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The Right Port in an Economic Storm
Good Jobs Buoy Alexandria And Arlington
By Brigid Schulte
Washington Post
November 7, 2008
With gloomy headlines about job losses and the constant drone of 24-hour cable news shows instilling fear, if not outright panic, in even the stoutest of hearts, economist Stephen Fuller has a few words for residents of Arlington and Alexandria: Snap out of it.
This is one of the best places in the nation to ride out a recession.
Yes, there is unemployment, but it's lower here than nearly anywhere else in the country. Home sales are actually up from the same time last year, with houses spending fewer days on the market. And the local economy is adding jobs.
In speeches across the region in recent weeks and on radio and TV appearances that have taken on more of an air of reassuring hand-holding than statistical number crunching, Fuller drives home this point: In the Washington area, and particularly in places like Arlington County and Alexandria, the "R" word is not recession. It's resilience.
"There are a lot of worried people. Yet they're working 60 hours a week. They're making as much money as they made last year," said Fuller, a professor at George Mason University and director of its Center for Regional Analysis. "Yet the headlines give you reason to worry. It's hard not to worry when you see the market doing what it's doing, even if you don't have any money in the market. So they're concerned. They overreact. They don't get the reference points."
And the biggest reference point they need to understand is this: "It's nice to have a rich uncle," Fuller said. Uncle Sam, that is.
"Arlington and Alexandria are just very well positioned to take advantage of these economic conditions," he said. "Because they're so close to Washington, they benefit from a stable federal government. They have a housing mix that's attractive to the middle-income professional. There's good public transportation, which is certainly an advantage given the high cost of transportation. People are saving time, saving money by living in Arlington and Alexandria, close to where they work. All of the trends, the demographic, economic and cost of living, favor Arlington and Alexandria. Their economies ought to do just fine."
Fuller has analyzed many of the 11 national recessions since World War II. He's been presenting audiences with a chart that shows how the Washington area performed compared with the country as a whole. "We're positive," he said. "And the nation's negative."
He has no patience for those who throw out comparisons to the Great Depression. "Even Alan Greenspan came out the other day and called this a 'financial tsunami,' the worst since the Great Depression," he said. "There's no comparison. This is a major event, but banks were failing at 50 times the rate during the Great Depression. The International Monetary Fund came out with a report of 74 financial crises around the world since World War II. This one is sort of average at this point."
In fact, as Fuller works on forecasts, he has a different take on the dour headlines. A $700 billion government bailout? More regulation? That means more jobs in the Washington area.
"We're getting a lot of federal contractor jobs because of the additional work that the Treasury and Justice departments and Fannie Mae and Freddie Mac and other regulatory agencies are going to undertake on behalf of the banking industry," he said. "Just remember how the Resolution Trust Corporation added a lot of jobs here in the early 1990s when they were bailing out the savings and loan associations."
The much-mentioned Federal Deposit Insurance Corp.? It has a major facility in Arlington, said Terry Holzheimer, the county's director of economic development. Federal agencies, which lease office space and account for more than one-third of what fuels the local economy, are a large part of what cushions the impact of any financial downtown. "If anything," he said, "they are going to expand."
And, Fuller said, "a new administration always creates new jobs."
Arlington and Alexandria, like the rest of the country, are beginning to see job losses in retail, construction and financial services, Fuller said. "But we're picking up new professional jobs in business, education, health, utilities and information services," he said. "So although the unemployment numbers have gone up slightly, the picture is not as bad as the numbers might indicate. Because the jobs we're adding pay more than the jobs we're losing."
Arlington officials have been widely circulating a report on Business Week's Web site that crunched economic and demographic data and determined that the county was the best place in the nation to ride out a recession. Nearly half of the 119,222 jobs analyzed were rated as being in such "strong industries" as government, government contracting, lobbying and professional, scientific, education, health and technical fields. Arlington got high marks because only 7 percent of its residents work in the vulnerable financial, real estate and insurance industries. Regions hit harder, such as Charlotte, a banking center, have double that number.
Holzheimer said that even in the midst of some of the most depressing economic news, he's been attending groundbreaking ceremonies lately for buildings in such hotspots as Shirlington, Crystal City and Ballston. Developers have 2,737 residential units under construction, along with three hotels and more than 250,000 square feet of retail space.
"Arlington County Manager Ron Carlee has been describing this year as the glass being only 95 percent full," Holzheimer said. "The line that we've used before is 'serious but manageable.' Obviously, this is something we have to pay attention to, but certainly we can manage our way through it."
Not to say that a serious downturn won't be hard. Retailers and small businesses are feeling the pinch as worried consumers cut back on spending, buying a cup of coffee and a cookie, one coffee shop owner said, rather than a pricier latte and a muffin. And people living on fixed incomes are certainly struggling.
"But the fact is, this has happened before," Fuller said. "The market fell 22 percent in one day in 1987. The economy recovers. The market rebounds. Three to four years from now, people's 401(k)s will have surpassed their previous value. It's going to be a cold winter for a lot of people. But here, we'll get through it."
He tentatively predicts an economic recovery by the second quarter of 2009. This spring.
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