Recession alive and well
by Ross Reily
Published: December 8,2008
Don’t tell anyone in Northeast Mississippi that the Magnolia State isn’t feeling the impacts of the current worldwide recession as much as the rest of the United States and the world.
It seems that where there is smoke, there is fire in the rumors about a delayed start of a Toyota plant in Blue Springs near Tupelo.
The Detroit News last week, in its “Auto Insider” column, quoted Toyota senior vice president for engineering Jun Umemura as saying the plant’s opening, currently scheduled for late 2010, would be delayed. Umemura did not answer questions after his presentation at a press conference in San Luis Potosi, Mexico.
Approximately a month ago, a Japanese newspaper reported that the Blue Springs facility would be delayed. Toyota officials denied that report.
The plant is expected to build the Prius hybrid, one of the most popular hybrids in the automotive market and one of Toyota’s strongest sellers.
But this news delays jobs for more than 2,000 people in the 15 counties that surround Blue Springs.
That’s a big deal considering the hit the furniture industry has taken this year.
The Northeast Mississippi Daily Journal in Tupelo reported last week that another 139 workers are being laid off from the furniture industry.
That comes on the heels of 39 being laid off by Fulton furniture manufacturer Max Home, which comes on the heels of 200 being laid off by Ashley Furniture in Ecru, which comes on the heels of 257 losing their jobs in the closure of Hickory Hills Furniture Company in Fulton.
That’s 635 people without jobs in one industry in one section of Mississippi.
In all, more than 2,000 people have officially lost their jobs in the state since July 1. And since the start of the year, Ken Pruett, president of the Mississippi Furniture Association, says the state’s furniture industry has lost about 2,000 of its 50,000 jobs related directly or indirectly to the industry.
It’s funny, though, how we keep hearing from the pundits that Mississippi isn’t taking as big a hit from the worldwide recession as everyone else.
Then we also find out last week, despite what everyone in the Mississippi housing market has been telling us for months, that Mississippi is among the top five in states with people who are two months behind on their mortgages.
According to credit reporting agency TransUnion LLC, for the quarter ended Sept. 30, 3.96 percent of people holding a mortgage were at least 60 days behind in payments, compared with 2.56 percent in the 2007 third quarter.
The highest delinquency rates continue to be in Florida, at 7.8 percent, Nevada, at 7.7 percent, California, at 5.8 percent, and Arizona at 5.5 percent, TransUnion data showed. Mississippi is fifth, at 4.6 percent.
The states with the lowest delinquency rates were North Dakota, at 1.4 percent, followed by South Dakota, at 1.6 percent, Montana at 1.7 percent, Vermont at 1.8 percent, and Wyoming at 2 percent.
If you put two and two together, business doesn’t bode well in Mississippi.
First, we have more and more people out of work. These are people who are accustomed to working, paying bills and taking care of families.
Second, it appears that more and more of the people are getting behind on the bills that they normally pay. The evidence is the numbers on mortgage payments.
That leads you to believe that more and more Mississippians are going to turn to their credit cards to pay for more and more bills.
According to Reuters, observations are that McDonalds is now the second-largest merchant vendor on credit cards — that is, people are now buying their Big Macs on plastic — in part because they don’t have the cash. Credit card balances have risen enormously in the last few weeks, as people attempt to keep going through the holidays.
The credit card is the second key source of consumer liquidity, the first being jobs, an Oppenheimer & Co analyst noted.
We have to be prepared, and we have to be willing to be honest with ourselves. The recession is here in Mississippi.
Contact MBJ managing editor Ross Reily at email@example.com.
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