This recession ain't over by a longshot.
California employers cut more workers in December, capping a dismal year in which the state lost more than half a million jobs.Payrolls shrank by 38,800, marking the worst month for job losses since September. The unemployment rate remained flat at 12.4%, but only because more than 100,000 workers left the labor force and are no longer counted. Many of them have given up looking for work or have moved out of state.
Economists expect the state's labor market to remain weak this year largely because the bellwether housing sector continues to struggle. Over the last two years, California has lost more than 1 million jobs.
How bad was it?
The construction sector has been pummeled particularly hard. California has shed more than 300,000 construction jobs -- nearly one-third of the industry's labor force -- since the sector peaked at 948,500 jobs in February 2006, according to state figures.Last year the state lost 116,100 construction jobs, the most in the nation.
"Construction jobs are a visible indicator of how well the economy is doing," Watkins said. "We have no idea when they're going to see relief."
The state probably set a record in 2009 for the fewest homes produced in a single year, the California Building Industry Assn. said last month. Although the data are not yet final, the association forecast that 35,600 homes would be built in 2009, the lowest number since it began keeping track in 1954.
There are some glimmers of hope. Median home prices in California have been rising while inventories are shrinking, trends that could entice home builders to resume construction.
Still, a forecast released this week by the Associated General Contractors of America predicted there would be no recovery in the industry nationally or in California this year.
No kidding, Sherlock.
Sales of previously occupied homes took the largest monthly drop in more than 40 years last month, sinking more dramatically than expected after lawmakers gave buyers additional time to use a tax credit.The report reflects a sharp drop in demand after buyers stopped scrambling to qualify for a tax credit of up to $8,000 for first-time homeowners. It had been due to expire on Nov. 30. But Congress extended the deadline until April 30 and expanded it with a new $6,500 credit for existing homeowners who move.
"It's 'exit stage left' for first-time homebuyers," wrote Guy LeBas, an analyst with Janney Montgomery Scott.
December's sales fell 16.7 percent to a seasonally adjusted annual rate of 5.45 million, from an unchanged pace of 6.54 million in November, the National Association of Realtors said Monday. Sales had been expected to fall by about 10 percent, according to economists surveyed by Thomson Reuters.
God forbid that we should've passed cramdown legislation and substantial financial reform instead of another awesome tax credit that merely provided a temporary stimulus for overleveraged consumers to start consuming again. Call it "Cash for [Fore]Closures." I mean, how much longer can the government keep throwing money at this hopelessly bubblicious economy, anyway?
Not much longer, it would appear.
The Federal Housing Administration’s mortgage insurance reserves fell to the lowest level in history and the government said more steps are needed to shore up the agency that guarantees one of every five single-family loans.The net capital ratio, or reserves after accounting for projected losses, fell to 0.53 percent in the year ended in September, from 3 percent in fiscal 2008 and 6.4 percent in 2007, according to an annual review sent today. While FHA said the fund “has good prospects,” it is changing its risk models to account for the possibility of the ratio falling below zero.
“Additional actions” will be needed to shore up the agency, Housing and Urban Development Secretary Shaun Donovan said at a news conference in Washington today. The insurance fund tripled in size last year and has taken on more risk as private industry sources for lenders to finance and insure home loans dried up and mortgage default rates rose to record highs.
I fail to see how this situation resolves itself in any successful way in the foreseeable future. Get ready for impeachment hearings to start in January 2011.
---Vitelius
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