Ten years ago this month was the start of a vicious recession, and some scars remain even if the economy has healed.
The Great Recession, the most painful downturn since the Great Depression, destroyed more than 248,000 jobs in metro Atlanta – about one of every 10 – and led to a quarter-million foreclosures.
Since then, job growth has been solid, the unemployment rate has dropped to 4.1 percent, wages have risen modestly and home prices have climbed while the rate of foreclosures has fallen to pre-recession levels. And with most economists predicting more expansion in 2018, it is a good picture, one that is radically different from recession.
Yet to Annie Manning, that past is not so past.
She had lived in her Stone Mountain home for 15 years when a “friend” persuaded her to refinance, getting her a low mortgage rate and soft-pedaling the extent that her rates would rise two years down the line.
When the rate reset in 2007, her monthly payments went from $572 to $874.
As a healthcare worker making less than $25,000 a year, she knew she was in trouble. “I tried to get in touch with the mortgage company to tell them, ‘Look at my history. I never missed a mortgage payment.’ I never did hear back from them.”
She delayed the inevitable by filing for bankruptcy, and like millions of others, she lost her house to foreclosure.
Still, that wave of losses ended. Haven’t we put all the pain behind us?
Maybe not, said economist Michael Gove of the University of North Georgia. “Yes, there has been a recovery, but it hasn’t been spectacular. Median household wealth lost 40 percent and hasn’t seen all that much rebound.”
People who lost jobs or homes often dipped into – or drained – their savings. They may look fine now, but their choices aren’t what they would have been, he said. “That affects things like retirement.”
A lack of savings also undermines the here and now, where wages really haven’t risen much for many workers, said economist Tom Smith of Emory University.
“So many people who are living on the edge where it wouldn’t take that much to push them off,” he said. “They don’t have a cushion. How many people are one broken ankle away from economic disaster?”
The broader economy is strong, but flawed, Smith said. “I have been bullish for a long time, but I can see the cracks.”
Michael Wald, an Atlanta-based economist who worked for many years at the Labor Department, said some of those cracks are generational.
Some older workers got laid off and retired earlier than they wanted. Others saw their savings depleted and so they held on to jobs when they wanted to retire. But young people were also hurt as they came out of school and struggled to find work. Many went back to school or took part-time jobs that paid poorly.
Overall pay for young workers stagnated for about five years. And as the economy improved, those earlier grads found themselves competing with younger, fresher graduates.
Some of those who came of age during the recession may never recover financially, he said. “That has a permanence. It sets you back. You may have to rethink your career goals.”
Most noticeably, a regional economy that had been dependent on housing saw building stop cold when the housing market collapsed.
That, in turn, had a series of consequences, starting with jobs: Construction employment plunged after the collapse of the housing market and even after about six years of improvement, there are still fewer construction workers than before the recession.
That is one large reason that men were proportionally hurt worse than women, since most construction workers were men. Men also took the lion’s share of the job losses in manufacturing – another sector that has not come back to its pre-recession level.
The burst of the housing bubble also slashed the rate of home ownership, nationally and in Georgia, Wald said. “We are becoming a nation of renters again.”
The recession ended the dreams of many lower- and modest-income people, said attorney Sarah Bolling Mancini whose work at the Atlanta Legal Aid Society focused on struggling homeowners.
“I think the data supports that anecdotal understanding - most people who go through a foreclosure will not be able to buy a home again for quite a few years, if ever.”
The housing market since 2012 has been mending, with prices up consistently. But lost in the macro data are many neighborhoods where home values have not rebounded as much as the hot ‘hoods. Or the many people who left the workforce and did not return, said Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University.
The economy does look good, but some damage can be psychological, he said. “The recession did leave a residue akin to PTSD for lots of workers and savers who saw their job and retirement security evaporate in thin air in a blink of an eye.”
Economists have puzzled about the drop in American mobility.
Fear is the reason, Dhawan said. “Now, people tend to stay put in the same home – and they remodel instead of move up. They don’t change jobs even when the unemployment rate is so low. And that affects the net migration of the older, skilled workforce.”
Of course, the recession meant that some people did move – because they had to.
Annie Manning, for example says she would have liked to have stayed in that Stone Mountain home a few more years. But she is not complaining. She lives now in a federally subsidized apartment complex in Atlanta.
She thinks the house was worth about $120,000 when she left. If she had stayed and sold it, she would have walked away with some cash.
She tries to look back with a sense of peace, she said. “It was a blessing. I couldn’t see it in the beginning. At the time, I was depressed. I felt embarrassed…”
Recalling, she tears up and has to stop for a moment.
“It has been so long,” she said. “My God, I thought I was over it.”
MYAJC.COM: REAL JOURNALISM. REAL LOCAL IMPACT.
AJC Business reporter Michael E. Kanell keeps you updated on the latest news about jobs, housing and consumer issues in metro Atlanta and beyond. You'll find more on myAJC.com, including these stories:
- Atlanta tech companies worry that tax bill undermines research
- Tax package: Atlanta businesses want cuts, fret about other impacts
- Small business: struggling, surviving and the money stays local
Never miss a minute of what's happening in local business news. Subscribe to myAJC.com.
Mortgages 30 days delinquent: metro Atlanta
Dec. 2006 7.0 percent
Dec. 2007: 8.0 percent
Dec. 2008: 10.8 percent
Dec. 2009: 15.2 percent
Jan: 2010: 15.7 percent*
Dec. 2010: 14.5 percent
Dec. 2011: 13.6 percent
Dec. 2012: 11.9 percent
Dec. 2013: 9.3 percent
Dec. 2014: 7.7 percent
Dec. 2015: 6.7 percent
Dec. 2016: 6.2 percent
Sep. 2017**: 5.7 percent
*Highest on record
**Most recent available
Number of people unemployed, metro Atlanta
Dec. 2007: 138,051
June 2011: 288,293
Oct. 2017: 126,236
Source: Bureau of Labor Statistics
Number of jobs, metro Atlanta
Pre-recession peak: 2,484,800
Post-recession trough: 2,236,500
Most recent (Oct): 2,774,000
Source: Bureau of Labor Statistics