The Sun Belt Needs a Killer App
Fresh off Obama imploring the country to “win the [vaguely defined, and definitely not defined as preventing climate change] future,” Calculated Risk has a new chart, showing the decline in unemployment by state. It’s useful to show not just which states are unemployment clusterfucks (Michigan remains near the top, though CA and FL passed it in overall unemployment last month), but also where it’s getting better.
And it’s getting better in the Midwest, where the auto bailout (as well as battery and related subsidies) has provided stimulus that led directly to new jobs.
But it’s not getting (much) better in the states where the housing market, not rusty industries, was the primary cause of the crash: NV, CA, FL, AZ. Now, presumably, that’s partly because the housing crisis–notably underwater homes–remain a big drain on the economy. But it also seems likely that part of the problem is that nothing has replaced housing as the driver of growth. Unlike the Midwest, which has the auto industry (for better or worse), several of the other clusterfuck states were relying on housing.
Now, there’s a lot more that might be gleaned from this chart–why, for example, is the Northeast also getting better? Is AL’s improvement about cars or defense or something else?
The jobs crisis in this country remains horrible just about everywhere. But in some places, it is actually getting better. Slowly. We’d do well to understand what’s driving that improvement and why other regions aren’t sharing in it.
I would qualify CA as having other equally causational factors, w/”housing market” decline being more tail then nose of the beast. Ca. endured…
a) .com collapse… eg. misdirection of massive investment into emerging internet “Opportunities” which more or less ignored useful possibilities for efficient information infrastructure, replaced instead by bum rush to move brick’n’ mortar retail stuff to websites. The good, useful stuff that could have been done went by the wayside. This was beginning of Ca’s world leading tech sector going toes up.
b) right on heels of a), the ubiquitous “California Energy Crisis”… a manufactured fraud en total. Last I looked, costs sucked +/- $32b of “liquidity” from the state. Also of note, particularly given some recent posts, FERC was another of BushCo’s transformed malfeasance coverup agencies… they’re agreement w/admitted NON-ENRON co-conspirators, nearly 2 yrs after the fact, included non-prosecution *promise*. I have often said (and believe) this was corp. America’s beta test for Mortgage Bond Scam.
c) post a/b, the tech offshoring of both manufacturing & design went from noticeable and disappointing to full fledged industry relocation… and cheapening (eg. most offshored destinations not close to product quality produced domestically). Even worse for future, the R&D budgets went with this exodus.
NET end result: incomes supporting Ca. housing prices evaporated, as did those salaries being spent @ small businesses up/down the state. Ca’s economic undoing was a planned multi front assault, skillfully and successfully executed by BushCo and it’s corp tentacles.
I left in ’05, still have my home in really nice older section of SF EBAY (Alameda). Bought that thing in ’91, paid it off in ’07. Current value is about what I paid for it, down 50% from peak.
Most of my tech friends from ’90(s) have either left the industry or moved out of state or country. Those w/formerly prosperous small biz’ have either gone toes up or borrowed deeply to keep the doors open, hoping upon hope a rebound is on the horizon… basically, an act of blind faith.
Well said. We left 1-04. Have not regreted it for a second. Still working for half of what I made in ’99. (manufacturing)
Thanks for this post, empty.
Yup, yup and yup. The dirty little secret behind H1B visa abuse is that a) it allows big companies to screw US workers by hiring overseas ones (who don’t have student loans to pay off because their home states — like India’s Kerala, home of the Indian tech boom — pay for their schooling up to and including college), and b) it trains the workers who will be helping Microsoft et al offshore their industries.
Agree, CA is a lot more complex than AZ and NV–so is FL. Plus, there are some killer apps that get investment in CA.
also, the loss of aerospace and defense jobs, as they were moved out of the state (for political reasons or for tax breaks from other states). That started under Bush41.
One factor that complicates analysis is there is no regional trends in which states are having budget problems that are increasing public sector unemployment. That is likely a biggie in California, for example. And which states have succeeded in getting tax increases in order to balance their budgets. Some of the states that are worst hit are those where the housing market was most speculative and the large number of foreclosures prevents the re-establishment of a market price or a stable sense of market supply. And second homes could be a part of this picture in the Mountain West and coastal areas. A map of where home prices have been affected the least would be helpful in analyzing this data.
Another factor is that the state data might be driven more by differences in county-level data. To understand this, one would have to understand the industrial structure of the county, the economic trends in that industry, and then aggregate those to the state level. And then there’s the often overlooked industry (which isn’t) — agriculture.
And as @1 describes, there are differences in longterm economic trends that could affect unemployment differently in different states.
NE improvement could be related to medical & finance.
Also, not as overbuilt during housing bubble.
The overbuilt thing is huge–that’s true, obviously, of the Midwest, too. Heck, Detroit had another new low in home values last month, but much of the rest of the state is closer to the national average in lost value. NV, not so much.
The most obvious empty buildings in my area of Ca are commercial. Large buildings that look about 5 years old and are totally empty. Don’t think they will be filled for a looooooong time.
I observed the last US building boom was concurrent in other places as Ireland and the continued one in China. China appears to have completely adopted the US model plus their coal dependency. From what I can see, China is being completely pumped (another data point with “China Plans A New Mega City: Population, 42 Million“) before the big dump (“wealth transfer”).
I’m currently sitting in an office on a former Sun Microsystems campus that was meant to house upwards of 6000 employees. There are now 5 companies here with a total of about 900.
66% of ALL home sales in CA are foreclosure/short sales. That leaves 1/3 for the rest of the RE industry which has shrunk as big banks deal to a few fav RE Companies.
My CRE friend who owns the 17th largest in the USA says banks are not loaning, and, the CRE bonds/loans are coming due and a huge crash is impending. CA is in the tank while kids are running up school debt expecting to get jobs, not gonna happen here.
I’ve been telling all my friends and family for the last few weeks that this shit will hit the fan within the next 6 months or so. Once lawsuits pick up speed against servicers and banks, the market is going to realize these banks don’t have the capital to withstand the onslaut of penalities and failed investments.
I just hope our government doesn’t bail them out again. If that happens, I hope our streets start bearing a strong resemblance to those in Tunisia or Egypt.
Indeed, we have yet to see the CRE shoe drop; it is but one of a multitude of these economic Swords of Damocles that loom above us like so many stalactites. Empty storefronts have been common for a couple of years now, and even mall owners are about to default. The counties have been starved by the MERS diversion of recording fees into the pockets (and offshore accounts) of Wall St. execs. If only there was a way to get restitution…
Have folks seen this new trend seen in Chicago, Ronald-Reagan-of-China’s new second home? http://boombustblog.com/reggie-middleton/2011/01/17/i-warned-that-banks-will-soon-be-forced-to-walk-away-from-homes-guess-what/
Win the Future. Otherwise known as “WTF”…
I like it already.
Love it.. Here’s to (raising glass) WTF!
I’d say the killer app for the Sunbelt is solar energy production. I heard about a near dark solar innovation in 2006 from a Nevada startup that immediately disappeared after the announcement.
In the upper midwest the ag sector is booming.
It is very hard to feel sorry for alot of people in these tragic circumstances, when those that created and caused the meltdown, continue to make off like bandits, dragging what remains of the middle class with them. Pure greed ladies and gentlemen.
In the 90s, industry began talking about changing to a service economy. Every day on tv, in colleges, in businesses, that was the meme. Go to college and train for an office job, that’s where the jobs will be. Well, they were right. Except they didn’t tell you that you’d get paid what that job was worth…….very little. When businesses saw the success of their service economy coming to fruition, they convinced these workers at their McJobs, that hey, know what, follow the ‘Merican Dream (TM) and go out there and buy that brand spanking new house, car (or two)! You can afford it!! Yes you can!! Guess what? Boom. No, you can’t, never could and never will be able to.
We can write about manufacturing until the cows come home, but I guarantee you that the cows will come home before the jobs do. Corporate wealthy wanted this. Governments the world over wanted this. This was planned. They never quite figured out how an economy that manufactures little, could afford to go eat at McD’s every night, but I’m sure Obomba and his corporate government will come up with a doozy. Next up, slashing all social services. Stay tuned.
That was Raygun. In the 80s. He began that push.
Yes, he did. But it really exploded under Clinton and the internet boom of the 90s. “Look how rich those office geeks is gettin”
Very true.
Not to nitpick, but haven’t we (the Left) just spent the last couple of weeks griping about the “Job Killing Healthcare Bill Repeal Act?” I thought we were going to take the violent language out of our political discourse.
David Dayen has a fresh cross-post available: Ryan, Bachmann Offer Confusing Stew of Doom and Despair
OT – Via the AP:
I’ve managed to make it into my 40s without ever having purchased a car. I’ve always been gifted cars from family, or gone without and used public transit.
I’m determined that my first car purchase will be an electric car. So far it looks like a choice between the Chevy Volt (manufactured in Hamtramck, MI) or the Nissan Leaf (manufactured in TN). Both models will be commercially available sometime this year.
Sorry for the OT.
If you did not get a chance to read this diary, please read it. Or, go to the Guardian and read the series.
@25 The Volt.
Killer apps are the holy grail(s) of the engineering mind.
Innovation breeds excitement and expectations for a better future. Even before HP sold their first sine wave oscillator to Disney, the lure of limitless opportunity and problem-solving technologies have beguiled garage shop inventors for decades.
Nick Tesla was one such entrepreneur…. Yeah, who?
So now we have social disarray, job-killing outsourcing, widespread fraud and corruption, toxic waste and a destabilized climate. Are Facebook and Twitter sufficient to withstand the tsunami of terrible consequences bearing down on a world in peril?
We are alive in this moment. To call humanity a killer app is ironically apropos. But it would take a trillion-node network to come close to the sophistication that is one human being. We can’t get past consciousness to see the bigger picture and that is why we suffer from selfishness and greed. So is “thinking” really the solution?
Or is it the problem? (Not that we have much of a choice!)
Sooooo….
Let’s go for the Seven-Billion-Trillion node network and see what happens!
Tragically the uptick in PA is probably linked to the Marcellus Shale which is going to poison the water for eastern PA and NY. But it’s jobs, right?
The other company that has been doing a chunk of hiring is Comcast. Wonder why?