America the Resilient
12:00 AM, May 14, 2011 • By IRWIN M. STELZER
Immigration isn’t Phoenix’s only problem. It is at the epicenter of the housing crisis. Prices have fallen by 11 percent in the past year, and by about one-third since 2008. Foreclosures are rampant, the inventory of unsold houses high. This, in a state heavily dependent on the construction industry and the desire of the so-called Snow Birds—mostly older folks seeking escape from the frigid weather of the North—to set up house in warmer—at some times of year much warmer—Arizona. The recession has clipped the Snow Birds’ wings: unable to sell their ice-covered homes, they can’t come to Arizona in the same numbers as in the past. The population growth rate has declined from a pre-financial collapse level of about 3.5 percent to about 0.1 percent, according to data gathered by the local electric utility.
All of which is a perfect prescription for gloom. Except that it isn’t. Instead, the justly famed American energy, self-reliance, and resilience comes into play. Terry Roman, a partner in Snell & Wilmer, the largest law firm in the state (and a long-time client) tells me that until recently bankruptcy filings by property developers and others resulted in the liquidation of businesses. Now, more of those filings aim at reorganizing the affected businesses so they can continue to function. Ms. Roman, who makes no claim to having done a scientific sample, says businessmen here are “Lickin’ their wounds and movin’ on.” Ed Zito, Senior vice president at Alliance Bank of Arizona, related at a private dinner a tale of continued and accelerating recovery, aided by increases in lending by his bank.
It would be foolish to argue that Arizona’s problems are over. Not everyone with whom I spoke believes that a significant recovery will take hold before 2013. The federal government is challenging the state’s right to tackle the immigration problem, the inventory of unsold houses remains high, and house prices probably have not bottomed out. But few people here believe Obama’s spending or Federal Reserve Board chairman Ben Bernanke’s printing presses can solve their problems. They prefer a do-it-yourself approach.
This is not peculiar to Arizona. Neighboring California, one of the worst governed states in America as a result of its dominance by teachers’ and other unions, is starting to recover because of the new hiring wave by the high-tech sector. In New York City, the lead is being taken by the highly competitive retail and hospitality industries, as the financial sector struggles with the residue of the financial panic and thousands of new rules and regulations. President Obama says that it is the private sector that must lead the way to a new era of prosperity. That is one belief the conservative voters of Arizona share with their president.
Some readers, I suspect, will find this impressionistic report not as much to their taste as my more data-laden efforts. Others, I hope, will find it a relief, as I did my short visit to what we call the American heartland, and East and West Coast liberals call flyover country, that blank space between New York City and Hollywood.
Recent Blog Posts