Sacramento Unemployment Rate 1990-2008
Source: BLS
In the 1990s, Sacramento home prices did not bottom out until well after the unemployment rate had peaked (3-4 years). Will we see a similar pattern this time around, or is this a completely different animal?
13 comments:
I'm assuming these are not seasonally adjusted. :) The dead cat bounce after the initial massive surge in 1991 is telling. My gut tells me we'll see a similar adrenaline spike on the national level in 3Q2009 once the $1T Obama stimulus hits, but then another increase by the end of the year when the effects wear off.
FWIW, the stimulus probably won't feel like much to Californians, since increased state taxes will capture any extra money the feds hand back. I doubt 2009 will be very pleasant around here. Also, housing will no longer wag the dog of the real economy in 2009. Employment and jobs will take over as drivers of the downturn. Like many predicted here.
Will we see a similar pattern this time around
i think so
It could actually go on much longer if the stimulus packages promised don't do the trick. If Obama and company bail out the states with fresh operating cashflow and add in an infrastructure reconstruction program, one could make a case that some departemnts will actually start hiring (Caltrans)
We saw how quickly the Bush incentive program faded once people got their cash...I'm wondering if this will be more of the same?
From the last blog but maybe more important on this one...
"About 112,000 state workers are employed in the Sacramento region, roughly 10 percent of the work force.
112K on the government's payroll. Anyone have any idea how many peripheral jobs, off payroll, are tied to the state? This is where I think the meat of the layoffs will occur...
I still believe the entire state will see unemployment above 11%...the valley will be even worse...
Crispy,
No hard data but my hunch says the CV is already in the double digits but not captured in the BLS.
I know a lot of people in the BA who have either lost or will be loosing their jobs in the next few months. They are walking away from homes (rentals and 2 owned) to rent in the CV because their unemployment and savings will last much longer.
Before all the investors lurking here get excited, they are doing it commune style with up to 8 adults in a 6 br house. Now that is rental demand destruction in action. That overpriced 1 and 2 bdr housing will be sitting a long time.
In the meantime, KB is sending out links to this article to everyone on their mailing list
http://www.nytimes.com/2008/12/06/business/yourmoney/06money.html?_r=2
Is there some magical reason KB isn't bankrupt yet? Other then morally that is?
verification word: growedia
I'm still trying to figure out how 1T in bridges and internet is going to help turn the economy of CA around. How may people work on a bridge, 300, maybe 400. Multiply that by 10 bridges and you get 4000max. Say there are 4000 more back end jobs created, and the trickle down employs 4000 more. That's 12k, a drop in the perverbial bucket. Add in 500 "geek squad esk" types to install internet into schools (not to mention all the hardware is made abroad). We'll see a big 1/10 of 1% change in unemployment.
I wish we would learn a lesson from Japan
sorry, i know this is off topic... but can anyone provide any info/link on a bill congress passed a couple months ago that stops all foreclosures until January? i can't find anything.
Gordon -
Here is a good post explaining stimulus math by Krugman:
http://krugman.blogs.nytimes.com/2008/11/10/stimulus-math-wonkish/
I'm still trying to figure out how 1T in bridges and internet is going to help turn the economy of CA around
It's not.
I wish we would learn a lesson from Japan
Ditto. From what I understand, Japan has many bridges and roads to nowhere, which obviously didn't stop it from staying in recession for years.
I don't know what to say. Our policy makers seem to have the same "it's different here" attitude that homeowners had.
word verification: jughedge
Not long ago spending a $Billion was a big deal...Now it's $Trillions that will eventually add up to 10's of $Trillions...
I think the last infrastructure program was under Bush Sr's watch and it did provide jobs and much needed road and bridge repairs. If I remember correctly, it was in area of $600B (early 90's).
But when you factor in the $ devaluation since then, $1T probably isn't as massive as it appears...nor will go as far as the Bush program did...
The problem in Sacramento is re-educating layed off workers in the fine art of road paving...it's not going to happen. Unless you're directly involved in or supporting the heavy construction industry, you're SOL.
Fred Thompson gives a pretty good laymen's view of what the Feds are up to right now....
http://www.youtube.com/watch?v=7IrR3o7x1ps
Sacramentia - I read and was going to respond to that Krugman piece on stimulus, but my thoughts were a bit lengthy, so I posted them on my blog:
http://theredpilljournal.blogspot.com/2008/12/shooting-in-dark.html
In short, the problem with the calls for stimulus isn't necessary the idea of stimulus itself, it's that there are many major problems with stimulating output via consumption, none of which you are likely to see addressed by Krugman or any other stimulus proponent.
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