Sobering News
It’s been a sobering week, highlighted by the news of the takeover of The South Financial Group (parent company of Carolina First) by TD Bank. A lot of reasons for the demise of this once-proud institution. Real estate is at or near the top of the list.
It reminds me of Conor Dougherty’s piece in the Wall Street Journal from last week. According to Dougherty, the construction industry is running 13% below its year-ago level, and 25% below the boom-year peak. About 2.1 million construction related jobs have been lost since spring 2007. With the glut of housing, offices and retail space, don’t expect those jobs to come back soon.
Adding to the problem, homeowners aren’t able to borrow as much due to declining home values. Same is true for small business, where almost half of business owners secure loans with suddenly devalued commercial real estate.
Real estate and construction have typically helped to lead America out of past recessions. If that’s the case with the current one, we can’t realistically expect a full rebound any time soon.
We wish our friends at Carolina First well. We hope for brighter days ahead for Greenville, for South Carolina and for the U.S. economy. We need it.
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