The first big blow to the economy was the 1979 revolution in Iran, which sent oil prices skyrocketing. The bigger blow was a series of sharp interest-rate increases by the Federal Reserve, meant to snap inflation. Home sales plummeted. At their worst, they were 30 percent lower than they are even now (again, adjusted for population size). The industrial Midwest was hardest hit, and the term “Rust Belt” became ubiquitous. Many families fled south and west, helping to create the modern Sun Belt.
That crisis devastated Pittsburgh. Young adults left in droves and that exodus, long since over, remains the dominant narrative of the region. The current downturn does not appear to be having the same effect. However, the worst is yet to come.
As our country moves into 2010, we could have 1982 all over again. Besides the California bust, what other migration patterns might emerge? If you want to bet on a sure thing, then Texas is about as good as it gets. We might also expect the alpha global cities to reinvent themselves as they have successfully done in the past. I'm keeping an eye on the Chicago takeover of DC. The Rust Belt is due for a makeover and I think the focus of the recovery will be in this mega-region. Pittsburgh is in good position to get a lot of the federal love. I've already speculated that the PNC buyout of National City set up Pittsburgh to finance urban redevelopment throughout much of the Postindustrial Heartland. Pittsburgh is on the cusp of re-emerging as a world city.