Rising Costs and Inflation Are Squeezing the US South

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2:33I mean, Carol, how many members of your family have moved from the Northeast to Southeast? One of those states. Yeah, exactly. A lot of it's about getting away from higher costs, getting away from taxes, lower housing costs, although they have seen some numbers go up. Yeah, it's drawn a steady influx of American retirees and also black professionals from some of the highest cost parts of the country. That is changing, though. It is indeed. With more on this, we head to another southern city, Atlanta. And to Bloomberg News Atlanta Bureau Chief, he is Brett Pulley. Hey, Brett, so glad we could bring everybody your story.

3:05First of all, let's take a step back. Talk about the migration. I've seen it in my own family, people moving down south. What's been going on and why have so many moved? Sure. Well, it's something that has been going on perhaps for some time in some of these big metro areas in the south, such as Atlanta or Nashville. But we've really seen it pick up, I think, you know, post-pandemic as people gravitated to so many of these Sunbelt states and cities. And what's happened is tremendously fast growth. And along with that has come some tremendous benefits. As you mentioned in Nashville, for example, Starbucks, they're in the process of moving thousands of employees there.

3:52Oracle is in the process of moving like 8 ,500 employees there by 2031. You know, this big new Tennessee Titan Stadium is being built. So there's tremendous economic development. And along with that is going this rapidly increasing cost of living in those areas. Houses have gone up since 2019, like 60 percent. And so wages are not keeping up with that, despite these, you know, these new professional jobs, particularly for that homegrown traditional population that's there. Or those people who migrated many years ago. So they're finding themselves increasingly squeezed as their wages don't keep up with the fast rising cost of living.

4:41So what are the economic implications of that? Because if you think about it from the perspective of, you know, a company like Oracle and a company like Starbucks, which you just highlight and you highlight in the piece among other companies, they're seeing these as attractive places to live because the cost of living is lower. But if you just think about this from the supply and demand perspective, I mean, economics 101, it doesn't stay like that forever. When more people go to a certain place or more people start buying something, costs go up as a result of that demand increasing. What are the overall economic implications of the higher costs in some of these areas, Brett?

5:17Yeah, I mean, I think one of the things that they're seeing happening is kind of mirrors really to some extent, Tim, what we're seeing in the national economy at large. And that is this increasing need to cater to the luxury consumer, right? This increasing need to sort of go where the money is, right? Fish where the fish are. and in these cities like we zoom in on Nashville and there are these areas where there's now there's a luxury solo house and an Hermes store and these wonderful outposts of New York restaurants, etc. And we've seen the same thing in some areas of Atlanta as well. Midtown Atlanta sort of has grown in the same way the last five, six, seven years.

6:04But then there's this struggle to have a critical mass of consumers who can immediately support these fast rising rent prices, these prices on property taxes, and go luxury, so to speak. As one person who we spoke to said, not everyone is going to be luxury. That's part of this challenge we're sort of facing in this economy, I think. And I think they're seeing it play out in these fast-growing southern cities. You know, there's a quote in the story, and it says, this is an economist at the Urban Institute, a think tank in Washington, D.C., and Gregory Axe, and he says, You have a lot of people who are not poor.

6:50They can pay the rent, they can pay the utilities, but they struggle to save for the future. You know, Brett, I think about a conversation we just had with someone who watches the markets and works with a lot of institutional investors. But this whole idea that you are creating, I don't know whether we call it a middle class, people who make a decent living and are paying for a lot of things, but they're not in a great position. And I do wonder how that continues to impact kind of the nation overall, both economically and politically. No, absolutely. And I think some of these southern cities will shine a light on that.

7:29One of the things that we talk to people about is how this is making them feel during this midterm election cycle. And what we found from talking to people in Nashville and Atlanta, that people are certainly very focused on the midterm and whether or not, indeed, there's an opportunity to perhaps switch directions or change what they think is their personal lot at this time. Yeah, I think about the impact on small business too, right? If you're not got a corporation behind you or private equity, which you also include in this story, you know, Tim, that's a problem. Yeah, Brett, we talked last week a little bit about the challenges facing Florida's job market too, and the unemployment rate in Florida, which is higher than the rest of the country right now, which I think is surprising to a lot of people who have heard that Florida is a place that people are moving to and have been moving to for years.

8:24Brett, I'm curious if any of the people you spoke to or any of the sources you had for this story. Talk at all about maybe migration changes as a result of this. Where do they go? You know, we didn't hear anyone say that they were ready to leave this area because I think overall the feeling is still that it's a favorable region of the country to live in. I think the sentiment is that some of that favorability is slipping away. Some of the advantage, the perceived advantage of living in this region of the country is changing as the cost of living catches up with the Northeast and other more expensive areas of the country.

9:11Hey, Brett, just got under 60 seconds to go. Anybody, though, within the story, you tell the story so well through different individuals who live in Nashville in different areas in the South. Anybody who sticks out just quickly? Well, I think one person who sticks out certainly is a woman who my colleague spoke with, John L. Marte, who worked with me on this story, spoke with a woman who moved to the Atlanta area about 20 years ago. And she really, you know, she was sort of a regular sort of middle class worker, got here and her daughter was maybe one year old at the time. Her daughter's now grown.

9:52Right. She's done a terrific job. And now she says, like, gee, I can pay my bills, but I'm not sure that I can do anything else at this point. And you hear those kinds of stories, I think, over and over in the region. And that's a tough way to live. That's for sure. Hey, Brett Pulley, thank you so much. Glad we could get some time with you and bring it out to the Bloomberg audience. He is Bloomberg News Atlanta Bureau Chief Brett Pulley, joining us there in Atlanta.

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