Category Archives: Economics

One in Nine Homes Empty. Eternal Optimists. The Bottom Near?

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According to this story in USA Today one in nine American homes is vacant.  10.1% of rental units are vacant and 2.9% of homeowner units are sitting empty, and the total number is over 14 million units nation wide.  Housing units worth over $500,000 are just as likely to be empty as those under $100,000.  9% of units built after 2000 are empty compared to 2% of older homes.  In other words the units sitting empty aren't just squats in crumbling industrial cities, and in fact they are more likely to be developments that promised a piece of the American dream in the newly landscaped suburbs and exurbs.

But there are always the optimists.  Real estate licensing exams in New York still have plenty of takers. I like optimists because they're the engines that keep the country going.  I figure if these folks can make a go of it now then they deserve every success that comes their way.

Optimists also look at the glass as half full.  Just look at the recent foreclosure news here in the Triad.  One article in the Greensboro News & Record focuses on the fact that foreclosures in the Greensboro/High Point markets rose 28% from 2007 to 2008.  Yet in the Business Journal we find this article that tells us that foreclosures in the Triad are down 62% from January 2008 to January 2009, and that follows on the heels of a 23% drop from December 2007 to December 2008.  In other words we could finally be finding the bottom of the housing decline.  Guess which article the optimists will focus on?

As for commercial real estate. Ugh, let's just stop here and have a nice Valentines Day.

You Know Times Are Tough When…

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You know things are tough when even government jobs aren't safe.  Growing up in DC the conventional wisdom was that if you wanted to make real money you worked in the private sector, but if you wanted stability you went to work for the government.  The joke was you'd have to die to lose your job.

Reading about the county commissioners' meeting in this morning's paper was just a tad depressing.  The commissioners were told that they were facing a shortfall in next year's budget unless taxes were raised or expenses were cut.  They said that if the cuts came from job cuts alone it would mean cutting 226 jobs, and commissioner Walter Marshall actually asked how those job cuts would affect citizens.  Well, I know what the effect would be on at least a couple of hundred taxpayers.

Commissioner Dave Plyler also asked how much money the county would save if they forced county employees to take 14 days of unpaid leave during the year.  I'm sure the county and school employees were just overjoyed to hear that question, but I'd think that they'd prefer that to the possibility of losing their jobs or of seeing their coworkers lose their jobs.

There's another old joke from my days in DC.  During snowstorms the federal government would make announcements that they were closed except for "essential personnel" and we'd always ask "If someone isn't essential then why do they have the job in the first place?"  Well, I guess we're about to find out exactly which jobs are essential.

Krispy Kreme in the Dead Pool

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US News & World Report has a list of 15 companies that stand a good chance of going belly up or at least declaring bankruptcy this year.  Unfortunately for Krispy Kreme they made the list along with Six Flags, Sbarro, Blockbuster, Six Flags and Trump Resorts to name a few.

More happy retailing news from Esbee: Kicks & Grins on Miller Street is shutting down.

Well at Least Our Bankers Haven’t Sued…Yet

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Bankers, who probably are now in the same league with lawyers and politicians in terms of popularity, are not happy with potentially losing their bonuses.  Here in the US there's been at least one prominent case of bonuses being granted despite some putrid performances by the company.  Still, the bankers here haven't gone so far as to sue to keep their bonuses.  In England?  Bankers are gearing up for legal battle.

Closures and Layoffs in Forsyth County

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Alert reader Peggy emailed me to point me to a page on the North Carolina Employment Security Commission's site that links to a database of permanent layoffs and business closures throughout the state.  The database is a compilation of filings with the state and a survey of published news stories.  While the data isn't definitive (there's a disclaimer on the site stating that the data doesn't meet the Labor Market Information Division's standards for accuracy), but it does provide a good indication of what's going on out there.  I ran the numbers for Forsyth County for all of 2008 and it returned 32 reported closings and 13 layoffs.  What's particularly interesting is that it provides company names, industry, number of people affected, effective date and the reason for the closing/layoff.

I decided to run all of the years between 1998 and 2007 and compare the numbers to 2008. Here's what I found:

Year Closings Layoffs
2008 32 13
2007 31 13
2006 24 4
2005 17 11
2004 32 8
2003 31 5
2002 19 11
2001 16 15
2000 24 6
1999 14 11
1998 12 6

I was a little surprised because I figured that 2008 would have been significantly higher than other recent years due to the recession, but I think the numbers really do highlight that things have been tough around here for a lot longer than they have been in much of the rest of the US.

In the end I found the reasons for closings and layoffs to be starkest reminder of how personal this all is.  Just as poker chips tend to disguise exactly how much money you're actually losing, numbers tend to hide the true emotional impact of all these layoffs. The reasons range from "economic conditions" to "consolidation" to "bankruptcy". Here are some that really hit home to me:
  • Forsyth Medical Center's layoff of 145 people for the stated reason of "outsourcing" in January 2008.    
  • Triad Appliance Center's bankruptcy in December, 2008.  That case received a lot of notoriety because the store's customers were stiffed and the folks at WXII picked it up. But in all the hubaloo about the customers' problems we lost sight of the fact that 18 people lost their jobs.   
  • Reynolds' layoff of 1,700 people in September, 2004 for "restructuring" 
  • Aon Consulting's December, 2006 layoff of 100 people for "outsourcing and restructuring" 
  • Hanesbrands' June, 2007 layoff of  590 for "offshoring production" and August, 2007 layoff of 260 for "restructuring"
  • Circuit City wins the award for harshest sounding reason with their March, 2007 layoff of 15 people for "payroll purge"  I guess they didn't purge the right people huh? 

I could go on and on but you get the picture.   

Unemployment Trust Fund Sucking Wind

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North Carolina's Unemployment Trust Fund is running dry.  From the W-S Journal:

The Unemployment Trust Fund was at $3.9 million yesterday, according to the N.C. Employment Security Commission. By comparison, the trust fund was at $400 million as recently as October.

Commission officials stressed that beneficiaries will continue to get their checks even as North Carolina has experienced a surge in first-time unemployment claims.

The commission expects to add about $19 million to the fund today as more employer unemployment-tax payments from the fourth quarter are cleared.

Even so, the commission is likely to need to borrow money from the federal government for the second time since 2002. The commission has a $540 million credit line that it can tap.

Oy.

Help for the Kids

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Esbee's post this morning about the effects of job losses and potential job losses on families cuts to the core.  The essential question: how do you reassure your kids whose parents have lost their jobs or whose friends' parents have lost their jobs?  It's the third comment on her post that got to me, and I think it's important enough that I'm sharing it below:

We are noticing an increase in students that are becoming homeless due to job cuts and layoffs. It is heart breaking to know that some of my students don't know where they will stay tonight. They don't know what or if they will eat. I do what I can by having snacks in the classroom, but I can only do so much. A pack of "nabs" isn't going to fill an empty belly. 
Please donate to your child's school's fund for these kids. We really need it now more than ever. The social workers have a fund set up just for such kids. Teachers reccomend them anonymously and the social worker offers aid to the family/student. Parent's can also go to the school to ask for help.

According to this recent story in the Winston-Salem Journal 47.7% of the kids in the Winston-Salem Forsyth County School System qualify for free and reduced lunches and that percentage is expected to rise.  Many of us are struggling to make ends meet, but if you have a spare dime please remember the kids.

More Job News in the Triad

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Two more pieces of not very happy news: the Greensboro News & Record is instituting wage freezes and mandating all full and part time employees take five days of unpaid leave this year, and Lincoln Financial, which has offices in Greensboro, is cutting 540 jobs overall but hasn't said how many in Greensboro.

Sprint is cutting 8,000 jobs, Home Depot is cutting 7,000 and Caterpillar is lopping off 20,000.  No telling how many of those jobs will affect the Triad, but the Caterpillar announcement could be significant since the company has operations in Clayton and Sanford.  Home Depot says their job cuts will be in support functions, not customer facing positions in stores so there may not be much effect of the cuts seen here.  Sprint?  Who knows.

Related: Forbes.com has a layoff tracker for the 500 largest publicly traded companies in the US.  Current number as I type this is 330,815.

Normal Abnormal Times

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Fec quotes Krugman Jim Collins who essentially said that the second half of the 20th century was abnormally stable thanks to having two superpowers keeping the world in constant, tense balance.  That means that our current state of global economic instability is more normal than the relatively stable late 20th century. However it's what Fec wrote himself that I really enjoyed:

In my case, it’s normal that what few businesses remain choose to outsource their IT functions. For that, I blame Microsoft. OTOH, my best client, who chose to embrace MS, is in their back yards eating their lunch. This leads me back to my original thought: leaving IT problems to someone else is an act of immaturity and evidences itself in other aspects of a business.

It’s normal that manufacturing has gone overseas. For that, I blame our various governments. The founders of Home Depot said some time ago that creating such a business under current regulations would be impossible.

It’s normal that I spend nearly all my income paying for one kind of insurance or another. For that, I blame lawyers and runaway juries.

It’s normal that the banks have done what banks do and are having to pay for it. Scratch that – we have to pay for it.

Finally, it’s quite normal that we’ve elected another charismatic pol and have unrealistic expectations. So long as the above mentioned offenders have lobbyists, one man, no matter how great, can make not a whit of difference.

Anyone else noticed that lobbyists have become the most reviled people in America with the exception of politicians?  Have you also noticed that many lobbyists and politicians start out as lawyers?  Coincidence?