Trillions of dollars of America's stock wealth have disappeared. Vanished. Poof.
But try to figure where the slump has hurt most and the trail begins to look like, well, a disappearing act.
Clearly, the stock market's woes have crimped consumer spending, hurt investors, and caused thousands to lose their jobs. But compared with previous recessions, when Midwestern factory towns or defense-industry bastions on the East and West coasts were hit hard and visibly, the 21st Century's first recession looks far more diffuse.
Except for Wall Street itself perhaps, specific swaths of the United States have not experienced a huge downturn. At least, not yet. At the same time, few regional engines of growth look ready to power the nation out of its slump.
"When you look at the total impact of changes in stock wealth, it's a big deal," says Chris Varvares of Macroeconomic Advisers here in St. Louis. But stock market losses of $6.9 trillion since 2000 haven't "been strong enough to stop growth in consumer spending."
In fact, a new Christian Science Monitor/TIPP poll shows a small uptick in Americans' economic confidence. The poll's index of economic optimism edged up to 55.6, up from 54.9 in July but still below its peak of 62.9 in March. This month's gain was based on improved expectations for the economy six months from now.
Prospects for a recovery hinge on the notion that consumer spending flows mainly from salaries, not the stock market. And relatively few Americans have lost their jobs compared with previous recessions. Unemployment remains at a relatively modest 5.9 percent.
Moreover, to the degree that the economy has worsened, it has not worsened in demographically predictable ways.
For example, conventional wisdom would suggest America's retirees and those soon to retire should be panicking. After all, from 1989 to 1998, the share of 55- to 64-year-old investing in the stock market jumped by one-fifth the biggest increase of any age group, according to the Federal Reserve. By 1998, the same group had more of its financial assets tied up in stocks (58 percent) than any other age bracket.
So Charlotte County, Fla., with the highest median age of any county in the continental US (54.3 years), should be reeling. Right?
"Nothing is really down that much," says Bob Carpenter, executive director of the Punta Gorda Business & Community Alliance. Home sales have gone through the roof, car sales remain strong, and retail sales while off from their double-digit growth in earlier years are still posting a 4.5 percent annual increase so far this year. "In season, we have trouble getting enough people to work," says Mr. Carpenter.
OK, how about those wealthy counties? Stock market tumbles affect the top 20 percent of American households far more than the other 80 percent of households, according to Dean Maki, an economist with Boston-based Putnam Investments. During the go-go years, this group accelerated its spending. In 2000, the top fifth of households accounted for 45 percent of all consumer spending. When the market crashed, so did their spending.
But don't tell that to Douglas County, Colo., which boasts the nation's highest median household income ($82,900 in 1999). True, retail sales growth has dropped from 31 percent in 1997 to about 4 percent so far this year. And the county's unemployment has also crept back up from 1.6 percent the lowest in metropolitan Denver to a much more average 5.4 percent.
Still, the county's sales growth remains much more positive than the rest of the metro area. Property tax delinquencies have actually gone down, and county use taxes on automobile sales are up. About the only negative indicator is the use tax on building materials which represents a harbinger of future construction activity. Collections have fallen nearly one-third from a year ago, says Karen Montgomery, the county's finance director.
Fairfax County, Va., boasts the nation's second-highest median income ($81,100). And it too has seen sales growth slow and joblessness rise. Some luxury retailers report stagnant sales.
"We're still doing pretty good -- about the same as last year," says Ron Wibowo, operational manager for Louis Vuitton at the ritzy Fairfax Square at Tysons Corner. The local Tiffany's won't comment, but the chain this week announced a 9 percent drop in profits and 2 percent fall in same-store sales for its latest quarter, versus the same period last year.
But with 2.9 percent unemployment, times aren't that tough.
"We're sort of insulated," says Jerry Gordon, president of the Fairfax County Economic Development Authority. Although the county spawned several Internet-related companies that have since merged or disappeared, it also is counting on post-9/11 federal spending on security and intelligence to provide 28,000 new jobs and soak up some 5 million square feet of office space in the county, he adds.
Such tales highlight a major lesson from the current slump: Local conditions trump the overall national picture.
For example, the outlook in adjacent Loudoun County, Va., with the nation's third-highest median household income, looks less rosy. Unemployment stands at 4.3 percent so far this year, the highest in a decade. And that probably doesn't include the 500 or so WorldCom employees laid off at the very end of June. The bankrupt telecommunications firm is the county's second-largest employer, behind shaky United Airlines and ahead of America Online, whose AOL Time Warner parent continues to grind through a difficult restructuring.
Nevertheless, local chamber of commerce president Randy Collins remains cautiously optimistic. A new Nordstrom store is scheduled to open next month in the county. Two luxury auto dealers BMW and Volvo have set up shop during the past year.
At another end of the economic spectrum lies Shannon County, S.D., which boasts the lowest median age in the continental US. An unorganized county, run by the Pine Ridge Tribal Reserve, Shannon's grocery store, convenience store, gas stations, and outlying mom-and-pop operations were barely affected by Wall Street's downturn. "There is a sort of vacuum here," says Norman Fourd, self-determination officer for the local Bureau of Indian Affairs. Typically, residents have to drive 50 to 100 miles to get their car fixed or their teeth cleaned.
Times are similarly tough for aging McIntosh County, N.D., not because of Wall Street but because of agriculture. "It's the worst I've seen," says Robert Wishek, president of McIntosh County Bank, who has lived in the area since 1988. Years of low grain prices, topped by a withering drought this summer, have combined to squeeze farmers and most of the local businesses.
In Ashley, the county seat, the laundromat and movie theater are up for sale on Main Street. The city now runs the bowling alley because the owner couldn't make a go of it. With a median age of 51 (fourth-highest in the continental US), residents are less likely to spend money than younger adults, Mr. Wishek says.
But in Idaho's agriculturally dependent Madison County, second youngest in the continental US, times are actually looking up. High prices for locally produced potatoes and hay, combined with the expansion of the community college to a four-year university, have increased local prosperity.
"I don't think we're feeling any of the hurt that other places are," says Clair Boyle, executive director of the county's economic development group. One block away from his home, a developer is putting up six new homes for expected newcomers.
One caveat: Don't expect a rapid return to prosperity. Hit by a stock-market downturn, "people don't make their full adjustment immediately," says Putnam economist Mr. Maki. Instead, previous downturns suggest the drag on retail sales will make itself felt every quarter for the next two to three years.