In this week's cover story, Rana Foroohar and Bill Saporito write that "technically, we're in an expansion, sinc economic output has now eclipsed its 2007 peak. But practically speaking, we are in a never-never land of a recovery. Income growth is nonexistent, we still have a $3.7 trillion housing hole to dig ourselves out of, and we're 5.3 million jobs short of full employment. It's a recovery all right — but not as we've ever known it."
Charlotte, North Carolina was one of the epicenters of the financial crisis — and it has struggled out of the worst of times to a sense that things are turning around.
The city, says local banker John Kreighbaum, "is dominated by the animal that has helped exacerbate the change of our market [for the worse]." The animal is, of course, made up of the two much villified giants of his own industry, banking. Until the financial implosion of 2008, Charlotte was the second largest financial center in the U.S., after New York, with the headquarters of both Bank of America and Wachovia (until that bank was acquired by Wells Fargo). Kreighbaum is president and chief executive officer of Carolina Premier Bank, which he helped to found six years ago. "A lot of business people lost their confidence in their banker," he says. That was exacerbated by bank policies. He said that bankers began to use a standard template "with absolutely zero flexibility" with regard to working with customers.
Almost four years after the meltdown, he's relieved that customers are no longer barraged with negative images of bankers and of banks undoing the economy. That is translating into new business and a "positive uptick" for his own bank. "In the last three months people have been coming in to talk about plans," he explains." Whether that comes to fruition or not [is unclear]...but they are talking about the future."
A small restaurant chain in Charlotte, for example, has made the decision that they are going to retrofit all of their entire five outlets in the area, and are planning to open a new one next year. "That is an industry where they have treaded water," says Kreighbaum. "The company is saying they are going to allocate x-number of dollars to be able to invest to generate an increase in sales — the old fashioned way of looking at things."
But Charlotte also has a lot of people doing new fashioned, small business. David Huff, 46, was once in organizational development and consulting with manufacturing companies and other businesses in Charlotte and other communities in North Carolina. Then he became a "creative" and entrepreneur, publishing a children's health magazine with his retired pediatrician father, and producing films — feature, documentary, and corporate videos — among other endeavors that require networking as a large component of the job. And then the Great Recession hit.
Huff first noticed the downturn when investors weren't being as generous. "I probably noticed a shift a year earlier than it actually hit. I felt the money begin to contract. As I was seeking money for different endeavors, it became more difficult to raise," Huff observes. It was also the year he had just bought a condo in Charlotte, in what he describes as "just before the crest of the wave," leaving him and many of his colleagues with very expensive digs now worth far less than he paid.
"We all stopped going to Starbucks, now we're all back there again," he notes, as his own little gauge of the economy shaping up. He patronizes the place not so much to get a cup of joe, but because it is a place where Charlotte business folk, particularly consultants, freelancers, and entrepreneurs congregate. "I go there to do potential business and I ran into someone I had not seen in a few years," he says. "You see every freelance person there. I saw a wedding planner talking in a corner about her wedding with a client, at another table there was a wedding photographer with a couple. For a long period of time you just had people 'contracting.'" That is, not expanding.
Still, he describes what he sees from his perch in Charlotte as the economy recovering in only "fits and starts." "It's like one day it's 'whoohoo!' and the next day, 'hmmm,'" he says. A lot of it is psychological. "As a freelance creative you operate in a world that is make-believe; so you are always talking yourself and one-another up. That's how you keep yourself going. You support one another when you have a dip; but there is the importance of the psychology of talking things up."
"What I've wrestled with is how to be optimistic. At times it has been hard," Huff admits. "I, like many, felt that Charlotte was a boom-town, when it was high-cotton. And there are certain segments...like healthcare — that is very strong in Charlotte. But with people who live in that slice of the economy that I do, we're impacted by gas prices and you make decisions based on that." "You have to spend money to make money and you have to be clever to do that," he says. "Do you spend money to go to this networking event to meet people who will invest or give you a job?"
He notes real signs of improvement, however. In Charlotte, in the multi-media business, the next three years are looking up: Homeland, Hunger Games and other films are being shot in the area. Says Huff, "We will ride that wave."