ECONOMY: Jobs disappear again; recession looms
Construction continues to lead job losses
By ZACH FOX - Staff Writer | ∞
San Diego County lost almost 5,000 jobs last month from a year earlier, marking three months out of the last four that the county has seen jobs disappear and raising concerns that the region has entered a recession.
Construction and financial services again led the way in job loss, slashing about 8,000 and 5,000 jobs, respectively, according to a report released Friday by the state's Employment Development Department.
Other sectors also posted declines, suggesting turmoil in the housing market is starting to affect consumer spending, a major driver of the economy. For example, retail stores shaved about 2,000 jobs over the last year.
"They're not able to take out second loans and use their house like an ATM," said Kelly Cunningham, an economist with the San Diego Institute for Policy Research, a free-market-oriented think tank. "And they need to compensate for the higher gas prices by cutting back on spending, because more of their dollars are going into the tank."
With more people out of work, the county unemployment rate leaped to 5.9 percent, up 28 percent from a year ago and the highest level since July 1996, when the county was recovering from a long recession.
It was the largest year-over-year decline in total jobs since the county started losing jobs in March. The last time San Diego County lost jobs was July 1993.
Still, San Diego County's economy is faring much better than other Southern California counties, especially the Riverside-San Bernardino metro area, which posted an 8 percent unemployment rate in June.
Economists are pointing to real estate as the cause for the county's pending recession, with home prices down 28 percent from a November 2005 peak, according to the Standard & Poor's Case-Shiller Home Price Index.
Job declines in real estate-related sectors battered by a housing downturn that began in late 2005 were mitigated by gains in health care and educational services, which combined to add about 3,000 jobs from a year ago.
But even growth in governmental and health care jobs has slowed while the state grapples with a budget deficit.
"And local governments rely on property taxes, and they're in trouble. So it's not just real estate. It's spreading to everything," said Dan Seiver, a finance professor at San Diego State University
As employment numbers continue their descent, more analysts are convinced the county has entered a recession and think any recovery will take at least a year and will be tepid when it comes.
"Looking down the road, I don't see any quick recovery," said Esmael Adibi, an economics professor with Chapman University.
The county's weakness torpedoes an argument among some economists that the region was too diversified to suffer a recession ---- an analysis bolstered when the county gained jobs during a national recession in 2001.
"There was an economics philosophy that said we were immune from national trends. And that was malarkey," Seiver said. "It was a national housing boom, and we were at the front of that, and now it's a bust and we're at the front of it. People are getting laid off, and consumers feel less well off."
Contact staff writer Zach Fox at (760) 740-5412 or zfox@nctimes.com.
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Gil wrote on Jul 18, 2008 1:35 PM:I would like to add to the story that the sky is falling. It was reporting falling this morning. Thanks!
Marget wrote on Jul 18, 2008 3:27 PM:the reality is the recession is here. The depression as big as pre-world war II looms.
yep wrote on Jul 18, 2008 6:32 PM:Thanks to those who think that the "free market" unencumbered of any oversight or regulation is the answer to all the nation's ills. This was greedy big business run amok.
Maybe... wrote on Jul 18, 2008 7:18 PM:too many cheap laborers do to un-skilled and semi-skilled labor, now that the economy has tanked, will we also have to provide social services to all the illegals, God knows, we don't take care of our own citizens as well.
localyocal wrote on Jul 18, 2008 8:43 PM:The illegals are staying in Mexico cause they can't find any construction work. Maybe we should move to Mexico where gas costs $2/gallon.
Old Timer wrote on Jul 18, 2008 10:29 PM:"Just a rough patch" as our great decider has said. What $4 gasoline or what recession??? We have not had any leadership in the White House since the last President. To think that eight years ago, all we had to worry about was a little dress from Monica, and we replaced that with corruption, trickle up to the wealthy, globalism that has given our jobs and wealth away to the world and Mr. Rough Patch himself. Time for America to learn how to be poor again. I don't think I will ever vote Republican again...
Ron wrote on Jul 19, 2008 7:19 AM:And the Liberal Democrats in Sacramento are attempting to pulling a "Hoover."
Raising taxes in a down-turned economy is asking for more unemployment.And "the Rich" aren't stuck in California, they will simply move their businesses to another State.
Just for perspective sake, 80% of all State income taxes are paid by those making more than $500,000 a year.
Most of these are small business owners, who provide about 70% of all jobs in our State.
You do the math, when these idiotic liberals pass off another $9 billion in taxes, simply because they can't stop spending other people's money.
Arnold had it right, before he went AWOL. They are addict's, Spend-o-holic's.
But where would they go wrote on Jul 19, 2008 8:46 AM:I speak to many (small) business owners frequently, and though they lament today's economic challenges, and share harsh words for our leadership, I have a hard time picturing them anywhere else. They are tied to this beautiful paradise as much as the rest of us... The image of a train of cars with "Oklahoma or bust" painted on signs makes me chuckle.
Haves and have nots wrote on Jul 19, 2008 8:53 AM:the middle class is shrinking more and more every year. Do you see Canada over run with illegals soaking up benefits they don't contribute to? This is our government's fault first and mass-consumerism by our own citizens secondly. Yes, we will need to learn to be poor again. If you don't have the CASH to buy something...go without it! The debt Americans have run up is ridiculous!! If we didn't owe half our paycheck to our credit card debt, we could make it ok!!
The facts are in wrote on Jul 19, 2008 11:06 AM:The free market has failed. The rich are unable to resist the temptation of the sin of usury and suck up the assets of the poor. Time for government regulation to re-enter the picture. Time and time again, the greed of unregulated markets leads to evil. Ayn Rand was very very wrong. Enlightened self-interest does nothing to help the community at large. The "rising tide" is a myth. Adjust your portfolios accordingly.
Greg in Oceanside wrote on Jul 19, 2008 1:46 PM:Like others have said, this article is 'sky is falling' reporting. Certainly, some will argue we are experiencing an economic downturn and will even go so far as to say we're in a recession. I think if people really look around, they'd be hard pressed to know someone who is actually out of work. And if they do, look at those unemployed objectively. Certainly, the construction, real estate, and lending industries are affected, but it comes after years of, unchecked and unprecedented growth. These industries were destined to have a 'bursting bubble.'
As for escalating fuel and energy costs, these are directly related to several market factors, especially market manipulation by the Chinese. Obviously the American auto industry has been affected by the rise in fuel costs. They will survive.
So, to those who are optimistic, they already have faith that the economy is doing 'ok' and the country will do fine. To those who pessimistic, nothing will convince you that this is just an ordinary economic cycle and market adjustment.
Just Wait wrote on Jul 19, 2008 2:15 PM:The worst part has not even arrived yet.
I don't expect a turn around for another 5+ years.
In the mean time, inflation and crime will rise and home prices will fall further and further.
I predict an environment where people can't get loans and houses and cannot be purchased or sold buy the general public. Even if the govt. steps in and bails our fannie and freddie, other institutions won't have the liquidity to lend.
I'll go out on a limb here: We have another 30%-50% fall in the future in the region. 2000/2001 prices folks.
We are all screwed!
Karl wrote on Jul 19, 2008 4:45 PM:Suck up the assests of the poor? Huh?
to just wait wrote on Jul 20, 2008 10:14 AM:I agree with you and that's why I'm so glad I bought in 2001 !! Those times are gone now...
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