Monday, September 17, 2007

'Filtering Throughout the Economy'

From The Union:

Hardware stores, plumbers, carpenters, electricians, masons and others in the construction trade are feeling uncertainty in the air since the real estate market took a nose dive. New home construction is down in western Nevada County, and the development of four major subdivisions is still years away from gaining approval, said Kevin Casey, owner of Caseywood Corporation, a major lumber supplier to area contractors. In two years, Casey’s deliveries have fallen by 20 percent, he said.
...
Some out-of-work laborers are seeking employment outside of California, said Eric Fullmer of an employment agency called Rush. Carpenters from the Morgan Ranch crew have varied plans. One plans to open a hot dog stand, another plans to get his contractors license and do his “own thing,” while another wants to collect unemployment and snowboard all winter.
...
The impacts of the slowdown are far reaching and even service oriented agencies such as plumbers are feeling the crunch. ABT Plumbing’s revenue has dropped 20 percent in the past two months, and it had to cut its workforce from 8 to 5 people in the past year because the company isn’t getting as many calls as it used to, said owner Andrew B. Twidwell. “It’s filtering throughout the economy,” said Twidwell, who has tightened his company’s budget, sold a truck and heavy equipment in order to pay his bills.

18 comments:

Diggin Deeper said...

Had to happen...and it soon will affect the overall economy. It really doesn't matter if it was "under the table" income, illegal immigrant income, or small business income. Somebody's got to pay. I wonder who

Perfect Storm said...

Sometimes I think that the majority of people who comment on this blog are sitting pretty in a job protected from a downturn in the economy. I think that way and I am pretty sure I am right. When the last engineering position leaves the Country please leave instuctions on how to operate the infrastructure. Do I think things are that bad, no I think a lot of people were making a lot of money based on fraud, plain and simple and now things will hopefully normalize, as for all the laid off trades professionals, I hear health care industry calling your name if you want to spend the time going back to school. As for all the mortgage scum, I hope nothing good comes to you.

Cmyst said...

My job is fairly secure, but I take nothing for granted. If you think healthcare is safe from outsourcing, think again. Radiologists in India are reading electronically-transmitted x-rays. Some insurers would rather pay for people to fly to another country and have a procedure done, then fly home when they're stable. These things are happening now, not speculative.
My ex's plumbing business is hurting, and has been since around April. Two of my four kids are plumbers, too, and OF COURSE those two are the ones that bought houses in '06.
Sometimes I ponder what our culture and our economy will look like when my grandchildren are my age.

David said...

I'm in an engineering field and it would be hard to outsource many of the jobs, because you have to actually be onsite to do your job correctly. But another risk in our economy is the rise of the huge single source firms. I've been seeing this in my field where a few huge companies seem to get all the work. The defense industry did this during the 80's and 90's and now we have only one company building submarines and cariers, and only two building fighter aircraft. No competition means higher prices for us. They are also starting to do everything from initial studies to construction without any other input, which I think will likely lead to lower quality. Our country is in trouble in many different areas, outsourcing is just the tip of the iceberg.

David said...

Oh, I forgot, some engineering firms are starting to lay people off. The ones that were involved with housing. Public work firms are doing alright. Housing seems to have been great for some for years, but toxic in the end.

Michael said...

This downturn plus increasing gas prices, etc., will affect every single area of the economy as consumer confidence disappears. Add to this what is likely to be a war against Iran with gas prices busting $100/barrel and chaos will soon be on tap.

Best advice right now - save money and prepare for a major recession. Have at least 6 months worth of cash available. Don't blow it on a big screen TV or spend it on a new car. Get something in reserves so you can last.

This sounds dire, but the market is dire.

wimpyVO2max said...

George Bush is on track to be the first president to start his term with a recession and end with one. Two terms, two recessions. What a legacy!

golfer_X said...

Northrop/Grumman Newport News, Yea baby, those guys are keeping a lot of us engineers employed building them thar submarines and aircraft carriers!

On a more local note, my buddy owns a golf shop and has seen his business drop about 30% in the last 6 months. He's sweating bullets and praying for a big holiday season. I hate to say it but I think he's toast. I saw quite a few golf shops go belly up in the early 90s bust. I'm still seeing a very noticeable drop in patronage at the local eateries. I used to wait 30 minutes average at the popular spots until a few months ago. Now, even on a Friday evening you get seated right away. Often times the places are 1/2 empty. It was scary empty last Wed night at Acapulco.

paranoid renter said...

This is all getting to be real depressing. In about another year this thing will be pretty deep and a lot of us will be in trouble. What's the solution to all of this?

Amid all of this, I'm sure petty crimes will start to skyrocket.

paranoid renter said...

By the way, corporate greed has no limits here. Companies have generated record amounts of cash over the last few years, but they continue to cut costs and increase cheap products via offshoring. The whole economy has become about cost cutting because it's an easy formula. Innovation has become a thing of the past. Once consumption goes down, there will be no need for gobs of cheap stuff and companies will have to get back to innovating. However, before that happens, the current management at these companies will continue to squeeze costs in the hope that consumption will recover. The next few years are not gonna be pretty. At the end of it, I hope people will realize it's not all about the money!

Sippn said...

PS - its a shame that planned obsolesence made its way into mortgages also.

Its funny they call it financial engineering!

Diggin Deeper said...

Buckle up people...this recession is not your Greenspan type recession after the tech wreck. Real estate downturns have been the RESULT of past recessions where job losses occured during major industry turndowns ie. tech, defense, autos, etc.

Not this time...just the opposite has occurred.

It was real estate that created:

1. Millions of unsustainable collateral jobs.

2. Millions of toxic loans.

3. Untold $Billions in invesments that are blowing up in the face of a faltering economy. Not just here but throught the world.

These are three heavy stones, any one of which could be cause for an economic downturn. And now they're working in unison. Throw in $80 oil, commodity inflation, and a weak dollar...and the question becomes, how deep will the recession be?

Instead of real estate prices being driven by industry job health, industry jobs will now bear the brunt of the real estate excesses. And that makes this possible recession a whole lot more dangerous than those of the recent past.

wrong moves said...

I am a federal employee. The FAA is funded largely by the Aviation Trust Fund. The lowering of ticket prices by the air carriers has supposedly taken a chunk out of the fund. The national air space (NAS) is on life support with 1970's technology and needs to be overhauled, major bucks.

I feel fortunate to be in an inspection role, labeled "inherently governmental", but there are contractors chomping at the bit to bid for our multi billion dollar budget.

In the olden days, one practically had to kill somebody to be let go from government service, not so today.

Diggin Deeper said...
This comment has been removed by the author.
Diggin Deeper said...

U.S. Net foreign long-term security purchases, down to $19.2 B in July from $97.3 B

http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=dc97b8ba-ec63-4563-877d-9a4b4fba645d

This is not the data we are looking for with the Fed poised to lower rates.

We need foregin investors to buy approx $75B each month in order to finance our debt. We've missed that mark in 3 of the last 7 months reported. In past years, the net inflows never were questioned because they met or exceeded our debt requirements month after month, year after year.

This monthly TIC number is important because it will eventually lead rates one way or the other based on cash inflows from other nations. If we keep falling short, Fed cuts are meaningless, and merely window dressing, because rates would have to rise, not fall, in order to entice further foreign investments.

paranoid renter said...

hooray...the fed just stepped in and lowered interest rates. the markets are going nuts!

Patient Renter said...

"the markets are going nuts!"

Anyone wanna place a bet how long it will take investors to realize that this rate cut isn't going to save the day, and neither would a dozen more rate cuts? Nobody wants US MBS paper anymore. They've all learned their lesson (China and foreign investors certainly included).

Diggin Deeper said...

I'm tracking the same way you are Patient Renter....

With this kneejerk cut, The Fed has just acknoweleged that something is seriously wrong with the real estate and credit markets. Bernanke wins no prize for this action. Imo, it does more harm than good.