As Atlanta Revs Up, So Too May the U.S. Economy

Times Staff Writer

Stephen and Elaine Zager did their bit for economic recovery this fall by opening a Captain Dollar discount store in suburban Toco Hills and hiring 11 employees.

But the sixtysomething couple went into business only after losing so much in the stock market that they had to come out of retirement and put off plans to travel the world.

At Hartsfield-Jackson International Airport, Deputy General Manager Mario Diaz sees evidence of economic rebound in climbing passenger totals, up 1 million in each of the last two years after being down 5 million the year before that.

But Diaz acknowledges that most of the improvement is the result of deeply troubled Delta Air Lines' shrinking operations elsewhere and consolidating at Hartsfield. The move is producing a big jump in transfer passengers who dash from one plane to another, but only a modest gain in the travelers who really count -- those who fly in and out of the region for business or pleasure.

True to its civic symbol, the phoenix, Atlanta is rising again from the ashes of the tech, telecom and travel busts. In fact, by measure of employment, it is growing at the fastest pace of any major metropolitan center in America.

The region's gain of 65,700 jobs through September was the largest of any of the 272 metropolitan areas that are followed by the U.S. Labor Department -- and a vastly better showing than such larger centers as New York, which lost 41,500 jobs, and Los Angeles-Long Beach, which lost 39,700.

"Georgia's economic performance will best that of the nation next year, and the Atlanta metropolitan area will account for almost all of it," predicted University of Georgia economist Jeffrey M. Humphreys.

If the rest of the country follows suit -- as the most recent growth statistics suggest it is doing -- the U.S. might be headed for an economic reprise of the roaring '90s, the Bush administration's tax cuts might be credited, and the president might be in for an easy reelection bid next fall.

But in the engine room of this region's economy, no great gear has turned yet, no piston fired. Instead, what has fanned the economic fires to date seems to have been an amalgam of tide-me-over decisions, such as the Zagers', and small borrowings from elsewhere, such as Hartsfield's. Said a cautious Sam A. Williams, president of the Metro Atlanta Chamber of Commerce: "We're seeing signs we're getting back to where we were before the trouble, but I wouldn't bet the horse and barn on it just yet."


By all rights, the Atlanta region -- with a population of close to 4 million -- should not be anywhere near the size it is. Perched high on the rocky piedmont of northwest Georgia, it has just a single, minor river -- the Chattahoochee -- to bring it water and remove its runoff.

But for most of the last four decades, it has grown like gangbusters, lifted by such American corporate icons as Coca-Cola and regional giants as BellSouth, and helped by the arrival of such transplants as Delta and United Parcel Service.

"We prided ourselves that we weren't Silicon Valley, but we had high-tech; we weren't New York, but we had finance; we weren't Detroit, but we had manufacturing," said Tom Noonan, chief executive of Atlanta-based Internet Security Systems Inc. "We thought we were recession-proof."

The trouble began in January 2000, months before much of the country had any clue that the '90s boom was coming to a close. And it started at the most unlikely of businesses, Coca-Cola Co., which hadn't had a major layoff in its century-plus history headquartered in Atlanta.

Jeff Herle was a senior marketing executive who had been with Coke for 22 years.

"When they announced the layoffs, it was a big shock inside the company," Herle said earlier this month. Executives said that Coke was cutting its payroll by 14% worldwide and almost 20% in the U.S.

Herle managed to escape the first round of cuts, but he wasn't so lucky earlier this year when the company announced a second round. In March, at 43, with a wife and two children in private school, he was out.

So were tens of thousands of other Atlanta-area workers. Indeed, between fall 2001 and spring this year, the regional economy posted the longest string of monthly job losses since the Labor Department began keeping records.

State tax collections and lottery ticket sales tumbled, hotel rooms emptied, and Macy's, downtown's only major department store, shut.

"We got whacked," said Noonan, the Internet Security chief executive. "Every one of the sectors we thought made us so diverse and recession-proof took it on the chin."

Today, Atlanta is back to adding jobs pell-mell. And some elements of its nascent comeback are easily traceable to the decisions of public officials and business leaders.

The city, for example, broke ground on a $5.4-billion airport expansion just six months before the Sept. 11 terrorist attacks upended air travel and nearly destroyed the airport's major carrier, Delta. But local leaders decided to press on with most of the project, which set off a boomlet and is creating a projected 16,500 construction and engineering jobs.

Other elements of the recovery are apparent in the statistics. The region's health-care industry never shrank during the downturn.

Temporary hiring is up sharply and accounts for fully one-quarter of the region's 65,000-plus job gains this year. Local giants such as UPS expect to see their work forces grow in the coming months.

But big public projects and individual industry and company successes aside, a substantial chunk of Atlanta's turnaround seems less a testament to the gathering strength of the U.S. economy than it is a gauge of the lingering damage from its recent weakness.


Consider the Zagers.

The couple were so successful during three decades in retail and computer businesses in Atlanta that they were able to retire in their 50s and begin traveling -- up the Amazon River, to the Inca ruins of Machu Picchu in Peru, to China.

Then came the stock crash of 2000 and the bear market that followed. The Zagers lost close to $1 million, according to Stephen Zager, and what they salvaged shriveled as interest rates slid lower and lower.

By last summer, the Zagers had decided that they could no longer make it on their savings and so, with the help of two of their sons, they opened Captain Dollar. Zager said sales have been brisk.

For the foreseeable future, the retailer and his wife will restrict their travel to buying trips to Las Vegas and Miami. Asked if he has any regrets, he said, "I regret losing the money."

Or consider passenger traffic at the airport.

Diaz, the airport's deputy manager, predicted that the number of passengers traveling through Hartsfield would rise by 4 million next year. But 3 million of those will be transfers, mostly from Delta.

Mike Gallagher, Delta's networks manager, said the increase is the result of the airline cutting back operations in Cincinnati, Dallas and Salt Lake City. Good news for Atlanta, but not for those cities. "We're flowing more passengers through Atlanta than those places," according to Gallagher. "It's definitely fair to say we retreated to our strengths."

Delta recently announced that it expects to lose as much as $275 million this quarter and has suggested its pilots take a pay cut. Its beleaguered chairman, Leo Mullin, announced this week he will step down Jan. 1.

Or consider Atlanta's population growth. The region has continued to add residents in the last three years -- nearly a quarter million, according to the Atlanta Regional Commission, giving it one of the fastest growth rates in the country.

The inflow has kept the area's home-building industry busy and helped boost demand for everything from groceries to dry-cleaning. But because virtually all the new arrivals have come from somewhere else, the economic lift they have given the region has effectively been borrowed from elsewhere.

That includes the rest of Georgia, which has seen almost no population or economic growth this year.

The state is threatened with the elimination of thousands of tobacco jobs in Macon and is fearful of losing one or more of the state's 13 military installations to the Pentagon's base closings. Georgia recently lost its bid for a new DaimlerChrysler auto plant after spending $80 million readying a site for the facility in Pooler.

What it will mean to people's prospects and presidential politics if Atlanta's economy -- and the nation's -- merely rumble, instead of roar, in the coming year is uncertain.

Perhaps middling growth won't matter to most Americans as long as economic events keep heading in the right direction.

But the conversation at a recent job networking session at the suburban Roswell United Methodist Church suggests otherwise -- swinging, as it did, from optimism to terror as participants shared tales of damaging delays in finding work or spots won only by accepting lower wages.

"I looted the 401(k) and ate up all my retirement money," said Jim McElligott, a 52-year-old electrical engineer who was jobless for 18 months before landing a position at two-thirds his previous salary of $100,000. "I'll have to work until the day I die to make up for what I lost."

"I had three callbacks last week," said Kevin Bock, a 42-year-old father of three who was laid off by Publix Super Markets in August. "That's better than I was doing."

Georgians' assessment of President Bush seems to have less to do with economic performance than with his personality. "I frankly do not believe even an economic stall would keep him from getting a majority [next fall] in Georgia," said Republican Gov. Sonny Perdue.

But the fact that recovery remains tentative in such a hot spot as Atlanta suggests that the president is not quite out of the political woods yet on the economy, and that the nation has a way to go to retrieve the glory days of the last decade.

Copyright © 2019, Los Angeles Times
EDITION: California | U.S. & World