The shape of things to come?

The Union Tribune reports from California.

“For years, new-home construction was the engine that drove the growth of the San Diego economy. But since the housing industry hit the brakes, regional growth has slowed to a crawl, local economists said at a forum yesterday.”

“The regional housing downturn has prompted layoffs in real estate and construction, said economist Alan Gin of the University of San Diego. ‘The big story in 2007 is going to be the real estate market and its impact on employment,’ Gin said.”

“Hiring for real estate-related jobs has declined steadily over the past year in San Diego County, Gin said. The local industry began to shed jobs in November, and roughly 6,000 jobs were eliminated during the last two months of 2006.”

“Construction of single-family houses has fallen so sharply that Alan Nevin of MarketPointe Realty Advisors said, ‘The new single-family home here is pretty much of a dodo.’”

“On a related front, the high cost of housing has become the biggest hurdle for employers to overcome in recruiting new employees, said Michael Schuerman, director of research for the San Diego Regional Economic Development Corp.”

“In a 2006 survey of local companies, 90 percent of the employers and 100 percent of the employees identified the high cost of housing as their top local business challenge.”

“As a result, far more people are leaving San Diego County than are moving here. Citing data from the California Department of Finance, Schuerman said only 900 people moved to San Diego County over the past two years, while more than 28,500 residents moved out.”

“That’s ‘hard evidence of what the housing situation is doing,’ he said.”
“Consumer confidence represents an additional risk, speakers said. Consumers also could be shaken by a spike in loan defaults and home foreclosures, Gin said.”

It should be noted that San Diego is one of the largest bubble areas of the U.S. It was not long ago however that they were laboring under the belief that their housing market was bullet-proof, a belief found in other areas of the U.S. right now among those who have not yet felt the sting of a broader housing and economic downturn. This is not to say it will happen, but I wouldn’t bet against it.

As more cities loose jobs, where will the jobless migrate to? With more cities joining the list of those in economic distress, safe havens (places with jobs) will come under more stress do to an influx of the migrating jobless, until we once again see ‘No jobs here’ signs as we last did in the 1930’s.
Possible? – Yes.
Probable? - It could happen.

There are many factors weighing on the U.S economy right now, outsourcing of jobs to China, India as well as other countries for one thing. The end to the housing bubble( ya, the bull-run is over). This directly effecting the spending habits of Americans further driving down production and related jobs at home.

I think it is safe to say we will be seeing more stories like this play out in 2007 and beyond. Welcome to the new reality, the shape of things to come.
Vern