Metro area entered local recession last year
by Patrick McCreless
Sep 17, 2013 | 3759 views |  0 comments | 47 47 recommendations | email to a friend | print
Calhoun County was in a recession last year, a symptom of productivity and job declines in multiple sectors, economic data released Tuesday shows.

According to a report Tuesday from the U.S. Bureau of Economic Analysis, the Anniston-Oxford-Jacksonville metro area's real gross domestic product fell 0.9 percent in 2012 after falling 1.4 percent in 2011. The back-to-back drops in GDP indicate the area slipped into a recession like much of the rest of the state in 2012, due to losses in construction and government jobs and gains in mainly low-wage work like retail and hospitality, economic experts say.

The federal government tracks data for socially and economically integrated communities, which it defines as “metropolitan statistical areas,” naming them after each metro area’s largest cities. The Anniston-Oxford-Jacksonville metro area includes all of Calhoun County.

The statistics show that of the country's 381 metropolitan areas, Calhoun County ranked 346 in terms of weakest GDP in 2012, meaning 35 metro areas had a larger decrease in their GDP. The GDP is the market value of all officially recognized final goods and services produced within an area. The report also shows that Calhoun County’s declining GDP is in line with most of the other 12 Alabama metro areas. Only four Alabama metro areas saw gains in their GDP in 2012, including Birmingham-Hoover at 3.8 percent, Florence-Muscle Shoals at 1.4 percent, Auburn-Opelika at 0.9 percent and Decatur at 0.9 percent.

All eight of the Alabama metro areas that saw a decline in GDP in 2012 had a similar decline in 2011.

"A drop in two subsequent quarters is a recession," said Keivan Deravi, economist of Auburn University at Montgomery. "A lot of the state continues in a recession."

Deravi said the minor recession was just part of the slow economic recovery that has continued since the Great Recession hit in 2008.

"The recovery has not started with any kind of sustainability in its momentum," Deravi said. "We have not recovered from the deep wounds of the last recession."

Ahmad Ijaz, director of economic forecasting for the Alabama Center for Business and Economic Research, said he was not surprised by the GDP drops throughout the metro areas of the state.

"The economic recovery is really slow," Ijaz said. "You see that in employment too."

According to the Alabama Department of Labor, the county's unemployment rate in July was 7.8 percent while the state's average unemployment rate was 6.3 percent. The national average unemployment rate was 7.4 percent in July.

"Job growth is very, very subdued," Deravi said. "And the jobs being created are at the very low-wage end."

Ijaz said gains in low-paying jobs such as those in the retail and leisure and hospitality sectors last year contributed to the GDP declines. Ijaz said high-wage jobs such as those in manufacturing contribute more to GDP.

"But adding jobs in retail doesn't really do much for GDP," he said.

Deravi said drops in government jobs also hurt GDPs around the state last year.

"Government is still shrinking, it's a very large component of our economy," Deravi said.

Government jobs account for about 20 percent of the state's economy, Ijaz said.

The statistics show the Anniston-Oxford-Jacksonville metro area saw a 0.21 percent decrease in government jobs last year. Hundreds of federal jobs have disappeared from the area in recent years due to cutbacks at the Anniston Army Depot and the closing of the chemical weapons incinerator. The drawdown of the Afghanistan War has also led to drops in business for local defense industry companies.

One bright spot from the report was gains in manufacturing last year around the state, specifically among the auto industry. The report showed the county had a 0.48 percent gain in manufacturing in 2012, due in part to increased production at local auto suppliers that support the Honda automotive plant in Lincoln.

"Last year was a significant improvement from the year before that," Lew Drummond, executive director of the Alabama Automotive Manufacturers Association, said of the state auto industry. "And this year will probably be better than last year, certainly in terms of units produced."

Drummond said state auto manufacturers and their suppliers have had trouble keeping up with demand, requiring some to expand their facilities. Honda expanded its facility earlier this year so it could add a fourth vehicle to its production line, the Acura MDX luxury SUV. According to the American Honda Motor Company, which oversees all manufacturing plants in the U.S., August sales were up 26.7 percent compared to the same month last year.

"We have products that are in extreme demand," said Steve Sewell, executive vice president for the Economic Development Partnership of Alabama, which works to attract and maintain industry in the state. "All the auto companies in the state are doing extremely well."

Sewell noted that 2012 also saw an increase in industries interested in locating in the state.

"We're seeing continued interest in the southeastern United States from manufacturers and Alabama is certainly in the mix," Sewell said.

Don Hopper, executive director of the Calhoun County Economic Development Council, said his organization also saw an increase last year in companies looking at locating in the area.

"Interest in 2012 was higher than in 2011 and I know activity has been up in 2013," Hopper said. "None of them have pulled the trigger though and I don't know if that's from uncertainty in the markets, but at least they're kicking tires."

Staff writer Patrick McCreless: 256-235-3561. On Twitter @PMcCreless_Star.

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