Housing Market Tracker - Housing Job Loss Outlook

Quote of the Day

“Last year, my prediction for 2007 was ‘disappointing but not a disaster.’ For 2008, this could well be a disaster.” - James Hamilton, an economics professor at UC San Diego. (San Diego Business Journal, Feb. 4th)

Macro Impact, And Will The Housing Slump Cause A Recession?

Housing Crisis Casts a Cloud Over Sun Belt. Arizona: "The state government is staring at a billion-dollar shortfall in its $11 billion budget. Forecasters expect a region that grew 7% in 2006 to contract this year. Retail sales, which rose 16% in 2006, are dropping... Housing prices in Phoenix have dropped by double-digit percentages in the past two years. A steep decline in construction jobs caused the record-low unemployment rate to spike by a full point, to 3.9%, from May-December. Population growth has slowed by half, and retail and office development are also ebbing." (Washington Post, Feb. 5th)

Region Still Generating Jobs as Economy Declines. "Alan Gin, associate professor of economics at University of San Diego: "Yes, it feels a lot like a recession, but the region is still creating jobs, and the economy is nowhere near re-experiencing the dramatic declines of the early 1990s. At the 2008 San Diego County Economics Roundtable...Gin and other economics experts highlighted the turmoil in the national housing market as the primary cause for a downturn that has accelerated in recent months. “It’s almost all due to the housing market..." Gin predicted San Diego should generate a net gain of between 5,000-8,000 jobs this year, below the net gain of 10,000 jobs in 2007." (San Diego Business Journal, Feb. 4th)

Housing to Hurt Economic Growth. "Bush administration budget documents: "It now appears that the effects of the housing slump on real (gross domestic product) growth will persist into 2008, holding down growth and delaying the expected rebound in activity." Beyond 2008, however, the administration said housing "should cease to be a negative influence on growth." The budget released Monday [includes] proposals to help deal with the housing crisis, including overhauling the Federal Housing Administration, providing funding for housing counseling and tightening the regulation of mortgage finance companies Fannie Mae and Freddie Mac... [as well as] for $65 million in housing counseling assistance for tenants and homeowners." (Wall St. Journal, Feb. 4th)

Lasco Lays Off 150 in Anaheim, Changes Sales Tactics. "Lasco Bathware Inc., a maker of bathtubs, showers and whirlpool tubs, has laid off 149 workers in Anaheim. The move comes months after Lasco let go of up to 100 workers at its factory in Georgia. Lasco, like many businesses, rode the housing boom of the past few years but now faces falling profits as fewer homes are being built and less people are refinancing their homes to pay for improvements. “The layoffs were a result of the slowdown in the housing market,” Lasco spokesman David McFarland said." (Orange County Business Journal, Feb. 4th)

U.S. Challenger January Job Cuts Rise From Year Ago. "Placement firm Challenger, Gray & Christmas Inc.: Job cuts announcements increased 19% to 74,986 last month from 62,975 in January 2007. The figures aren't adjusted for seasonal effects, so economists prefer to focus on year-over-year changes instead of monthly figures... The number of planned job cuts surged 69% last month from 44,416 in December... Financial firms led the reductions last month, with 15,789 cuts, or more than one-fifth of the total. Construction cuts, including those at builders, accounted for 1,245 announcements in January, and employers in the automotive industry shed 7,142 jobs." (Bloomberg, Feb. 4th)

New York To Confront Its Economic Fate. "NYC gained slightly more than 50,000 jobs last year... The construction of new stadiums, the rebuilding of downtown and the completion of scores of residential towers sent construction employment up by 5,000 positions... However, Wall Street's... securities industry accounts for 5% of all employment in the city and 20% of income. [In 2006] the average wage reached $339,000--five times the figure for all other industries combined. Bonuses hit $23.9 billion... Layoffs so far total fewer than 5,000... Soon, the number of people losing their jobs will increase. Wall Street write-offs for last year exceed $100B, and firms [will] dramatically cut costs." (Crain's NY Business, Feb. 3rd)

Incentives Help To Aid Home Sales. "Jason Schaeffer of Tim Schaeffer Homes: Builders have been arm wrestling with vendors, negotiating lower prices with such major suppliers as the DuPont Co. "We're getting discounted rates on Corian countertops. Landscapers also are working with us so we can pass on that savings to the consumer." Prices for commodities such as lumber and drywall have declined as well, as demand has weakened." (Courier Post Online, Feb. 3rd)

Inside the Payroll Data. "Manpower (MAN) CEO Jeffrey Joerres: "In 2000 and 2001 there was a more traditional effect on the labor market... There was a slowing of demand for goods and services by our clients and therefore we were very much part of being a leading indicator as labor and staff was being whittled out of business." The current environment is much more based on a slowing housing market and some challenges with the financial industry, so the effect isn't as immediate, Joerres added: "That doesn't mean there won't be as it works through the system, but it doesn't have the immediacy it did in 2000-2001." (Minyanville, Feb. 1st)

Construction Sheds 27,000 Jobs in January. "Labor Department: The housing downturn is taking its toll on the job market as construction employment decreased by 27,000 in January. The government's Bureau of Labor Statistics reports that construction employment fell by 284,000 since its peak in September 2006. Overall, the U.S. lost 17,000 jobs in January, largely due to the drop in construction and manufacturing jobs. Nigel Gault, chief U.S. economist at research group Global Insight: Gains in the services sector were expected to balance out the loss of construction and manufacturing jobs, but that wasn't the case." (Builder Online, Feb. 1st)

Facility Closures and Permanent Mass Layoffs. "The number of workers laid off last year, which had been falling since 2001, increased last year. Mass layoff last year totaled 1.58 million, up 7% from 2006. [Well below] 2001, when 2.57 million people lost their jobs [after] the Internet bubble burst. The number of workers getting lay off notices has gone up four consecutive months now... The following future closings and permanent mass layoffs were reported in California: Bear Stearns (BSC) is closing down and laying off 142 employees... in Irvine. Washington Mutual (WM) is laying off 231 employees... in Cypress; another 100 employees... in Pleasanton; and 50 employees in Chatsworth... In Ohio: Palm Harbor Homes (PHHM) is closing its production operations in Sabina... affecting 130 employees." (CoStar Group, Jan. 31st)

Housing Meltdown. "On Jan. 30 the government said annual economic growth slowed to just 0.6% in Q4 as home construction plunged at a 24% annual rate... Home prices could sink an additional 25% over the next two or three years, returning values to their 2000 levels in inflation-adjusted terms. That's even with the Federal Reserve's half-percentage-point rate cut on Jan. 30... While a 25% decline is unprecedented in modern times, some economists are beginning to talk about it. "We now see potential for another 25% to 30% downside over the next two years," says David A. Rosenberg, North American economist for Merrill Lynch (MER)." (BusinessWeek, Jan. 31st)

Black & Decker to Shed 170 Jobs. United Kingdom: "Black & Decker (BDK) is set to cut more than half the workforce at its North-East plant and move production abroad... The power tool company is looking at proposals to close manufacturing at its factory in Spennymoor, County Durham, with the loss of 169 jobs." (Northern Echo, Jan. 30th)

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