Bacon's Rebellion

Democracy Thrives in Sunlight

Virginia Consumer Economy: Not So Hot

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by

James A. Bacon
in ,

Map credit: CredAbility

CredAbility, a nonprofit credit counseling service, regularly updates its Consumer Distress Index, which tracks the financial condition of the average American household. The index combines such metrics as unemployment, credit scores, net worth, spending vs. income, and performance in paying rents and mortgages.

Nationally, the consumer economy is slowly improving. Reports CredAbility in its Aug. 22 press release:

Slowly but surely, consumers have worked to repair their finances during the past four years by paying down debt and better managing their credit, said Mark Cole, executive vice president of CredAbility. They are more in control of their household budgets, increasing their savings even as gasoline prices have risen and the drought has started to affect food prices. While millions of people continue to battle unemployment, the majority of households with stable jobs and housing has made wise financial choices and are moving in the right direction.

Unfortunately, the Richmond and Hampton Roads Metropolitan Statistical Areas remain more stressed than the national average. Virginia out-performs the national average only because the Washington MSA is so much better off.

The Richmond MSA received a 69.7 score (distressed, unstable), just shy of a (weakening, at-risk) status. A relatively low unemployment rate was the region’s only comparative strength. The region lagged national indicators for housing, credit, household budget and net worth.

Hampton Roads (Virginia Beach MSA) received a 69.0 score, also bolstered by a relatively low employment rate while impaired by the other indicators.  The score for mortgage/rental performance was particularly below the national average.

The Washington MSA, which includes Northern Virginia, received a 77.1 score, significantly out-performing in all categories except net worth, where it came within a hair of the national average.

— JAB

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  1. Neil Haner Avatar
    Neil Haner

    I shudder to think what any real discipline in Federal expenditures will do to the Washington and Virginia Beach economies. I can foresee both tanking (not necessarily to Detroit levels, but in that same vein) if Congress ever makes real cutbacks in its spending habits, especially with the military.

    Then again, this is Congress we’re talking about. I’m probably giving them far too much credit.

    1. DJRippert Avatar
      DJRippert

      Neil:

      You points are “spot on”. While I haven’t looked at the possible sequestration process closely, my understanding is that it will either be in process or not before the Presidential inauguration in January, 2013. In other words, if Mr. Obama and the Congress do not manage to avoid the “fiscal cliff” then either Barak Obama or Mitt Romney will inherit the sequestration process on the first day of the new presidential term.

      I think there is a better than average chance that sequestration will happen. The GOP will be loathe to raise taxes in any way before the election. Meanwhile, the Democrats are unlikely to cut spending without increased taxes.

      There is the possibility that the lame duck Congress will act between the election and the inauguration. However, a Barak Obama heading for a second term isn’t going to capitulate on spending cuts with much higher taxes. And a lame duck Obama is likely to declare that this is now Mitt Romney’s problem.

      In the Virgnia race for US Senate, George Allen seems willing to jump off the fiscal cliff while Tim Kaine has suggested a less drastic tax hike (than envisioned by Obama) as his antidote to the impending problem.

      Clearly, the NoVa and Tidewater economies will be crippled by sequestration . Even without sequestration, I think there is considerable pain ahead. However, I wonder about the impact in other areas of Virginia. A considerable flow of revenue goes from the wealthy areas in Tidewater, NoVa and Richmond to less affluent parts of the state. NoVa and Tidewater will be hurt by cuts in federal spending. Meanwhile, Richmond will be hurt by the inevitable “knock on effect” of less tax revenue flowing to the state government and government related entities in Richmond.

      This could truly be a perfect storm brewing.

      Finally, our legislators in Richmond have had 25 – 50 years to prepare for the day when federal spending growth would slow, stop or turn negative. They have done nothing.

  2. larryg Avatar
    larryg

    The sequestration process shows just what hypocrites the GOP is. They’ve spent the last 3 years blathering on and on about the deficit and debt and the “crisis” “need” to cut spending and what is the result of that 3 years of blathering?

    Then we keep hearing that the govt does not create jobs that private industry does – BUT – if we DO actually do an across the board cut to Federal spending that a full-blown disaster will be the result. So what exactly is the truth?

    The truth?

    is that the GOP are not true fiscal conservatives at all. Recent events have clearly demonstrated that their real ardor is social conservatism, a refusal to provide THEIR plan for actually balancing the budget, and a laughable “trust us and we’ll tell you what we’ll do after you elect us” campaign slogan
    ….l

    .. that I would be totally remiss if I did not mention – Mr. DJ here apparently also fully supports.

    TSK TSK!

    1. DJRippert Avatar
      DJRippert

      As one of the few registrants on this blog who has plainly supported both Democratic candidates (McAuliffe, 2009) and Republicans (Romney, 2012) I must say that your hyperbole is more than odd.

      First, the fact that federal cutbacks will cause job loss in Virginia does not, in any way, shape or form require that jobs will be lost nationwide. Therefore, the “government must create jobs because jobs might be lost in Virginia” line of logic is a non-sequitir. In my opinion, Federal cutbacks will help America far more than they will hurt Virginia. It’s just a shame that out state legislators (especially the Republiclowns) missed the chance to convert the “happy days” of heavy federal spending into a blueprint for a successful, diversified future in Virginia. Now, that time has passed and crisis awaits.

      Second, I would be very careful about pointing any fingers at Romney / Ryan regarding a balanced budget given the past three and a half years of Obama. In Obama’s world, every year is a crisis requiring stimulus-level Federal spending. I recall Obama claiming that spending the stimulus funds would leave us with 6% unemployment right now. How has that worked? Finally, Madeline Albright accidentally blurted out the truth the other day when she admitted that the Democrats would blame Bush “forever”. Unfortunately for Ms. Albright – every day that passes sees fewer and fewer voters accepting that excuse.

      Obama’s first term has been an abject failure. He obviously has no realistic plan to even reduce near term unemployment, let alone balance the budget. Like Jimmy Carter before him, there is no need to see another eight years of failure to know that he will fail.

      It’s time for a change. My bet? Even if Romney sucks, he’ll suck less than Obama.

  3. larryg Avatar
    larryg

    Obama support the across-the-board-cuts in the sequester. What does the GOP support? What does the “leader” Cantor or candidate George Allen or Paul Ryan support?

    you continue to evade this simple reality:

    http://www.washingtonpost.com/business/economy/adding-to-the-deficit-bush-vs-obama/2012/01/31/gIQAQ0kFgQ_graphic.html

    take a look at it. Look at where the increases came from.

    What you are blaming Obama for is not cutting what the GOP added during the Bush years. He can’t cut that – only Congress can and the GOP is opposed to cutting DOD which more than doubled during the Bush years.

    Obama, in fact, wants to cut DOD – along with entitlements – and the GOP is not only spineless about it but demagoguing it – and that’s a polite word for lying out their butts. Look at Cantor, Allen, McDonnell, Ryan and Romney on balancing the Federal budget. What do the support?

    The Romney/Ryan plan is “trust us and we’ll tell you our plan when we get elected”.

    …and DJ…. supports that approach… tsk tsk… come on DJ.. admit it. Ryan has no plan other than to get the govt into people’s bedrooms..same as Gov. vaginal-probe does. At least you got PART of the clown show part right but you’re giving Cantor a free ride and Ryan a free ride. Romney is a shape-shifter…he’s only after one thing – to be in charge …without having to say what he will actually do once he is in charge… that’s what passes for “leadership”.

    1. James A. Bacon Avatar
      James A. Bacon

      Larry, Do you believe that the Dems bear *any* responsibility at all for the deficit spending during the “Bush years”?

      * Did the Dems, or did they not, support the expansion of agricultural subsidies early in the Bush administration?
      * Did the Dems not support the expansion of the No Child Left Behind Act?
      * Did the Dems not support the expansion of medical care for poor children (SCHIP)?
      * Did the Dems not support the expansion of Medicare to include paying for pharmaceuticals? (They differed on the approach, but surely you will concede that they agitated for an expansion of the program, in effect forcing Bush to come up with his own plan.)
      * Did the Dems not support the prosecution of the war in Afghanistan?
      * Did the Dems not support the expansion of spending on Homeland Security?
      * Did the Dems not control both houses of Congress for Bush’s last two years in office, giving them effective control over the budget?

      The only thing you can really pin on Bush is the decision to invade Iraq (and even then, a large number of Dems went along). The Iraq war was expensive, but it was a drop in the bucket compared to all the other spending programs just cited.

      It is amazing to see Dems twist the truth in a bizarre effort to portray themselves as paragons of fiscal virtue during Bush’s two terms in office. Comical, really. But it’s one thing to believe the B.S. and propaganda you throw out to fool the public and get re-elected and another thing to actually believe it yourself. When it comes to most other topics, Larry G, you seem to be a pretty level-headed guy. But you appear to have swallowed Obame’s line of budget B.S. without the slightest reservation.

  4. larryg Avatar
    larryg

    Jim – you forget one very important point. The Dems have never claimed to be fiscal conservatives!

    that being said – have you bothered to look at how the deficit actually came to be:

    washingtonpost.com/business/economy/adding-to-the-deficit-bush-vs-obama/2012/01/31/gIQAQ0kFgQ_graphic.html

    I’ve NEVER “swallowed” Obama’s “line” but it took me a while to figure out that the GOP are total hypocrites on the budget.

    The self-proclaimed deficit hawk Paul Ryan voted for:

    the 2 wars
    the biggest expansion in Medicare in it’s history
    the car bailout
    the bank bailout
    the stimulus
    doubling the DOD budget

    and then we come to sequestration – that Obama and many Dems do support and look at the GOP. No deal if it also includes DOD.

    Now I ask you Jim. if you KNOW that the Dems are not and have seldom claimed fiscal conservatives credentials (except for the blue dogs) and that the GOP proclaims their fiscal conservative bona fides every time they burp – you tell me which side is feeding the most bologna …..

    do you REALLY think that Ryan, Cantor, Forbes, George Allen, Bob McDonnell will actually do what is necessary to get to a balanced budget if it involves cutting DOD?

    truth now James.

  5. James A. Bacon Avatar
    James A. Bacon

    LarryG asked, “Do you REALLY think that Ryan, Cantor, Forbes, George Allen, Bob McDonnell will actually do what is necessary to get to a balanced budget if it involves cutting DOD?”

    No, I don’t expect Republicans to get the job done… except in the unlikely circumstance that they sweep the presidential election, the House and the Senate (with a filibuster-proof majority). Why? Three reasons. First, they are in bed with various special interests and constituencies whom they will protect. Second, the Dems and their pals in the media will demagogue every cut with every ounce of their being. Third, cuts will entail pain, and the Republicans will be looking toward the next two-year election and will be too scared to inflict too much of it for fear of losing seats.

    That’s why I wrote “Boomergeddon.” While I do believe the Rs would make deeper cuts than the Ds would, it will be a case of too little, too late. The only question in my mind is how long it takes for Boomergeddon to occur, and how deep will the depression be?

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