The current unemployment crisis will wreak havoc on any hope for a housing recovery. When people have no job, they can’t pay their mortgage or their rent. Just surviving with food and water will be a challenge for many Americans over the next few years.
Soon we will see many more reports of increasing homelessness, crime and food shortages as a result of what is now becoming an unemployment crisis that may resemble what was seen during the first Great Depression. This crisis will make sure that California does not have any type of real estate recovery any time soon.
To think any different must mean you are getting your data from a Realtor!
SAN FRANCISCO – California’s unemployment rate climbed to 11.9 percent in July, the highest number in modern record-keeping.
That’s an increase from 11.6 percent in June and considerably higher than the jobless rate of 7.3 percent a year ago.
The U.S. Department of Labor also reported Friday that 87,000 Californians lost jobs last month.
The reported unemployment statistic (the one everybody pays attention to) uses a method that started in 1994. In that method, anyone who has exhausted UI benefits and has gotten so discouraged they stopped looking for work is discounted altogether!
When we use the old methodology (the one used in the 1930′s) that simply considers: Are you eligible to work, and are you working yes/no, we find that unemployment by that truer measure is over 18%. And at the height of the Great Depression, it was 24%.
So we are very close, and indeed in some cities in the US, we are already in Great Depression territory on unemployment. Perhaps the biggest untold story of our day is just how huge the unemployment crisis really is. The media is barely touching it, doesn’t seem to want to go there at all.