California Could Be Hit Hardest
According to this article, when the housing bubble pops, busts, deflates, hisses, slows, decelerates, whatever, choose your favorite adjective, it will almost certainly bring down California's economy and will likely not leave the US economy as a whole unscathed if for no other reason than the "RE broker bubble" will pop along with it.
Some choice quotes:
Some choice quotes:
"In 2004, the gross domestic product of the United States was nearly $12 trillion. But one state contributes far more than the 49 others."
"At 13.3 percent of the national GDP, California's share is nearly double that of New York, the nation's second-largest economy."
"That's why Alan Greenspan cannot relent in his quest to quash the speculative fervor in "frothy" housing markets."
"The whole darn state of California could qualify as the frothiest bubble in the land and, by the way, harm the U.S. economy as a whole when it blows."
""As home prices decelerate, consumption that has been financed through mortgage-equity withdrawal is likely to decline," Mr. Hatzius wrote. "As spending slows, the labor market is likely to weaken as well.""
"Northern Trust Co.'s Asha Bangalore estimated recently that 43 percent of the jobs created since 2001 have stemmed from housing. It stands to reason that a slowdown in housing will just as easily take away what it has so generously given to the workforce."
"Mr. Hatzius figures that the nation as a whole could lose upward of 1.3 million jobs, or 1 percent of the pie, in a housing-bubble recession. And California would get hit twice as hard, losing some 2 percent of its jobs."
"These estimates assume that employment in housing-related industries falls back to 1990 levels, when housing employed 4.4 percent of the U.S. population and 5.3 percent of California's. Today, it employs a record 5.2 percent of the nation as a whole and 6.3 percent of California's population."
""These estimates probably still understate the total impact of a housing downturn. First, our employment numbers do not include related areas such as banking, furniture or building materials manufacturing. Second, there likely will be an indirect hit from weaker consumer spending.""