Email
Print Friendly
A A A

The Federal Reserve

2008 Annual Report pdf logo PDF version

Tough Times: The Southeastern Economy in 2008

Introduction
Employment
Real Estate
Banking and Consumer Spending
Energy, Tourism, and International Trade
Manufacturing and Agriculture
Little Good News
Economic Crisis Timeline
 
A Day in the Life

Photo of Joseph HaleJoseph Hale
Community bank safety and soundness examiner


Employment takes huge hits

For many years the southeastern economy generated hundreds of thousands of jobs, but it showed signs of fatigue in 2007 and outright decline in 2008. Its twin locomotives—Florida and Georgia—stalled and began rolling backward. Florida, the leader of the region's economic surge in recent years, suffered from overbuilt residential real estate markets and related financial turmoil. Georgia, another major growth engine in recent years, joined Florida, California, and Michigan as the states that lost the most jobs in 2008.

All told, the six states of the Southeast shed 674,000 jobs in 2008 (chart 1). The decline started early, and job losses accelerated in the final quarter of 2008. A quarter million net jobs were lost in the fourth quarter alone.

As the year ended, there were few positive signs. A shrinking employed workforce and rising ongoing unemployment insurance claims indicated that jobless people were having difficulty finding new work.

While payroll employment shrank in most southeastern states, Florida experienced the worst losses. Notably, employment in the Sunshine State's once robust construction industry in 2008 dipped to its lowest level since 1991. In the fourth quarter of 2008, Florida also reported the highest number of layoffs of fifty or more jobs on record in the state. For all of 2008, Florida lost more than 375,000 jobs. The state had added 275,000 jobs as recently as 2005, before employment growth started to decline.

Chart 1
Southeastern Employment Growth
Chart 1: Southeastern Employment Growth
Note: The gray bars indicate recessions.
Source: U.S. Bureau of Labor Statistics and Federal Reserve Bank of Atlanta

Florida's neighbor to the north fared little better. In Georgia, job losses in 2008 were spread among most economic sectors but were heaviest in manufacturing, construction, and business services. In December the state's unemployment rate reached 7.5 percent on a seasonally adjusted basis, the worst reading since 1983. This downturn came after Georgia had added more jobs between 2003 and 2006 than all but six other states, including Florida.

The news was better in Alabama, which maintained modest job growth for most of 2008, but even there employment started falling after the third quarter. In Louisiana, employment remained positive, but growth was much slower than during the post–Hurricane Katrina recovery. Meanwhile, Tennessee and Mississippi began losing jobs in the spring in most sectors.

Photo of unemployment line
With unemployment rising in the Southeast, an estimated 3,000 job seekers stood in line at just one fair, the South Fulton Bilingual and Diversity Job Fair held in College Park, Georgia, just outside Atlanta.

Regionwide, the unemployment rate had begun climbing in the spring of 2007. By the end of 2008, the jobless rate in the Southeast as a whole, as well as in Alabama, Florida, Georgia, and Tennessee individually, was the highest since the early 1990s. Unemployment in the region was above the national average for most of the year.

Out of service
One factor that provided a cushion during past downturns was no comfort in 2008. Service-sector employment growth no longer offset losses in goods-producing industries. In fact, in most southeastern states annual growth in services employment in 2008 was no better and in some cases worse than during the 2001 recession.

The region's public sector eliminated jobs too. Governments across the Southeast, as elsewhere in the nation, pared payrolls because tax revenues declined along with consumer spending. In Georgia, for instance, by December governments were hiring at their slowest pace since the early 1980s. In November the city of Atlanta, like many municipalities across the country, announced a plan to adopt four-day work weeks, even furloughing police officers, in the face of declining tax collections.