The Geography of Job Losses

There’s an extremely cool animation of job gains and losses since 2004 at Tip Strategies. Here’s a couple of screen shots:

The animated version is amazing. This reminded me of Jim Hamilton’s powerpoint which shows the regional propagation by quarter of recessions between 1969 and 2004, saved here. Did you know that the recession starting in 1990 actually began in Arizona in the fourth quarter of 1988?

You have to click through the slides yourself; the action starts on slide 14.

These are both good reminders that there are huge variations in a recession’s impact among metro areas.

Full Recovery of the CRE Market in 2-1/2 Years? The Global Economy

Robert Sanchez thinks a full CRE recovery could take as long as 2-1/2 years.  From The Saint Report (hat tip The Dirt Lawyer's Blog):

During a panel discussion for Pepperdine MBA alumni in downtown Los Angeles last month, Robert Chavez, former CEO and founder of Staubach LA and current president and CEO of Guardian Commercial Realty, said that a full recovery in the commercial real estate market could take 2 ½  years.

I previously posted on why I think this is unlikely given the current state of employment (post here). Another reason I think a recovery is unlikely to happen that fast is the state of the global economy. Now, I’m not much of a globalist (all real estate is local, right?), but there is no escaping the fact that this meltdown is everywhere, and that the world is more interconnected than ever. VoxEU has an extremely sobering post comparing current trends with those in 1929. Here are a couple of charts:

Before a recovery can start, things have to stop getting worse. There is nothing in current economic news to suggest we’ve reached a turning point.

Economy and Real Estate Post Picks: Week of May 3, 2009

Wholesale Sales Continue to Slide: Commodities are the hardest hit

The Latest Employment Report: Not as bad as previous months, but still not good

Does a Decline in Initial Jobless Claims Signal the Recessions End? A discussion of the impact of initial, continuing, and net jobless change

Regional Disparity in Unemployment Rates: The West Coast is faring poorly in this recession

CMBS Loan Performance: Transfers to Special Servicing are up sharply

Economy and Real Estate Post Picks: Week of April 27, 2009

GDP Growth 1950 – 2009: First quarter GDP decline the worst since the early 1980’s

Credit Crisis Indicators: Credit indicators are headed in the right direction

Recession to End by Fall: Indicators are turning positive

April’s Economic Data in Graphs: Big collection of graphs showing economic data released in April for everything from new home sales to restaurant performance

Consumer Spending Rebound: Personal Consumption Expenditures rebounded in the first quarter

Economy and Real Estate Post Picks: Week of April 20, 2009

Will the Recession End in a Few Months? Two economic forecasters think so

Can the Economy Function Without Securitization? This post argues restoring  securitization markets should be a top priority.

Commercial Real Estate Values at 2005 Levels: Moody’s Commercial Real Estate Indices indicate gains over the last four years have been reversed.

Which Way Are 10 Year Treasury Rates Headed? Two opposing views

What Will be the Shape of this Recession? V, L, or D?

Economic and Real Estate Post Picks: Week of April 13, 2009

Is the Cutback in Consumer Spending Abnormal? Consumer spending patterns in prior recessions

Job Loss Patterns in this Recession: An interactive map showing the geographic pattern of job losses in this recession over time

General Growth Property Bankruptcy: A set of stories exploring various aspects of the bankruptcy of the nation’s second largest mall owner.

What Direction is the Economy Headed? Russell Investment’s Economic Dashboard shows most indicators are headed in the right direction

Retail Sales Down in March: Declines in gasoline and motor vehicle sales were big contributors

Economic and Real Estate Post Picks: Week of March 16, 2009

Post Recession Employment Trends: How long does it take for employment to recovery after a recession ends?

Cap Rate Closing/Asking Gap: The spread between asking and closing cap rates is widening.

Maturing Loans Are Coming Home to Roost: The looming problem of maturing income property loans with no exit strategy

Reflation: The risk of deflation has diminished.

Has the Economy Hit Bottom Yet? Probably not, but the rate of decline is slowing.

Economic and Real Estate Post Picks: Week of March 9

Recession Proof Industries: Government and health care do best

Layoffs versus Quitting: Despite the economic downturn, more people quit than are laid off in most industries

Has the Decline in Retail Sales Stabilized? Charts showing retail sales trends

Wholesale Sales Decline: Wholesale sales by sector; durable goods show the biggest declines

Inventories are Declining Rapidly: A major inventory correction is underway

Housing and Business and Consumer Cycles

Calculated Risk has a post on the business cycle based on Edward Leamer’s Housing and the Business Cycle paper. The basic thesis is that residential investment is a leading indicator for recessions, and a leading indicator for recovery:

 

 

PCEs are personal consumption expenditures. Here are some supporting charts from Leamer’s paper:

(Click on charts for larger versions in a new window)

The suggestion is that until housing turns around the recession won’t end. Business structures (CRE) clearly lags, so we have a long way to go in that sector.

This reminds me of Joseph Ellis’ work presented in Ahead of the Curve. Ellis sees the cycle like this:

(Click on charts for larger versions in a new window)

For Ellis real consumer spending is the leading indicator, and employment and capital spending both lag. Ellis maintains a series of charts showing the components of his model (available here) and commentary on current conditions. Real hourly earnings leads real consumer spending, and earnings are recently up, so under Ellis’ model we may see an upturn in 2009.

(Click on charts for larger versions in a new window)

Economic and Real Estate Post Picks: Week of March 2, 2009

Price Stickiness and the CPI: The components of the CPI change at very different rates

A Long Recession Ahead?: The decline in household wealth could mean this recession will be a long one

Employment Decline, Recession, and Depression: A comparison of employment declines between this recession, 1981, and the Great Depression.

Credit Crunches and Small Business Finance: How small businesses are financed, and what happens in a crunch

Is the Pace of Layoffs Declining? Trend data from October, 2008 says maybe

Economic and Real Estate Post Picks: Week of February 23, 2009

February Economic Summary in Graphs: A summary of real estate and economic trends from Calculated Risk

This Recession in Perspective: Charts from the Minneapolis Fed which compare this recession to others from many perspectives

Credit Crisis Indicators: Some progress has been made

Is the Worst Over?: Mounting statistical evidence the worst of the recession may have passed

Paul Volcker on This Recession: What caused it, what’s different this time, how to prevent it from happening again

Economic and Real Estate Post Picks: Week of February 9, 2009

How Bad is the Employment Picture, Really? Recession comparisons using Payroll Employment versus Household Employment data (hint: payroll employment is a better data source)

How This Recession is Different: Consumer, bank, and business balance sheets are much more leveraged then previous recessions

Real Disposable Income Up: The savings rate also improved in December

Significant Fall in Domestic Demand: The worst decline post-WWII

Retail Store Opening and Closings: Good information on trends in openings and closings by retail sector

Economic and Real Estate Post Picks: Week of February 2, 2009

Sharp Contraction in Trade: Both imports and exports have gone off  a cliff

Jobs Forecast by State and Sector: Interactive map and charts of a Moody's Economy.com forecast of job loss/gain by sector and state through 2012

The Housing Market: 1982 versus 2009: A comparison of our current situation with the situation in 1982

The Behavior of LIBOR in This Economic Crisis: Very detailed discussion of LIBOR and its recent movements

Upcoming Economic Indicator Releases: A useful calendar of upcoming economic indicator releases, with links directly to the data sites.

The Landes Apartments Project has the Best Multifamily Location in the Whole World

OK, I don’t know this for sure, because I haven’t visited every multifamily site in the whole world. But, I think this location (901 8th Avenue, Seattle, WA) is a contender. Here is my logic:

1. The best apartment location should perform well in difficult market conditions.
2. In difficult market conditions, the sectors which perform best are government, health, and education.
3. The Landes location is ideally suited to appeal to government, health, and education workers.

With regard to the second premise, there is a helpful post at Macro and Other Musings titled "Where are the Safe Jobs?". Here is a chart from that post:

By far the most jobs have been created in the government and education/health services sectors. This is not a fluke of this recession – Eric Janszen put together charts of every sector showing data back to 1940 (posted here) and reaches the same conclusion.

So here is the location of the Landes Apartments (“A” on the Google Map below):

Easy walking distance to Seattle University, three major medical centers, and the Seattle/King County government buildings (shaded in red at the lower left).

There might be better locations, but I don’t know of any.

Not Everybody’s Recession is the Same

Mark Perry in Carpe Diem says the 1990-1991 recession was relatively short and mild, but that media reporting on severity was hysterically overblown. For example:

"There is no question but this is the worst economic time since the Great Depression.”

 

“.....the worst plunge since the Great Depression.”

 

"This is the most severe economic dislocation we've had since the 1930s. Few are immune."

There are eleven such quotes in the post. When you go back to the original sources, here is how they break out:

• Four refer to specific indicators (e.g., sales, pessimism, job loss)
• Three (in fact, the three cited above) refer to geographic areas (e.g., California, Great Britain)
• One refers to a specific demographic group (white collar employees)
• One refers to a forecast of the severity
• One refers to a specific time period (worst three year period)

This is a good reminder that, which the aggregate data for a recession gives one picture, there is a lot of variation in the geographic distribution and dimensions of each recession. James Hamilton at Econbrowser has some great posts on recession variations between states here, here and here.