Economist: Recession milder in Mobile

Count Martin Soler among those who believe that the national recession is treating Mobile and Alabama more gently than other areas.

"Mobile and Huntsville, in Alabama, are some of the strongest performing metro areas we have in the South right now," said Soler, a Moody's Economy.com assistant economist who regularly studies the area.

Many midsized metros have been able to "dodge the crunch in consumer lending" nationally, according to data from Moody's and credit rater Equifax, parsed by The Wall Street Journal. But few showed more resilience than Huntsville and Mobile. Both were among the metros seeing the five highest percentage increases, per household, in consumer lending balances as 2008 ended.

As the Journal noted, there are certainly negative situations that could create higher loan balances — people drawing on credit because they can't pay their bills, for example.

And problem loans are apparently growing in Mobile. An analysis of commercial and consumer loans by bank analyst firm FIG Partners indicated that problem loans were 4.92 percent of total loan values in Mobile during the last quarter of 2008, matching the national norm. That figure was 1.93 percent in the last quarter of 2007, a full percentage point below the norm then.

But after problem loan growth spiked significantly in Mobile during 2008's third quarter (33.9 percent against a national norm of 25.1 percent), it moderated quickly in the fourth quarter, growing just 6.6 percent against a national norm of 23.8 percent.

And with credit standards as tight as they've become almost everywhere, experts say, there's a good chance that the higher consumer lending balances — mortgages and equity lines, auto and student loans and the like — reflect positive economic activity.

"In Mobile, it's the foreign direct investment," said Soler, noting particularly the ThyssenKrupp steel complex growing on the Mobile-Washington county line.

Employment is contracting, and the manufacturing base is seeing losses, particularly in the wood products industry. But neither problem is seen locally at levels experienced by some other parts of Alabama and the nation, he said.

Mobile County's payrolls are holding up well, he said, though household income is not quite as strong, likely a reflection of job losses in outlying areas still within reach of commuters, he said.

"You definitely could see people coming back to Mobile to work," he said.

Mobile's recession may be milder, Soler added, because it didn't see the deterioration in housing that started the nation's problems.

Could things still get worse? Of course.

"Timing is everything," he said. "The biggest downside risk to the Mobile economy going forward is a prolonged national and international recession. Mobile handles a huge, huge chunk of Alabama's exports and imports.

"If you don't see global trade pick up and you don't see demand for steel rise and manufactured goods rise, it is going to have a big effect. Credit markets have to improve for Mobile to improve, or businesses can't buy the durable goods Mobile depends on.

"If we see the credit markets improve, that's going to be a very, very good sign for Mobile and all of Alabama."

(Readers may write K.A. Turner at the Press-Register, P.O. Box 2488, Mobile, AL 36652-2488, call her at 251-219-5644 or e-mail kturner@press-register.com )