Obama's Vacation Choice, Asheville, Doesn't Reflect North Carolina Job Losses

April 23, 2010 — -- When the Obamas arrive in Asheville, N.C., today for a vacation, the first couple will find a festive tourist destination and a bustling business hub that, though hurt by the recession, has managed to keep its unemployment level below the national average.

If only the rest of the state were so lucky.

Some 30 miles away from Asheville, in Waynesville, N.C., furniture store owner Tom Massie, 70, is recovering from his business's toughest year in decades. For most of 2009, he said, 108-year-old Massie Furniture didn't turn a profit and Massie had to dip into savings to make ends meet.

Massie was able to keep all 12 of his full-time employees, but he watched as businesses around him shed workers and contributed to his home county's 12.3 percent unemployment rate.

"It's by far the worst we've seen since the Depression that my father and grandfather went through," Massie said.

With a few exceptions -- including Asheville and the biotech-heavy "research triangle" of Chapel Hill, Durham and Raleigh -- most parts of North Carolina struggle with unemployment rates above 10 percent, thanks largely to the downturn in the construction and manufacturing sectors also seen nationwide.

"Because those industries were bigger here (than in) other states, we were hammered," said University of North Carolina-Charlotte economist John Connaughton.

The economy in the western part of state, including Waynesville, has also been hurt by a decrease in the number of retirees who -- thanks to the ills of the national housing market -- are unable to sell their homes in other parts of the country and move to western North Carolina.

When the "in-migration" to the region was higher, those retirees helped stimulate both home building and commerce, as they shopped for everything from groceries to furniture to sustain their new lives, said Tony Plath, an associate professor of finance, also at the University of North Carolina-Charlotte.

The downturn of the nation's banking sector, meanwhile, took a heavy toll on the economy and employment in Charlotte, which lost one of its biggest banks, Wachovia, after it was purchased by San Francisco-based Wells Fargo. Charlotte, the home of Bank of America, is still considered the banking hub of the Southeast, but the city and its neighboring towns have lost some 10,000 jobs in the finance sector since 2007, according to data from the U.S. Bureau of Labor Statistics.

Banking Hub Bonuses

A portion of the jobs lost, experts say, were those of high-paid investment bankers -- think multi-million dollar bonuses -- whose incomes helped support other businesses.

"When those people show up with all this disposable income and start buying houses and cars and go out for dinner, that has a multiplier effect," Plath said. Today, he said, "that's gone."

But the banking sector, ironically enough, Plath said, could help lead Charlotte's recovery. The sector had drawn educated, experienced people to the city who are applying their know-how to other ventures.

Dan McDonough, the CEO of Charlotte-based Commercial Credit Group (CCG), agrees.

"Clearly there's a lot of smart people here in Charlotte and there's been some displacement within the banking community," he said. "Smart people do good things and I'm sure it will show eventually."

McDonough's business, which provides financing for equipment purchases by construction, transportation and waste companies, recently benefited from an investment by bank industry veterans. Falfurrias Capital Partners, a Charlotte-based private equity firm founded by former Bank of America Chairman and CEO Hugh McColl Jr. and former Bank of America CFO Marc Oken, announced last month that it was putting $20 million into CCG.

McDonough said his company will leverage that investment into $100 million in loans to clients.

"We finance assets that put people to work," he said.

For other parts of the state, hopes for recovery could lie in a broader, national economic rebound.

Massie said that 2010, so far, has been profitable for his furniture shop, something he attributes in part to increasing consumer confidence and positive economic reports from the government. The publicity from President Obama's trip, he added, should be good for local businesses too.

Tourism officials in Asheville agree.

"I think the fact that we are an affordable vacation destination has resonated with people who are looking for value right now," said Marla Tambellini, the assistant vice president and director of marketing of the Asheville Convention and Visitors Bureau.

The president's visit, she said, could help kick off not only "a strong spring but a great summer."