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Darkness looms over Sun Belt

A foreclosure sign sits outside a home for sale in Phoenix, Feb. 17. With one of the highest foreclosure rates in the country, Arizona makes a fitting backdrop for President Barack Obama's new housing program, to be unveiled Wednesday.  AP Photo by Ross Franklin

A foreclosure sign sits outside a home for sale in Phoenix, Feb. 17. With one of the highest foreclosure rates in the country, Arizona makes a fitting backdrop for President Barack Obama's new housing program, to be unveiled Wednesday. AP Photo by Ross Franklin

Todd Lewan
AP National Writer

Orlando, FL — We first heard the term decades ago: The “Sun Belt” was just starting a run of phenomenal growth — and no wonder. It conjured a sunny state of mind as well as a balmy place on the map.

Everybody, it seemed, wanted a spot in the sun.

Industries such as aerospace, defense and oil set up shop across America’s southernmost tier, capitalizing on the low involvement of labor unions and the proximity of military bases that paid handsomely, and reliably, for their products and services.

Later, San Jose, Calif., and Austin, Texas, developed into high-tech nerve centers; Houston grew into a hub for the oil industry; Nashville became a mecca for music recording and production; Charlotte, N.C., transformed itself into a center for low-cost banking and finance; and then there were the new Dixie Detroits, places like Canton, Miss., Georgetown, Ky., and Spartanburg, S.C., that began rolling out Titans, Camrys and BMWs.

For a generation or more, the Sun Belt thrived like no other region in America — a growth so steady it felt as though the boom would never end. But now it has, replaced by a bust that has left some swaths of the region suffering as severely as anywhere in the current recession.

What brought the dark clouds to the Sun Belt, and are they here to stay?

Interviews with economists and demographers across the region, and data from The Associated Press Economic Stress Index, a month-by-month analysis of foreclosure, bankruptcy and unemployment rates in more than 3,000 U.S. counties, suggest the answers are not all encouraging.

Some cities — Las Vegas, Phoenix, Fort Myers are good examples — hitched their floats to housing bubbles and got caught up in development that depended largely on development itself, rather than sustainable, scalable, productive industry, economic analysts say.

It’s in these places where the economic meltdown “will likely find its fullest bloom,” Richard Florida, the urbanist and author.

The boom in parts of the Sun Belt was, in many respects, a growth machine that banked on wishful thinking, on the hope that an unending stream of new arrivals would forever inject their money into construction and real estate.

In the Sun Belt’s newer, shallow-rooted communities, the roadkill is most evident: Where once there were “boomburbs,” there now stand “ghostdivisions.” Where property-flipping was once almost a middle-class sport, joblessness and “For Sale by Owner” signs reign.

The fallout is traceable in other ways, too. Nevada — the only state with a lower proportion of native residents than Florida — has seen net migration plunge 61 percent in two years; Arizona, 55 percent.

Were it not for immigrants, many of them from Latin America, and for fertility, the Sunshine State would actually have lost population last year — an “astounding development in the Florida experience,” says Bill Frey, a senior fellow and demographer at the Brookings Institution in Washington, D.C.

There are many ideas on how to fix the problem. Florida said one idea is to scrap policies that encourage home buying and give incentives to more mobile renters who can go where the jobs are.

But halting expansion in the Sun Belt’s “sand cities,” could stem the flow of tax revenue and leave established government programs without money to operate.

Officials in Arizona, Nevada and southern California are scrambling to reverse course — either by scrapping government services they’d promised or, at the very least, by hiking taxes to pay for services created in expectation of bigger suburbs, exurbs.

Even before the Crash of ’08, the Sun Belt was being buffeted by out-migration of factory jobs abroad. In the Carolinas, for example, industries that linked up the economy, society and culture for more than a century — furniture making, tobacco and textiles — had been gutted by a decade of decline.

Doomsaying pundits have played the Sun Belt dirge before.

But Stan Smith, a professor of economics and director of the Bureau of Economic and Business Research at the University of Florida, says tourism, the “momentum” of decades of population growth, and already extensive networks of personal connections will again draw more migrants to Florida.

Frozen credit won’t last, he said. Real estate price declines — as much as 70 percent in some Sun Belt counties — will entice buyers. And with home heating costs in the “Frost Belt” only expected to rise, Smith said, the attraction of warm weather to retiring Baby Boomers can’t be overestimated.

Recovery will take time, though, and few economists see significant growth in the Sun Belt soon.

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