Job losses hamper California and Southern California economy in 2010

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Southern California’s economy for 2010 will still have job losses, according to a report released by the Kyser Center for Economic Research at the Los Angeles County Economic Development Corporation (LAEDC).

In California, three sectors will see employment growth during 2010: information, private education, and health services.

Unemployment in the state will remain high with the LAEDC forecasting a 12.3 percent average rate for the remainder of the year. In 2011, unemployment will remain high but will dip to 11.9 percent.

Jack Kyser, founder of the Kyser Center for Economic Research, says Los Angeles County will see a .5 percent dip in non-farm employment or 19, 200 jobs.

Worried about Your Bank or Your Home?

Cash flow worries seem to be hitting all around us. I drove near the Indy Mac bank headquarters in Pasadena this morning while people were lining up to get their money out. Is there a banking crisis?

The number of foreclosures seems to be mounting, too. Is there a housing crisis? Stocks have dipped below the 11,000 mark for the first time in two years. Mounting economic woes?

Or do the current conditions stem mostly from lenders and borrowers being irresponsible with their money?

I spoke with Richard Streitz, Realtor, of Baldwin Real Estate Services to get his opinionand ask him if people who are facing foreclosure will be unable to purchase a house for years to come.

He reminded me these cycles occur about every 10 years. Richard explained how Real Estate Owned properties were so prevalent in the ‘80s that Freddie Mac opened a design center. Richard believes real estate will be back to normal levels around 2012.

Here’s hopeful news for families going through the pain of foreclosure. If the problem is widespread, then banks look more favorably on your condition. As Richard explained, banks see you’re not the only one and your condition is weighted accordingly.

So, does this mean this is a good time to buy? Or will we hit more of a bottom in the market in the next several months to a year.

Here are my observations:

Don’t give in to fear. Panic can easily sweep across society. I know I can worry. But I suggest you read this article that I wrote several months ago based on an interview with a financial planner.

If stocks have dipped, then it could be a good time to buy.

Since the economy is never 100% stable, don’t stop saving or investing for the long term. Diversify your portfolio.

Don’t build up debt you can’t control if that’s possible.

If you’re a business, especially a service business, then make sure your accounts are healthy and your vendors are able to deliver their goods and services to you.

If you have doubt, begin networking or marketing for additional clients and build a contingency plan.

I know for me, action helps fight off worry and potential panic when I think about cash flow. And here is an encouraging article to read if you are going through foreclosure.

Doing business in mid-town Manhattan?

Be sure to check the Times Square Alliance web site if you're traveling for business or pleasure in mid-town Manhattan.

Our family recently visited there and we were impressed with the type of commercial activity taking place as you can see in the photo with my wife and daughter.

To me, it's a gathering place for some of the strongest brand names in the country: Yahoo!'s name was emblazoned in lights but I was also surprised to see the following stores: Toys R Us, M&Ms, and Hersheys. Yep, I played tourist and had my picture taken inside the M&Ms store!

Here's a quote from a 2006 Facts and Figures report on Times Square:

"Times Square today is an electrifying commercial
carnival; by night a wildly flashing arcade game, by
day a chaotic and globalized performance of light,
noise and crowds. The neighborhood is a mirror
of America, refl ecting the obsessions, priorities and
desires of a changing nation."

We stayed at the Doubletree Hotel in a 2-room suite for $300 per night as a AAA discount.

I recommend eating at Ray's Pizza, too.

For another view of staying in Times Square and seeing Manhattan in almost 48 hours read this article I recently wrote.

Should you spend the money to visit New York City? Here's another article I wrote on our recent experience.

So How is the Economy?

Is the economy bad or good? It's easy to spot the headlines online about recessions, housing prices falling, etc.

I was at a real estate club earlier this week and they distributed a copy of a Wall Street Journal online article titled "The U.S. Economy is Fine (Really)" by Brian Wesbury from January 29.

He opened the article with this sentence "It is hard to imagine any time in history when such rampant pessimism about the U.S. economy has existed with so little evidence of serious trouble."

He explains how retail sales fell .4% in December, real GPD grew at only a 1.55% annual rate and unemployment reached 5%. But then he describes the numbers as a "payback for previous strength."

The article is certainly worth reading to get another perspective on the economy's strength.

How Rain Impacts Marketing

Southern California got smacked with almost a full season's worth of rain in one week. Of course, the stormy weather made me think about marketing and the impact on two different businesses.

In the home improvement industry, roofing sales are going to perk up while another Southern California landmark watched ticket sales plummet: the Santa Anita Race Track cancelled races for the past week.

Here's how I personally experienced marketing in the home improvement industry and groaned through some low dips in business.

In 2004 - 2005, Pasadena had nearly 40 inches of rain. Wow! Most of it came during intense storms from November to February. Needless to say, once dry roofs sprung leaks.

In late 2005, I joined the Home Depot as an outside salesman to sell roofs. I saw the printout of the sales numbers for people on the team: commission-only salespeople were earning from $12,000 to $20,000 per month. They were running 3 - 4 appointments per day even as dry weather moved in.

2005 was a record year of sales for the entire roofing industry.

So Home Depot in their corporate offices in Atlanta were so excited by the cash that the LA office brought in, they decided to expand the sales team dramatically in 2006.

Then the rain stopped. In 2006, I ended up number 4 in Los Angeles for total appointments in the year, but I had to work almost 7 days a week. Tough emails started circulating questioning why people didn't "want" to work hard and earn money.

The corporate office churned out marketing collateral like crazy: new, impressive banners to hang over the entrances of stores, stickers on shopping carts, handouts to customers in the stores, tear-off pads at every register.

Every piece of material cried out to the customer that Home Depot could do their roofs (and do a nice job, I will say. I respected the project managers). But the rain wasn't falling and the marketing message seemed to fall right smack on to the cement aisles.

As 2007 started, the number of salespeople fell from 30 to about 11 within a few months. I hung in until the summer. In 2006 - '07, Pasadena had less than 4 inches of rain. Plus, credit was getting tighter and roofing prices rose.

But herein lies a marketing lesson: you market for the future. If you're going to have a line of products and you want people to know about it, you need to keep churning out the message.

Marketing requires a long-term effort.

So the rain is pouring this year. I expect there are some leaky roofs and sales should pick up - even if for a few months.

The Economy of Western Pennsylvania

Traveling back to my hometown for Christmas reminded me that economies don't just cover large regions. They're small and localized, too. In Latrobe, Pennsylvania - the home of Arnold Palmer - during 2006 the famed Rolling Rock Beer brewery was shut down when it was bought by that beer company in St. Louis.

The few hundred workers were given a year's severance pay and now many have returned to a plant operating at a smaller capacity, but operating nevertheless.

My sister, Chrisia Simkovich, a real estate agent with Northwood Realty in Latrobe and Westmoreland County, said about 80% of the workers had returned. Then she told me about plans UPS has to operate a distribution center out of the Westmoreland County airport. It may be 3 - 5 years distant but there are plans to expand the airport.

Currently, Northwest Airlines flies from Latrobe to Detroit two times per day and Continental Airlines may be operating from there as well.

In all, Latrobe isn't doing too badly. I can't say it's great. I'll research exact figures. But I heard from several sources that the Latrobe area and Westmoreland County has benefitted from the high taxes of Allegheny County and what appears to be mismanagement of Pittsburgh city government.

The other point is we're looking to buy a piece of real estate there. Why not? In Southern California, properties have appreciated to a ridiculous degree. Our house has more than tripled in value in 14 years.

Why is it important to understand local economies and not just national or global economies?

Partly as a defense against news reports which so often report negative news. And if you keep your personal finances in order - keeping high interest debt to a minimum, investing small amounts reguarly - then you begin to have more control and understanding of your financial abilities.

I Discovered the Economy, Stupid

Bill Clinton's line "it's the economy, stupid" will always resonate in my ears. Not that I like the guy, but before I digress.

We traveled to New York's Times Square and then to western Pennsylvania during Christmas and New Year which is one reason I haven't posted regularly to the blog.

I really saw how "local" an economy can be and I'll be writing about that during the next several days. It seems Westmoreland County is gaining population while nearby Allegheny County, home to Pittsburgh, is losing population.

My sister is a real estate agent in Latrobe, PA which I always saw as an economically hard hit area, but that's not necessarily the case. The strength of a local economy is swaying us to seriously investigate investing in real estate there. Plus, housing prices are still relatively inexpensive.

I'll be digging up facts to go along with my personal observations on how local an economy can be. So stay tuned.