Home » Posts filed under National Econony
Posted by
Expert Gadget Reviewer on Thursday, 8 July 2010
Continuing a slow steady climb back, the East Bay economy continued to grow stronger, as the
unemployment rate for the region notched down to 11% in May, from 11.4% in April (California's rate was 11.9 %, and the national unemployment rate was 9.3%).
East Bay home sales increased, with a total of 8,264 new and resale homes and condos closing escrow in May. This represents an 18% increase from April, and an 11% increase from May of 2009. May
Median Home Sale Prices increased, up 10.8% versus April, and 20.1% versus May of 2009.
So what does all of this mean? From my vantage point, I see economic fundamentals continuing to incrementally improve, commercial office rental rates and sale prices are still at bargain levels, and these factors are slowly enticing businesses who have been "hibernating" during this long winter, to venture out and "test the waters". Ignore the doom and gloom from the media...time to get back to basics.
Posted by
Expert Gadget Reviewer on Wednesday, 16 June 2010
Think the best way to judge the health of the economy is by looking at the standard issue government reports? Guess again...
A recent
Bloomberg Businessweek article highlighted several alternative "metrics" for measuring the economy in "real-time" including;
- Diesel Fuel Sales from 7,000 truck stops across the country
- Train shipments of waste and scrap materials
- Electrical usage by commercial users
- Use of Temporary Workers
Courtesy of Ceridian-UCLA Pulse of Commerce Index
The
Pulse of Commerce Index (
PCI), which measures the diesel fuel sales referenced above was
up 3.1% in May from April. This is the largest monthly increase since February of 1999.
Posted by
Expert Gadget Reviewer on Thursday, 10 June 2010
I've had a couple of people mention to me that my attitude has bordered on pollyanaish, regarding the current and forecasted state of the regional and national economy. My response has been:
- The alternative is to whine and complain - which nobody listens to anyway.
- I've actually seen a slight but consistent upward trend in our business - so I tend to ignore the doom and gloom headlines, and focus on the information instead.
Long segue into my post today -
SF Chronicle's article
Upbeat outlook on the economy, details the most recent Bay Area Confidence Survey, which shows
63% of local CEOs forecasting that the regional economy will "Get Better".
The article interviewed 5 local executives (including me), and we all were "cautiously optimistic" regarding the immediate future. Feels good to have some company in the Pollyanna corner!
Posted by
Expert Gadget Reviewer on Tuesday, 8 June 2010
More reasons to ignore the headlines and look at the data:
The Conference Board Employment Trends Index (
ETI), rose in May for the ninth straight month. The index is up over 9% from the prior year.
“
The ongoing growth in the Employment Trends Index suggests that the disappointing uptick in payroll employment in May could just be a one-month blip, and that jobs will likely expand further in the next several months,” said Gad
Levanon, Associate Director, Macroeconomic Research at The Conference Board.
The
ETI aggregates eight labor-market indicators into a composite index. This process provides a clearer picture of the true underlying trends.
Anecdotally - I've spoken with two regional competitors, and three large regional installation companies, and they all indicate a small but sustained uptick in business.
Deep calming breath everyone...
Posted by
Expert Gadget Reviewer on Monday, 7 June 2010
Its easy to fall into a funk watching the "talking-heads" go on and on about how bad things are right now. The recent jobs release on Friday was supposed to show 513,000 additional jobs in May - it only came in at 431,000 - and all but 41,000 of those jobs are temporary census jobs.
Lets all agree these aren't great numbers, but from the reaction of the stock market (down over 3% on Friday), and the hue and cry of the "experts", one would believe we are again falling off a cliff.
Lets look through the numbers: the average workweek increased to 34.2 hours from 34.1 hour in April, and manufacturing workers also saw their workweek rise 0.3 hours to 40.5 hours. I can tell you from my own experience, that we have brought staff that had been working 24 to 32 hours a week back to a full 40 hours. This is a precursor to adding additional staff.
Lets all take a deep breath and remember that the media makes its money by creating exciting storylines - that may or may not bear a faint resemblance to actual reality. From my small corner of the economy, things are tracking slowly and surely upward (and last time I checked, the economy of Hungary has no real impact on my business).
Posted by
Expert Gadget Reviewer on Wednesday, 2 June 2010
The Institute for Supply Management's (
ISM) May 2010
Report on Business provided more positive economic data, indicating that the manufacturing sector grew for the 10th consecutive month.
The ISM's
Purchasing Manager's Index (
PMI) a widely watched economic indicator, came in at 59.7 which was
above the consensus estimate of 59.0, indicating that the manufacturing engine of the economy is still running strong.
The report sited strong positive comments from multiple industries. Click (
HERE) to see the complete report.
Posted by
Expert Gadget Reviewer on Tuesday, 1 June 2010
The Business and Institutional Furniture Manufacturers Association (
BIFMA), has revised their 2010 forecast (again), now looking for a -5.1% decline in shipments for the year, versus the -3.8% decline they revised back in March
(BIFMA Updates 2010 Office Furniture Forecast)
. BIFMA is now looking for 2010 production of $7.45 billion. For some historical perspective, BIFMA records go back to 1991, and
only 1991 had lower production numbers than the current forecast for 2010.
The silver lining in the cloudy forecast is that Office Furniture is mirroring Commercial Real Estate (
CRE Forecast - 2010 BAD - 2011 - Better...), which is looking for a strong rebound in 2011.
BIFMA is calling for a sharp +11.1% increase of Office Furniture production in 2011, to $8.27 billion. While any increase is welcome, a quick check of the historical data shows that
we have to go all the way back to 1993, to find lower production numbers than the current forecast for 2011.
Posted by
Expert Gadget Reviewer on Friday, 21 May 2010
The Architectural Billings Index (ABI) has risen for the third month in a row, increasing to 48.4 from 46.1 (any score above 50 indicates an increase in billings). The ABI is a leading indicator of construction activity, reflecting an approximate 9 to 12 month lag time between architecture billings and construction spending.
By geographic region, the scoring averages were:
- Northeast (51.0)
- Midwest (49.2)
- South (46.5)
- West (44.7)
Lunch yesterday with a prominent SF based commercial builder, who confirmed that they are extremely busy responding to mulitple RFP's.
The challenge that he (and all of us in the commercial interiors industry), face right now, is that tenants have multiple options to look at regarding space - and they therefore want to see budgets and renderings for
all of those options. Instead of creating budgets and plans for one or two options, we (the collective we) are being asked to create budgets and plans for three or four different options (all at no fee of course, and with no guarantee that we will get the job..)
Whining session over - it sure beats the alternative!
Posted by
Expert Gadget Reviewer on Wednesday, 19 May 2010
Contradictory economic news released today. Housing starts for April of 2010 (the number of privately owned new houses on which construction has been started) rose to an anuual rate of 672,000 last month (41% above April of 2009), the highest level since October of 2008. Good News!
At the same time, Building Permits (seen as a leading indicator for homebuilding), fell 12% to an annual run rate of 606,000. Not Good News...
At the same time, U.S. consumers are keeping up with their debt, as delinquency rates on mortgages, home equity loans and credit card bills fell for the third month in a row. Good News!
From this small corner of the economy, things are still trending upward, but all of the (bad) news coming in from Europe, combined with the recent stock market volatility, definetely makes things feel a bit shaaaaky...
More about → Mixed Economic News
Posted by
Expert Gadget Reviewer on Thursday, 13 May 2010
The
Contra Costa Times reported this afternoon that
Chevron Corporation is cutting 925 jobs in the East Bay. 620 positions will be eliminated from its San Ramon California head quarters, and 305 jobs from its Concord California facility. The cuts are part of a larger effort to eliminate 2,000 jobs worldwide.
Chevron Corporation Facility in Concord Ca.
The cuts represent 18% of the 3,500 employees in San Ramon, and 16% of the 1,900 employees in Concord.
This is very local for me, as the Concord Chevron facility is about 1/2 mile from my office. Not a whole lot more to say about this, other than for an area still struggling to recover from the residential real estate crash, this isn't exactly helping things...
Posted by
Expert Gadget Reviewer on Tuesday, 11 May 2010
Headlines from China this evening (courtesy of Bloomberg.com):
- Retail sales grew 18.5% in April
- Property prices jumped 12.8%
- The Central Bank announced new lending of $113 Billion - exceeding all expectations
Can we all agree that we have seen this movie before, and it
doesn't have a happy ending. Overheated economy grows and grows - until it stops growing - and the house of cards tumbles.
Why what happens in China is relevant to an East Bay Office Furniture dealer (amongst others):- Imports: A large percentage of our day-to-day furniture, and a healthy percentage of components used by our high-end furniture manufacturers, are imported or directly sourced from China. Low costs have allowed us to remain highly competitive in a brutal market. A disruption to the supply chain would be very ugly (and my industry is just one of many in the same boat).
- Exports: Products manufactured in California, and leaving via the Port of Oakland for China and the Far East are currently helping to lead the East Bay (and California) out of the recession.
- U.S. Economy: Mainland China is the largest holder of U.S. debt. The old saying goes if China sneezes, the U.S. may catch pneumonia.
I'm not a gloom and doom guy, but if China goes through anything similar to what the U.S. has endured over the past two years, things could get very interesting very quickly.
Posted by
Expert Gadget Reviewer on Monday, 10 May 2010
Forget about the Dow dropping 1,000 points in 7 minutes, because for the vast majority of us, it doesn't make a bit difference in our everyday lives. The
most important business news that came out on Friday was the
monthly jobs report,
which blew away estimates with 290,000 new jobs in the month of April. April's numbers indicate that employment is growing at the fastest pace in four years, with strong growth in manufacturing, professional and business services, health care, and leisure and hospitality. Federal Government employment also grew (showing continued hiring for the census),
BUT, census hiring was a secondary factor to the overall private sector job growth.
Bottom line, it appears that the economy is truly ramping up, and it is time to start thinking about how to operate in the
post-recession economic environment.
Posted by
Expert Gadget Reviewer on Friday, 7 May 2010
Excerpts from the latest
East Bay Q2 Economic Outlook created for the
East Bay Economic Development Alliance, and authored by Jerry
Nickelsburg, Senior Economist at the UCLA Anderson Forecast.
Key sectors in the East Bay to watch as the recovery unfolds:
- International trade
- Domestic distribution
- Manufacturing
- Health care
- Government
- Technology
The report went onto say that the recovery will be
export and
technology led, and that the East Bay is well positioned to grow rapidly.
The report also touches on the
Greening of California. Specifically the report estimates
that current Green industries employ between 65,000 to 125,000 people in California.
However, for Green to pull California out, two things need to take place:
- Demand conditions need to be right for an explosion of green production
- Innovation has to drive the relative price down and this innovation / creation has to occur in California
A quick read, and well worth the time. Click (
HERE) to read the complete
East Bay Q2 Economic Outlook and click (
HERE) to read
Jobs, Green Jobs and Recovery.
Posted by
Expert Gadget Reviewer on Thursday, 6 May 2010
I'm not one to recycle my posts, but I wanted to check back in on the
AP Economic Stress Index, to see whether things had improved at all. As a refresher, the Stress Index; "
measures the relative impact of the recession and its recovery by integrating the cumulative effect of... unemployment, foreclosure, and bankruptcy." What is slick about the index is that it measures
every county in the U.S.Click Here For the AP Stress Index
In this update I found that my 'home' county, Contra Costa California, has actually gotten worse over the past 6 months. In my October 2009 post, Contra Costa registered 16.31 on the stress index (up significantly from the October 2007 reading of 7.44). For the March 2010 reading, Contra Costa's stress level has increased to 17.06. Interesting, because all signs point to a recovery, but it evidently hasn't really started yet.. The index has a "slider", which allows one to adjust the date from October 2007 to March 2010. Pretty amazing to watch the color (stress) change on a nationwide basis.
Posted by
Expert Gadget Reviewer on Tuesday, 4 May 2010
"
Credit can be manufactured-not so the willingness to borrow, which rests on faith in the future". This quote comes from page 275 of
The End of Wall Street, a masterpiece chronicling the recent financial meltdown written by
Roger Lowenstein. This key insight speaks to one of the nagging issues for those of us in the "durable goods" sector, specifically it doesn't matter how cheap money is, if people are too afraid to spend it.
Which leads me to the subject of
today's posting -
The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing, rose 4 percent in March,
the first year-on-year gain since October 2007. The report followed that while accounts delinquent 180 days or more rose to a 5 year high,
accounts that were 30 days or more behind plunged by the most in 11 years. This indicates a declining trend in delinquencies.
It appears that people are beginning to have faith in the future again...
Posted by
Expert Gadget Reviewer on Wednesday, 28 April 2010
More signs that the long awaited economic recovery is picking up speed - April's Consumer Confidence Survey, conducted monthly by
The Conference Board, rose to 57.9, up more than 5 points from March's 52.3. April's reading is the highest Consumer Confidence level since September of 2008 (61.4).
Chart Courtesy of The Conference Board
Overall the survey recorded positive appraisals of current business and labor market conditions, as well as a positive outlook about the future. The percentage of consumers expecting business conditions will improve over the next six months increased to 19.8 percent from 18.0 percent, while those expecting conditions will worsen declined to 12.6 percent from 13.6 percent.
The survey is based on a representative sample of 5,000 households.
Posted by
Expert Gadget Reviewer on Thursday, 22 April 2010
The headlines say it all "
ABI Sees Highest Reading Since March 2008"... The American Institute of Architects (
AIA), reported that the ABI was up more than two points in February to 44.8, and more than a point in March, coming in at 46.1. Although
any score less than 50 indicates a decrease in billings, March 2010 is the highest score recorded since March of 2008. In even brighter news, the New Projects inquiry index was 58.5.
“This is certainly an encouraging sign that we could be moving closer to a recovery phase, even though we continue to hear about mixed conditions across the country,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. Mixed is a fair assessment when looking at the scores on a regional basis:
- Midwest - 50.5
- Northeast - 47.0
- West - 46.0
- South - 44.4
All else being equal, this news is still good. What a difference a couple of months can make... Reference the 3/1/2010 post:
Architectural Billing Index (ABI) is ugly... which highlighted the fact that the ABI for December and January was in the tank.
The ABI is a leading economic indicator of construction activity, and reflects the approximate nine to twelve month lag time between architecture billings and construction spending.
Posted by
Expert Gadget Reviewer on Tuesday, 20 April 2010
Some good news - some bad news...
Good News: The Conference Board's
Leading Economic Indicators show that the recovery is in full swing, led by improvements in financial and labor market indicators. Check out the V shape:
Bad News: The FDIC moved quickly on Friday closing and then immediately selling
Innovative Bank of Oakland to Center Bank of Los Angeles, and
Tamalpais Bank of San Rafael to Union Bank of San Francisco. While these closures are not shocking (the media has been rumbling for sometime), they reinforce the stress that small
financial institutions (and businesses) continue to endure.
Posted by
Expert Gadget Reviewer on Friday, 16 April 2010
I spent the past two days in meetings with one of our manufacturing partners, and was
pleasantly surprised at the overall outlook from both the manufacturer, as well as the outlook from my fellow office furniture dealers.
The general highlights were as follows:
- Large Business: Corporate America is in the process of re-starting their capital projects -with projects formally on hold now being reactivated, and a positive GROWTH forecast for the remainder of 2010.
- Small Business: Small business is still staying on the sidelines, with order flow remaining slow and an overall outlook of uncertainty.
- Pricing: Look for price increases coming within the next 6-12 months, driven by sharp increases in commodity prices. Some of the increases that have taken place over the last 3 months are staggering, and if the trend continues, prices will have no where to go but up. If you are contemplating a project, move now because inflation is coming.
This is the first time in nearly 36 months that I have come out of an industry meeting where the consensus sentiment outlook was positive.
Posted by
Expert Gadget Reviewer on Wednesday, 14 April 2010
It certainly appears that the macro U.S. economy is in recovery mode. Bloomberg news reported today:
"Inventories in the U.S. rose 0.5 percent in February, the most since July 2008, as companies boosted orders to try to keep up with sales". The report went onto state: "Efforts to stabilize inventories contributed 3.8 percentage points to the U.S. economy’s 5.6 percent annual rate of expansion in the fourth quarter of 2009. Last quarter’s growth rate was the strongest in six years."
Great -- unfortunately when I look at my backlog and sales forecast I don't see it yet. When I speak to an office furniture colleague in Florida, he echoes my experiences of declining sales and gross margins, with an uncertain sales funnel. When I speak to a local east bay commercial broker, he tells me things are as slow as they have been in months...
This is what golfers call "grinding"...
