Looming Recession Update: Just Shedding Jobs

The nation actually had a good employment month in October. The economy added 166,000 jobs, mainly in the professional and business services, health care, and leisure and hospitality sectors, and even construction was largely unchanged.

On the other hand, California lost 15,800 jobs, and year-over-year unemployment is up a full point to 5.6% (and that of course doesn't include those who have stopped looking for work). That's also a full point over the national average. The apologists that call themselves economists in this article are trying to spin the numbers but it won't wash.

October's decline in employment, the biggest since the loss of 14,000 jobs in July, confirms that the state's economy is slowing, said Stephen Levy, who directs the Center for the Continuing Study of the California Economy in Palo Alto.

But "this is a slowdown that the nation is participating in," Levy said. (Then why did the US add 166,000 jobs in the same month? -ed.) [...]

Levy cautioned against making "a big deal" of the overall job loss figures.

"None of this is like when we lost our aerospace industry -- that was permanent -- or when the Internet bubble burst," he said.

The current job losses do not signify any loss of strength in the state's key economic sectors, he said. "It's not like our economy is threatened from this."

Really? You mean the construction sector isn't losing strength due to the housing meltdown? And that isn't driving economic trouble in all other sectors, as the end of refinancing and redecorating new homes depresses consumer spending?

Ever hear of trash-outs?

“An old wooden house along Genevieve Street in San Bernardino was the scene recently of a trash pickup for tenants who lost their home to a bank foreclosure.”

“On Thursday morning, the driveway was piled up with appliances, furniture and clothes that were littered everywhere - a telltale sign of a family that recently lived there. An old gas stove with a skillet full of dust was found. In the back yard, there were mattresses, a microwave, two mangled couches and a bulky refrigerator.”

“Foreclosed homes all over the Inland Empire are turning into what Lisa Carvalho calls ‘trash-outs’ - wooden and stucco carcasses with piles of junk left behind by former tenants.”

“The High Desert offers even more interesting tales. The area is full of tract homes in subdivisions that have stacks of furniture piled inside every room, she said.”

“‘These typically look like they’re occupied, but they’re not trashed,’ she said about these homes. ‘(The owners) just walk away and wash their hands of it.’”

Distressed properties (which are usually foreclosures or short sales) made up one out of every five homes listed for sale in Orange County last week. And it's hard to even say who's in worse shape, homeowners, realtors, or financial institutions stuck with mortgages that will be defaulted without delay.

This is a crisis, and economists who keep their heads in the sand aren't serving whoever it is they're supposed to serve. The legislation that would have at least helped to address this was blocked by Senate Republicans last week. Where California is able to go in the next decade relies on stabilizing this housing situation.