Rising Costs and Inflation Are Squeezing the US South

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You're listening to Bloomberg Businessweek with Carol Massar and Tim Stenovec on Bloomberg Radio.

**Tim Stenovec** (0:14)
For decades, Tennessee, along with other southern states, Florida, Georgia, North Carolina, South Carolina, they really stood out for their affordability. I mean, Carol, how many members of your family have moved from the Northeast to one of those states?

**Carol Massar** (0:27)
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.

**Tim Stenovec** (0:35)
Yeah, it's drawn a steady influx of American retirees and also black professionals from some of the highest costs parts of the country. That is changing, though.

**Carol Massar** (0:43)
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.
First 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?

**Brett Pulley** (1:04)
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. Oracle is in the process of moving like 8,500 employees there by 2031 You know, there's 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%. And so wages are not keeping up with that despite these new professional jobs, particularly for that homegrown traditional population that's there, or those people who migrated many years ago, they're finding themselves increasingly squeezed as their wages don't keep up with the fast rising cost of living.

**Tim Stenovec** (2:29)
So 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?

**Brett Pulley** (3:05)
Yeah, I mean, I think one of the things that they're seeing happening, it kind of mirrors really to some extent to 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, right? And in these cities like we zoom in on Nashville, and there are these areas where there's now, you know, 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 Manhattan, Midtown Atlanta, sort of has grown in the same way the last five, six, seven years. But then there's this struggle to have a critical mass of consumers who can immediately support these fast rising rent prices, these property, 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 luck, in this economy, I think. And I think they're seeing it play out in these fast growing southern cities.

**Carol Massar** (4:27)
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, DC.
And Gregory Axe, and he says, you have a lot of people who are not poor, they 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.