Sun Belt Reset

Returning to the most recent Brookings MetroMonitor:

Meanwhile, nearly all the metropolitan areas that suffered the most since the beginning of the recession either experienced a large house price boom and bust or (in the case of Detroit) depend heavily on auto and auto parts manufacturing.

The recent BEA release about metro GDP reinforces the part of the passage I highlighted. The migration economy went bust and I can't imagine why anyone thinks those days will return. Hope springs eternal.

There is a connection with the above data and prospects for recovery in Charlotte. From the most recent issue of The Economist:

The bank’s big problem is litigation stemming from America’s mortgage fiasco. This risk is not unique to BofA but it is unusually severe. The lawsuits fester in three different categories. The first of these, responsible for $12 billion in paid claims and another $18 billion in specific reserves, covers litigation in state courts over mortgages sold to investors with allegedly faulty representations as to their quality. An $8.5 billion settlement announced in June with various investors was supposed to have stanched the bleeding in this area, but the deal has recently appeared to unravel. A second category involves alleged violations of federal underwriting laws that are expected to grind through the courts over many years. The final category, tied to irregularities in foreclosure processes, is currently the subject of negotiations with a number of state attorneys-general. ...

... Enhancing returns in this kind of environment will not be easy. Mr Moynihan announced plans to cut $5 billion in ongoing annual costs and the bank subsequently confirmed this will involve the elimination of 30,000 employees, 10% of its staff. These reductions will be in addition to the loss of tens of thousands of other temporary jobs created to process dud mortgages.

Bank of America is headquartered in Charlotte and a symbol of that city's rise as a financial center. Charlotte and BofA were big players in the migration economy. That bet is now an albatross strangling the region. More layoffs are coming. Things will get worse before they get better.

Generally, that's the case for most of the Sun Belt. The notable exception is Texas. Energy and education have allowed government to keep growing. Texas can afford to receive more people. Not Texas is about a decade into a slide that could last 50-years or more.