Friday, November 21, 2008

IE unemployment hits 9.5%


Unemployment increased to 9.5 percent in Inland Southern California in October from 9.1 percent the previous month and 6.3 percent a year ago, the state Employment Development Department reported today.

One in 10 workers in Riverside County are now unemployed, and there are 22,000 fewer payroll jobs (1.7 percent) in the two counties than there were a year ago. Unemployment in San Bernardino County is estimated at 9 percent.

Yes, that is sure to help the housing market.....not.

From the LA Times

Surge in unemployment puts California's Inland Empire in tailspin.

If the Inland Empire is one of the birthplaces of the current recession, it is also at the forefront of the nation's growing pain over joblessness -- with the highest unemployment rate of any large metropolitan area in the country.

State numbers released Friday show the Riverside, San Bernardino and Ontario area is now suffering from its highest unemployment rate in 13 years at 9.5% in October -- 3 percentage points higher than the national rate and 1.3 points higher than the state's rate of 8.2%.

Ignited by the collapse of the local housing market, which decimated the construction and lending industries, the wave of unemployment has trickled into almost every area, including retail, manufacturing and local government.

Meanwhile, the percentage of people unemployed in the Inland Empire has more than doubled from a year ago, and some experts predict the situation will worsen before it improves.

"It's a perfect storm," said Brad Kemp, director of regional research for Beacon Economics, which recently conducted the second annual Inland Empire Economic Forecast Conference.

"It was one of the fastest-growing places in America," he said. "And when you have that kind of growth, you have the potential for loss."

The downturn has all but erased the glow of optimism the Inland Empire enjoyed only two years ago, when newly minted mansions and an array of upscale retailers fashioned parts of the region into a more affordable Orange County in the making.

In many cases, those developments are now symbols of the decline, from the sparsely populated outdoor malls to the rows of repossessed homes -- victims of housing price plunges of 35% in Riverside and 37% in San Bernardino in the last year.

All over, there are signs of reversed prosperity.

Ontario International Airport went from setting growth records to losing about a third of its airline traffic in the last year. To curtail costs, buildings and a parking lot were closed. And at night, one of its unused runways shuts off its lights.

Riverside County animal control officers are reporting an alarming surge in abandoned horses, a consequence of home foreclosures and the rising cost of feeding the animals, they suspect.

And San Bernardino-based Stater Bros., the chief grocer in the Inland Empire with 91 supermarkets, opened only half the number of stores it planned to unveil this year because of the slowing economy.

"We were selling a lot more Haagen-Dazs" during the boom, Chief Executive Jack Brown said. "Frankly, people are now buying more [no-frills] private label."

John Husing, who heads Economics & Politics Inc., an economic research firm specializing in the Inland Empire, says 2008 will be the first year the region has failed to increase its job base in the 44 years he's studied the area.

Even during the mass aerospace industry layoffs in the early 1990s, the Inland Empire was able to grow, mainly because the coastal counties lacked available land, he said.

Despite gains in international trade, warehousing and office space in recent years, the Inland Empire will not bounce back until its primary asset -- housing -- returns in value, Husing said.

The question, of course, is when that will happen. But Husing said the one positive of the epic and swift devaluation of residential property is that it will reach the bottom quicker.

"This is an interruption in the economy caused by a housing market detached from reality," said Husing, who traced 95% of the Inland Empire's lost jobs to the residential construction industry, from building material manufacturers to escrow agents to furniture sellers.

Kemp of Beacon Economics expects the unemployment rate in the Inland Empire to grow as high as 12.4% before coming down in the later part of 2010, largely because he believes consumer confidence could improve, leading to an increase in demand for the region's available space.

"If you look beyond the short-term losses, the Inland Empire is poised to see not only normal growth but accelerated growth," Kemp said. "It's the path for expansion in California."

But with the immediate outlook crumbling, the whiplash of change has jarred residents and officials who worry their communities are teetering on despair.

"You see less people at the restaurants and carwashes," said Riverside Mayor Ronald Loveridge. "There is real pain almost everywhere you turn. My daughter is a counselor at Riverside Community College and she told me she met a [student] whose house was up for foreclosure. Her last resort would have been to move in with her parents, but their home is up for foreclosure. All over there are statements of personal tragedy."

8 comments:

Leti said...

I do NOT see fewer people at restaurants and frankly I am surprised. BUT there is a long way to go until the bottom as the layoffs are just beginning. The government and retail layoffs coming next year will be staggering.

Unfortunately, the local government entities are in denial and will continue to be until it is too late. The IE government/political structure is tied to and funded by real estate.

Try cutting the budgets by 40-50%. That is where this is going.

golfer_X said...

You don't? Most of the restaurants I got to are noticeably down. I used to wait all the time and now I almost never have a wait and if I do it's 15 minutes. Like last Saturday evening I went to the Riverside Market Broiler. Last year the wait would have been an hour easy, it was 10 minutes and when we were done there were empty tables and no wait. Wed evening we were at Citrus City Grill and it was empty. Tonight we are off for Sushi and I expect it will also be slow because lately it has been very slow when we go. We go out two or three times a week so for us it is very noticeable.

Leti said...

First,

GREAT BLOG! I've been reading for several months but never posted before. Keep up the great work.

We must be perceiving the same things a bit differently. I was at the Riv Plaza last weekend also (although not eating) and it seemed far from empty. Breakfasts out on the weekend still seem full to me. And I've noticed no drop in the lines at the eateries downtown at lunch. For all the talk of "pain" and 10% unemployment, it doesn't feel anywhere close to the 70s or early 80s yet.

I think I'm a little more low end (how sad is that?) or maybe we are just out of phase. It'll be interesting to see the Mission Grove IHOP on Sunday AM in about a year.

golfer_X said...

I just got back from dinner. 2 people at the sushi bar and 4 out of 11 tables had customers. That's pretty sad for a Saturday evening. This place used to be packed on weekends.

Martin Burtin said...

Speak'n of sushi, I found a money saver. When the wifey yearns for sushi, sometimes I can talk her into going to Wood Ranch. They often have seared ahi tuna. They serve a really big piece for reasonable $ and you can get it as raw as you like. The freak'n sushi bar would cut that chunk up and serve 10 people with it. OK, you don't get any other sushi items outa Wood Ranch, but then again, you do get the option to share and make your own surf n turf. Good luck with THAT, at your average sushi bar.

Kevin said...

I think the customer thing depends on the type of restaurant and the meal. Lunch really seems about the same everywhere - I suppose 90% of working people are still going to get lunch where they always have as they have a routine they need to follow to stay within their lunch break/range. However, dinner is much more flexible. So the lower-end and average restaurants and restaurants are probably doing fine. Whenever I go to Red Robin, iHop, most Mexican good joints - they are still buzzing with business especially near weekends when most people go out. However when you move upscale a little more - like Market Broiler, CPK, Citrus Grille, etc - more people cannot find the funds to stretch their budget for these joints, so they seem emptier more often now. However, at the high end places like the Mission Inn, Marios, etc, they remain as busy and in-style as always because 95% of the people who probably eat there are not nearly as affected by the recent changes in the economy as the rest of us.

Sellin @ Da Drop said...

It's all about the credit cards. More and more peeps using the cards to eat and shop. Even sadder..pay the mortgage. Their thought it the market will recover in 2 years and all will be better. Once their home goes up in value they can roll it into the next mortgage.

golfer_X said...

I woulnd't say the high end like Marios and Duanes (Mission Inn) are as busy as ever. I go to one of them usually once a month at least and during the week for the last year they have been very very slow. I don't go on weekends so I cannot comment on the traffic but during the week they seem to be easily down 50% from 2 years ago (at least 50%!). Marios seems to be doing a little better than most of the other high end joints. Napa 29 folded up. I can't see Omakase or Trilussa staying open very long either. Those were both empty the last time we ate there. It's a very uncomfortable feeling being the only customers in a place.

I was in F&B management 15 years ago and I can tell you that you don't keep the doors of a restaurant open with a busy Friday and Saturday night. Those places need to be busy all the time or they are bleeding red ink. I think we will see a serious thinning of restaurants in 2009.