Folsom Deep Impact?
The Sacramento Bee reports on Intel's planned layoffs:
SacBee Update:Intel Corp. announced a major restructuring Tuesday that will pare about 10 percent of the company's work force over the next year. While details were sketchy, the cuts could hit the 7,000-employee Folsom campus particularly hard. In a press release, Intel said it will layoff of about 10,500 employees out of a workforce of roughly 100,000 over the next year...
The company said the bulk of the cuts to its work force will come from marketing, management and information technology workers. Because Folsom is headquarters for Intel's IT department, employing up to 1,800 workers to manage the company's internal computer networks worldwide, the cuts could hit particularly hard in the Sacramento region. It also has a large contingent of marketing staff.
If hundreds of well-paid Intel employees find themselves without jobs over the next several months, it could be a blow to an already shaky real estate market, but the area's economy should be able to absorb the shock, experts said. "We've seen things like this happen before, and we will probably be able to ride it out," said David Lyons, a labor market analyst with the California Employment Development Department. He said people with the skills needed to work at Intel generally are in demand in the region. "All these people are highly skilled and will be very marketable," Lyons said.
Though it was painful for the individuals involved, the economy absorbed at least 2,500 job losses at Hewlett-Packard Co. in Roseville over the past several years, said Barbara Hayes, executive director of the Sacramento Area Commerce and Trade Organization. "Anytime there are layoffs, it's a major blow," Hayes said. "But 10 or 15 years ago this would have had a much more significant impact....(Now) we have the diversity and strength in our base economy to withstand something like this."
The home market, already reeling from a glut of sellers and a shortage of buyers, could be hit hard if a significant number of Intel workers put their homes on the market, said Fred Wilcox, a real estate agent with Remax Gold in Folsom. "Right now the market is pretty loaded with listings," Wilcox said. If motivated sellers unload another passel of homes on the market, it will drive down prices, he said.
2 comments:
The headline in the OFHEO report today reads:
House Price Index Shows Largest Deceleration in Three Decades
But the OFHEO index only goes back to 1975. In other words, this is the steepest deceleration in the history of the index. What do we know about history before the official index?
Take a look Robert Shiller’s graph showing inflation adjusted home prices since 1890. (Lander graciously provided a copy of Shiller’s graph on SacLand(ing) on August 30th.)
Then consider that the official house price index published by OFHEO is “based on a modified version of the weighted-repeat sales (WRS) methodology proposed by Case and Shiller (1989).”
Shiller’s recent graph shows that RE prices crashed after 70’s and 80’s booms. Each of those two precipitous crashes are covered in the official OFHEO index since 1975. And yet, per the headline today, we are witnessing the most precipitous deceleration in the last 30 years.
Not to be alarmist, but look at Shiller’s graph again. Prior to the booms/crashes of the 70’s and 80’s the last big crash was the depression era. And, of course, the run up of the last five years is unprecedented.
"Not to be alarmist, but look at Shiller’s graph again. Prior to the booms/crashes of the 70’s and 80’s the last big crash was the depression era. And, of course, the run up of the last five years is unprecedented."
I don't think you can understate the problem enough. A government that's $78 Trillion in debt, a sinking dollar, consumer debt running rampant, the largest trade deficit in our history, and IO/ARM mortgage holders that are beginning to see there payments double, leaves a path forward that is rife with uncertainty. The real estate market has been the dominant job producer over the last several years. I've read as high as 40% of all the million plus jobs created belong to the real estate boom. Now in contraction with buyers that appear non-existent, surely the problems coming our way will include layoffs in this market in the near future. Part of the problem has been the steep decline in the dollar since 2000. If it takes more dollars to buy less goods it stands to reason that the price of homes, energy, food, and staples rise to compensate for its dwindling buying power. There's hardly a soul out there that will say that inflation is under control and running at an annual clip of 3-4%. All one has to do is go to the grocery store and stop for gas on the way home to know that inflation is nearing runaway status. In order to keep COLA's under control, the national PPI and CPI figures are weighted toward little or no movement up or down. Otherwise the retirees would be getting huge raises in the social security checks pumped out each month.
No, you can hardly understate the problem once the rose colored glasses come off.
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