March Data Suggests Potential Job Recovery

Submitted by Rich Toscano on April 17, 2010 - 12:08pm
According to the California Employment Development Department's latest estimates, the San Diego economy added jobs in March and the year-over-year rate of employment decline fell to its slowest pace since December 2008.



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Submitted by desmond on April 17, 2010 - 7:41pm.

So SD is down 35,000 jobs from 2009, and around 100,000 jobs from 2008. SD "added" 5,000 jobs in January 2010 but lost 40,000 jobs for a total loss of 35K. Of those 5000 people who found jobs 1700 of those were added by the Government. With Government on the brink of subtracting jobs and the total unemployment rate rising to 11% it is a long stretch to call this a "Potential Job Recovery." I guess if Roberto's hires a few more people we will be well on the way to the job recovery.

Submitted by CA renter on April 17, 2010 - 11:18pm.

Thanks for another great post, Rich. I sincerely hope you are right about the general economy turning around.

One thing your post got me thinking about was the fact that falling housing prices, in isolation, didn't cause any problems with our economy. If people could have easily afforded their payments, the negative equity would have affected only those who wanted/needed to sell. The reason falling housing prices hurt the economy so badly was because everyone was **living off** their home price increases via HELOCs and cash-out refis, often refinancing multiple times because they were using the "extracted equity" to pay the mortgage itself.

From what I can tell, we've managed to make it through about 1 1/2 to 2 years without this HELOC/cash-out money, and businesses were forced to adjust to a level where people have to pay from their earned income. It would be bullish if we saw growth from here, as it would likely indicate REAL growth, not false growth that resulted from the piling on of debt that could never be repaid.

One caveat: the existence of people who have been living without any housing payments, or with artificially low payments via temporary modifications or new hybrid ARMs that will adjust again in a few years. If these squatters are going to be evicted (finally!) and forced to pay for housing, it might lead to another downturn.

Also, there's that pesky govt debt that has replaced much of the private losses. It remains to be seen how this is managed.

Still, there is no doubt that things have visibly picked up. We've been seeing it around here since February of 2009, and it just keeps getting busier. There is no shortage of people who are looking to spend lots of money.

Submitted by Rich Toscano on April 18, 2010 - 9:03am.

desmond wrote:
So SD is down 35,000 jobs from 2009, and around 100,000 jobs from 2008. SD "added" 5,000 jobs in January 2010 but lost 40,000 jobs for a total loss of 35K. Of those 5000 people who found jobs 1700 of those were added by the Government. With Government on the brink of subtracting jobs and the total unemployment rate rising to 11% it is a long stretch to call this a "Potential Job Recovery." I guess if Roberto's hires a few more people we will be well on the way to the job recovery.

You seem to think that "recovery" means "getting back to the highs." It doesn't. It means "ceasing to get worse and starting to get better." So no, it's not a long stretch to call it a potential job recovery.

Rich

Submitted by Rich Toscano on April 18, 2010 - 9:14am.

CAR - Unfortunately, I think your second caveat is huge. Instead of homeowners borrowing like mad, now it's the government doing it. So this economic recovery, if indeed this is one, is no more sustainable than the last one.

But just because it's artificial and eventually unsustainable doesn't mean there can't be a cyclical economic recovery. I think there are serious structural imbalances to work out in this country, but it won't be a straight line between now and when they eventually get worked out -- there will be ups and downs along the way. I suspect we are in one of the ups, thanks partly to having over-shrunk but mostly due to massive govt borrowing and money printing and stimulus. We will see... but if we are in an "up phase" by no means do I take that to mean that we are on a sustainable long-term growth path.

Rich

Submitted by CA renter on April 18, 2010 - 6:20pm.

Rich Toscano wrote:
CAR - Unfortunately, I think your second caveat is huge. Instead of homeowners borrowing like mad, now it's the government doing it. So this economic recovery, if indeed this is one, is no more sustainable than the last one.

But just because it's artificial and eventually unsustainable doesn't mean there can't be a cyclical economic recovery. I think there are serious structural imbalances to work out in this country, but it won't be a straight line between now and when they eventually get worked out -- there will be ups and downs along the way. I suspect we are in one of the ups, thanks partly to having over-shrunk but mostly due to massive govt borrowing and money printing and stimulus. We will see... but if we are in an "up phase" by no means do I take that to mean that we are on a sustainable long-term growth path.

Rich

Rich,

Absolutely agree.

Thanks for all the work you put into this.

Submitted by desmond on April 18, 2010 - 8:12pm.

Rich Toscano wrote:

You seem to think that "recovery" means "getting back to the highs."

I did not say that. Ok, I guess if a patient had a 106.5 degree temperature and it lowered to 106.4 then you could say he is recovering. I think he is still sick, that is all.

Submitted by Rich Toscano on April 19, 2010 - 9:35am.

CAR -- Interview here from a great macro analyst, David Roche... I think he sums up the nature of the recovery well: http://www.cnbc.com/id/36541080

Rich

Submitted by UCGal on April 19, 2010 - 2:19pm.

on a personal anecdote... the friend I posted about previously - out of work for a year, resorting to food banks in an effort to keep the house.... got a job a month ago.

so maybe the recovery is starting.

Submitted by CA renter on April 19, 2010 - 6:24pm.

Rich Toscano wrote:
CAR -- Interview here from a great macro analyst, David Roche... I think he sums up the nature of the recovery well: http://www.cnbc.com/id/36541080

Rich

Yes, that was good. It's exactly my fear (currency collapse). They'll drag it on as long as possible, but the end game will not be pretty.

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