This Wall Street Journal A1 story today takes a rubbery strand of data about consumer borrowing and stretches it past the breaking point.
The paper says consumer-loan balances are rising in “many” midsized cities, evidence, apparently, that these lucky communities are “riding out the recession better than big cities and rural towns.”
This seems to be a dubious point to begin with: Medium-sized cities will do better than small or big ones? Common sense tells us that’s probably not true, and if it is, this story doesn’t show it, and anyway, consumer lending probably isn’t the best metric (And, really, who’s going to call for a correction on this one—Long Island? Fond du Lac, Wisconsin?). But even if this micro-point were proven to a fare-thee-well, how in the name of Barney Kilgore it gets three columns on Page One is beyond me.
We’re further told that balances are falling “across parts of California, Florida and Michigan, on the other hand.”
So mid-sized cities in those three states are faring better somehow, and other cities are doing worse, we think. We’re never really told that explicitly, but that seems to be the implication. Lucky for us, the Journal has a handy interactive chart so we can see for ourselves.
Alas, there are metroplex-sized holes in the Journal’s Population-Size Theory of Urban Prosperity. In California, Los Angeles and San Francisco both had consumer-loan balances edge up while those in most of the rest of the state went down. How does that jibe with this piece’s thesis?
And thirteen of the sixteen metro areas listed for Florida had gains in consumer-loan balances. Three of the thirteen are big MSAs: Miami, Tampa/St. Petersburg, and Orlando.
As the story itself points out, Merced, California, and Cape Coral, Florida, both of which are mid-sized places, are seeing big drops in consumer-loan balances. There seems to be an obvious connection here that the Journal doesn’t make. These two smaller cities are in hard-hit housing areas in bubble states California and Florida. Seems to me a big reason for declining consumer-loan balances in places like these would be people losing their houses to foreclosure, right? That would cause a major drop in a person’s loan balance in one fell swoop. Population size really isn’t the issue, is it?
Looking at the Journal’s own chart, I don’t see much difference between the cities that have the biggest loan increases in the latest quarter and the ones that did a year and two years ago. Also, of the very worst-performing cities—most are mid-sized places in California, along with others like Charleston, South Carolina, and Huntington, West Virginia.
Andast I knew, overlending was how we got in this mess, but a 13 percent jump in consumer-loan balances in Huntsville, Alabama, is a good thing?
Then there’s the choice of Huntsville as the main anecdote. I lived in Huntsville briefly, but you don’t have to be Wernher Von Braun to know the city is a complete anomaly—nothing that could hope to pass as representative of anything other than a midsized town with major NASA facilities, an Army base, and myriad contractors whose sole purpose is to serve them. It might as well be in the Pentagon. The Journal halfheartedly acknowledges this, but plows ahead with Huntsville as its main example.
This is what passes for a “leder” in today’s Journal—evidence of serious problems developing under Rupert Murdoch’s ownership with the replacement of rigorous long-form reporting with more superficial, on-the-news, less-edited and less-reported stories. See Starkman’s thoughts on that issue here.