Unemployment is Good
Chuck Ponzi January 27th, 2006
Ok,
I didn’t say it, but an Escondido Bank CEO did. Here’s a link on some commentary that was supposed to be positive, but I think the last part kind of backfired. I’ll let you decide what you think.
Some listeners said that much of what they heard was nothing new, however, it did re-enforce some of their beliefs about California’s economy.”I think we can expect mortgage rates to rise, which will result in a slowdown in the housing market, which will cause unemployment,” said Larry Hartwig, president and chief executive officer of California Community Bank in Escondido.Which, he said, would be good in that the state would become less dependent on the construction industry.
Well, if a little unemployment would be good, I suppose a whole bunch of it would be even better! You know us Americans, we always like to supersize everything.
The better question is, if unemployment is required to reduce dependence on real estate, did you think the same about California’s dependence on aerospace and defense contracting in the 90’s? If so, that last housing price collapse was just the cure for that darned overreliance on a single industry, right?
Luckily, unlike the early 90’s, California has a diverse corporate base that was lacking before the defense contractors lost all of their contracts and all of the aerospace engineers lost their jobs.
Unemployment will rise as the economy slows, but from an economic standpoint unemployment serves to stablilize inflation. Obviously this is no consolation to anybody who has recently lost their job. My thought is that a log of mortgage and title companies will cut back and cause the Orange County unemployment rate to rise. What this does to the OC economy remains to be seen.
-RJ
http://www.4MYSales.com
Geez, the sky isnt falling. there will always be adjustments in the economy and southern california will adjust. Yea, some people will lose their jobs and possibly their homes, but most will not. If you have a home and are afraid of the loan adjusting dont just stand there like a deer in headlights, do something about it. there are interst only loans that are fixed for 10 years. 10 years should be enought time for the re-cycle to run its course. But if you are one of those “keep up with the joneses types” them maybe its time to take a hard look at you financial picture. get rid of the hummer, range rover etc,etc and be real. a good used toyota might do the trick or maybe shopping at The Rack instead of Nordy’s. people need to learn to strech those dollars. I know plenty of old time Multi-millionaires that drive chevys and fords and wouldn’t dream of buying $300 jeans. everyone needs to take a step back and be real
The SoCal economy will rise and fall a little, but its no where near as dependent on real estate busines as it was in aero in ‘90. I lived through it. Unemploymen in the OC has been 4% for the last 10 years. everyone is making money. everyone wants to live there. barring a natural disaster or a china meltdown, nothing is going to effect this machine.