Wednesday, November 22, 2006

A contrarian view of the 'bad' economy in Birmingham

Our friend, Gordon Rinschler, chairman of the city's Historic District Commission and Design Review Board, writes:

For months we have heard about Michigan’s “bad” economy from Republicans, Democrats, analysts and news anchors. We have been sold on the idea that it is “bad” out there, and there is not much we can do about it. Even in our Birmingham City Commission the “bad” economy has been offered up as a slam-dunk reason to defer everything from increased PSD assessments to the Bates Street survey. It’s the economy, stupid.

I may be alone here, but I don’t quite buy it. On a gut level, we should all be skeptical of a premise that so readily provides political cover for inaction. But skepticism is not an argument, so I offer some evidence from our own Birmingham back yard.

* The maddening queue at Starbucks continues unabated. Apparently the "bad" economy has not dissuaded anyone from paying $3.00 for a dollars worth of coffee.
* Tender (a very high-end retailer) has just doubled its size. Apparently the "bad" economy has not quelled demand for outfits that cost more than a good used car.
* Clear Blue (a locally owned business) is doubling its size right in our downtown, and a big-ticket law firm can’t wait to relocate to the Rail District. Apparently these businesses didn’t get the memo on Birmingham’s “bad” economy.

If you’re thinking that I'm just cherry-picking good news, let’s take a broader look:

* Birmingham’s annual audit report (presented to the commission a week ago Monday) shows revenues up, assets up and expenses under control. The “bad” economy was very good to city coffers.
* More Monday night news: Birmingham was able to refinance $10 million in bonds (saving taxpayers $300,000). Apparently the “bad” economy missed our credit rating.

Now, couple these local tidbits with a record Dow Jones, sold out holiday flights, and Walmart’s obscene profits (up 11.5% floated mainly by flat-screen TV sales!) and you start to have an argument that Birmingham’s “bad” economy may not be as bad as you heard on the evening news.

But, you say, “What about all the empty retail? What about slipping property values? What about outsourcing?” All true, and it is tempting you to shout, “It’s the economy, stupid!” But is that the whole story?

Yes, there is empty retail space in Birmingham, but there is also a new tea shop suffocating under a $6000 a month rent bill. (Any idea how many cups of tea that is?!) Could high rents be a factor in vacancies? After all, the “bad” economy must spill over to Royal Oak and Ferndale, yet there seem to be fewer “for rent” signs there.

Yes, housing is down, but hasn’t the housing market been cyclical since Little House on the Prairie was built? Small consolation for anyone currently selling a home, particularly for a short-term owner, but let’s look deeper. My home was purchased in 1992, and at the market peak the value probably had tripled. Now, even with the most dismal assessment, my home value has only doubled in 12 years. Glass half empty – lost a lot of money. Glass half full – doubled my money. It is clear the “bad” economy has hurt Realtors and folks who bought at high tide, but it is not so clear for everyone else.

Yes, a big issue of Michigan's 2006 election campaigns was outsourcing, and the bad news is undeniable. Hardest hit are manufacturing workers who have been dealt the double blow of closed plants and deep cuts in those that are still open. Nationally, a whole way of life is being threatened, and cities like Wixom, with assembly plants in their backyards, can be hit hard. But back to Birmingham. We don't have auto assembly or manufacturing plants in our immediate area, and downsizing of the executive ranks has impacted us more than outsourcing. Clearly, the economic news is bad here, but not hopeless. Birmingham can attract “new economy” executives and businesses; it is a great place to live and work.

And that’s the point I want to make. Birmingham has a history of being an island of prosperity in the stormy sea of Michigan’s up and down economy. Birmingham has always been (and still is!) a great place with a bright future – bad economy or good. Why would we expect anything less when there is evidence to the contrary all around?