With the Wealthy Burbs Stalled, So Is the Economy

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What's wrong with the U.S. economy? Ugliness abounds. The Dow is way down, then it is way up, then way down again. The Federal Reserve is hoping that promising to keep interest rates low for a long time will help. And in Washington, there is little consensus on anything, but specifically on what to do about turning the economic mess around.

The latest unemployment numbers at the county level from June reveal the depth of the problem and show how long it could linger. Simply put, the places that need to be healthy to move the economy forward aren't.

The nation's wealthy Monied Burb counties are, like other places, feeling the pinch. Their unemployment rate rose to 8.5 percent in June. Without them feeling better, a broader turnaround will be very difficult.

How Do Things Get Better?

The road to an economic turnaround almost certainly has to go through the 285 counties and 70 million Americans who live the Monied Burbs. The median family income in those counties was over $59,000 in 2010, as we wrote in the April issue of The Atlantic Monthly, by far the highest of the 12 county types in Patchwork Nation.

Voices on the left can blame the economic troubles on corporate greed. And those on the right can blame government spending. But the truth is, in an economy driven by consumer spending - roughly two-thirds of GDP - any recovery is going to have to start with consumers spending money.

The Burbs, wealthier on average than the other 11 county types in Patchwork Nation, are the lynchpin, as we have written in more in-depth reportage. Simply put, if the Burbs aren't spending money, who will? And with unemployment up in those communities, any real increase in spending seems unlikely.

One the whole, unemployment in those Burb counties is below the national average of 9.2 percent in June and below most of the county types we study.

But it is rising, and that's a problem. It has hovered at 8 percent or higher for all of 2011 in those counties. It was at about 9 percent in January and if it is creeping back up toward 9 percent, that's likely to sap any positive feelings -- and will to spend -- those places have.

Looking for Ideas

Of course, it's not only the Burbs that are hurting. Unemployment was up in every county type in Patchwork Nation. About half of the Patchwork Nation county types, including the socially conservative Evangelical Epicenters, and the formerly growing Boom Towns saw a jump of 0.7 percent in June. That's a steep rise for one month.

Driving the rise is many of those places may have been the winding down of construction projects begun with stimulus money.

The rural agricultural counties we call Tractor Country saw the smallest rise in unemployment, just 0.3 percent, and still look relatively healthy with an unemployment rate of only 6 percent.

In the broader, national sense, the economy is trapped in a kind of vicious circle. Unemployment is up, so people aren't spending. Because people aren't spending, business aren't creating new jobs and that leads to higher unemployment.

If the economy is going to break that cycle, the Burbs will have to lead the way. They have the population and income levels to do it. But these numbers certainly don't make that look likely.

Earlier this week, The New York Times' John Harwood wrote a blog emphasizing the challenges that lay ahead for politicians when it comes to turning the economy around. The bad news for incumbents in 2012, he wrote, is "it can get worse -- and stay that way for a long time."

Patchwork Nation has been arguing that exact point for some time, particularly with manufacturing and construction struggling. These unemployment numbers just hammer that point home.

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In the broader, national

In the broader, national sense, the economy is trapped in a kind of vicious circle. Unemployment is up, so people aren't spending. Because people aren't spending, business aren't creating new jobs and that leads to higher unemployment.