Saturday, March 22, 2008

Collateral damage

As the housing bust expands, it's effects are spilling over into other aspects of the economy. On the streets you can see the signs every where. Furniture stores closing, half empty shopping malls and fewer cars driving around with dealer plates. Do you remember that last car you saw with dealer plates? Now the governments are starting to feel the pinch. The property tax collected is starting to drop. Some of that is people just not paying it but now the counties are starting to drop the assessments as the property values drop. The property tax is not the only source of income for the government that has fallen. As the economy has worsened consumers are spending less. This has reduced the sales tax revenue collected. Combine all this and the government is facing the perfect storm. They have escalating costs due to inflation, higher energy (gas/fuel) costs and a real need to staff up in some areas but they have a huge reduction in revenue (14 to 16 billion short last I read). I'm sure you've heard by now that they are cutting back, laying off employees and raising "fees" (that's politcal talk for taxes).

What's the point of this post? I want to see if any readers are affected by this. Do you know anyone that has been affected. On Friday night we went out for our weekly sushi dinner. 2 couples sat at the table next to ours and the conversation was all about their fear of an impending layoff. The two gals were both new school teachers and both seemed sure they were going to get the pink slip any day. I have several friends in construction and even have one mortgage broker buddy. As you can imagine they aren't very optimistic at the moment.


Buttermonkey said...

Oh yes, we had two weeks of terror in this house. The husband decided to change careers and go into teaching last year. We thought he'd for sure be going back to his former firm this coming June due to the budget cuts. Good news though, I guess Riverside wants to hang on to their math teachers.

Anonymous said...

Not so good news for a lot of teachers, did you see how many teachers were laid off - 30,000. A friend was given a notice back in February that his contract with Colton School District would not be renewed next year. Then they were threatened that if they don't resign that if another employer called for a reference the school district would not give them a good referral. Then last week an article in Press Enterprise stated that Colton was proud NOT to be laying off any teachers. That's because they were already laid off in February. How outrageous is that? That school district is nothing but a bunch of liars and cheats. Be ready for a surge of crime on our streets as kids will be out there because there are no rooms in classrooms for them because of lack of teachers. And they claim that there is a shortage of teachers...HAHAHAHA...LIES...LIES...LIES

Papasmurf said...

My family has been hard hit by the economic downturn. My father has essentially retired. He was a cabinet maker and had a small industrial unit in Riverside. In early 07 he had 4 full time employees and 2 part timers working with him. By lat summer he laid off all but 2 and just before xmas he shut the doors and sold the equipment. My brother worked in one of the local boat manufacturers. He got laid off about 6 months ago and still has not found work. There are a lot of boat and RV manufacturers out here in the IE and all of them are hurting. Don't be surprised when you see these companies folding up. The cost of gas and the end of the housing ATMs is going to kill these guys.

Anonymous said...

My wife is a teacher and I work for the government. Needless to say we are worried. We both have about 10 years in which may save our asses, but we have many friends and coworkers that may not be so lucky.

Anonymous said...

Government workers?

Anonymous said...

My friend has lost her business because of the housing market. They have had no income for 1 month now and are truly distraught.

My cousin used to work for Countrywide. They're probably going to lose their home.

Another friend is going to lose everything in about 6 months.

Custom_kitz said...

I have a business importing car parts, mostly from Europe and Asia. Due to the falling dollar my costs for inventory have gone up about 30% in the last year. I can't raise my prices fast enough to keep up. My net yearly profit dropped 68% last year and this year looks worse so far. We work on slim margins so a small increase in costs results in a large degrease in profit. We've noticed a huge drop off in sales numbers in the last 6 months. Now we are increasing the prices on most items 35% to 50% to reflect our new costs. I am afraid that will kill what sales we still have left. You want to see ugly numbers

2006 net profit, Over $500k
2007 net proftit Under $200k
2008 looks ugly so far!

I am currently looking for wherehouse space in the IE to try and reduce some costs. I currently run my biz out of Tustin and space here is quite a bit more than in Colton or Fontana.