWWWWW.

I am a licensed contractor. Things have slowed down, however, we've gotten two good contracts lately that well keep our few guys busy for a few months.

I work in the communications industry. Work is steady on the larger businesses, but slow to none on small business.

[petalgirl00]

I don't think MS is that bad. Now Michigan and other parts of the country..people are leaving en masse. We're still riding off of Katrina.

[bscharwath]

Real Estate is normally slower this time of year. Especially during football season and getting the kids back to school.

I find I'm usually the busiest between school breaks. People prefer to relocate their kids during a break.

I was usually slammed in June, July and August. Now June and July are insane and August is slower because they go back to school so much sooner.

It is going to be really interesting to see what happens next year. I'm going to try to keep the numbers updated quarterly.

[birthdaybunnie]

Healthcare has been impacted by cuts and everyone is praying that layoffs are not in the forcast. You hate to want people to get sick, but when it's a paycheck,,,,well, enough said.

Husband is in manufacturing and the business is booming for the moment.