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Tim Myers: Local economic indicators

Myers' Musings

Posted: March 22, 2009 12:58 a.m.
Updated: March 22, 2009 4:55 a.m.
 
The major media treats us to a plethora of so-called "headline" economic indicators on a daily basis.

Anchors breathlessly report the unemployment rate, the number of jobs lost and the daily movements in the Dow Jones Industrial Average ("Dow").

Since this latest difficulty involved the bursting of a real estate bubble, we now also learn periodically about rates of home foreclosure courtesy of RealtyTrac, along with ever-declining average home prices thanks to the Case-Schiller Home Price Index.

The purveyors of these headline indicators also compute some on a very granular and local basis. For example, various outlets report a local unemployment rate somewhere between 6 percent and 7 percent depending on the source or the day.

Realtor groups also help by touting - or now reverse-touting - the somewhat inaccurate median home price, which during the course of our difficulties declined from just over $600,000 to $400,000.

But how should we feel about these "headline" indicators?

Right now, based on the savings rate and impacts on consumer spending, we feel pretty badly all around the country. Car sales in all lines fell to catastrophic levels, so much so that our family, which needs to purchase a new vehicle, feels extremely afraid to go to a dealership, fearful that armies of zombie-like salespeople may overrun and eat us.

We even see strident examples of the so-called "substitution" effect, in which people losing confidence go to cheaper alternatives for necessities; hence the short-term and recent success of Wal-Mart and McDonalds against the declining fortunes of Neiman Marcus, Macy's, Nordstrom and full-service restaurants.

But looking at even the local data one can possess two minds: First, one can feel negative about the local unemployment rate, since it doubled in the past year. But one can feel good the local unemployment rate stands 350 basis points below the state average of 10.5 percent.

Similarly with housing prices: The fact they declined locally by a third would naturally bum one out, particularly if one purchased a home at the peak of the market. However, if one owned one's home long term, one might still feel good the prices stand at double where they stood 10 years ago.

I prefer to develop my own sense of local indicators. My personal favorite? Traffic volumes through the Newhall Pass on Interstate 5 and Highway 14.

Before the bursting bubble, one could count on slowdowns both ways many hours of the day. Now my personal unscientific observations indicate one can blast through the pass at freeway speeds pretty much any time before 7 a.m. and any time after 6 p.m. - something believed unthinkable and unattainable even three months ago.

Less people working truly does translate into less cars on the roads during the peak times, and less economic activity noticeably cuts down over the road truck traffic.

But one thing I cannot quite figure out: gym attendance. I generally hit the gym three to five days a week for heavy cardio and other exercise, and one can see predictable attendance patterns.

The gym suddenly gets crowded right after the New Year's holiday with people seeking to fulfill resolutions for better health and weight loss, quickly falling off about the third week of January.

This year for some reason - at least in my corner of the world - gym attendance began to steadily surge around the third week of February during times when people seek exercise before the normal work day.

Are people working off the stress of the economy through exercise? (Nothing relieves stress better, in my experience.) Or do they feel that skinny, fit and energetic people fall to the bottom of the reduction-in-force list?

On March 13, I saw particularly poor local economic indicators. I literally blew through the Newhall pass at 6 p.m. on a Friday and met my family at a favorite restaurant in town. At the restaurant, where one generally must wait for an hour for Friday seating, we walked right in.

Could things really deteriorate this much?

But one hour later, I felt better. Exiting the restaurant with our grandson, I found the lobby full and nearly 20 people milling outside awaiting seating. Cars cruising around the parking lot were waiting like vultures for my parking space.

In the next month, we will not put off our new car purchase any longer. And I will "happily" report to all when the Newhall Pass again clogs up.

Tim Myers is a Valencia resident. His column represents his own views and not necessarily those of The Signal.

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