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The Humboldt County
Economy in 2008
By Erick Eschker
Presented to Eureka Rotary Club
March 31, 2008
The Humboldt County
Economy in 2008
By Erick Eschker
Department of Economics
Humboldt State University
Humboldt Economic Index
www.humboldt.edu/~indexhum
Humboldt Economic Index
Sponsors
Six Sectors and Composite
•
•
•
•
•
•
•
Energy
Lumber-based manufacturing
Employment
Hospitality
Retail
Housing
Composite
Is Humboldt County in a
Recession?
• No decline in Retail or Employment
• Unemployment Rate up
• Overall Activity down due to:
–Lumber Manufacturing
–Housing sales
Retail
• Based on our own survey (we’re always looking
for more data providers!)
Retail Index
(seasonally adjusted)
180
170
160
150
140
130
20
08
20
07
120
The seasonally adjusted Retail Index is represented by the blue area in the graph
above. The red line shows the four month moving average which attempts to
demonstrate the overall trend in the data with less monthly volatility.
Employment
• Very little change in overall employment
• Unemployment rate has risen over the year
Housing
Composite
• Decline since May
• Housing and Lumber-Manufacturing the main reason
Forecast
• Two local Leading Indicators show slowing
Concerns for Humboldt County
• Credit Crunch
– “We are facing the most serious combination of
macroeconomic and financial stresses that the United
States has faced in at least a generation, and
possibly much longer than that.” Larry Summers,
Economist, ex-Harvard President (March, 2008)
• State Budget Cuts
– $16bil deficit
– Humboldt County has higher percent government
workers than most counties
Concerns for Humboldt County
• Commercial Real Estate
– “Banks with CRE concentrations should take
steps to strengthen their overall riskmanagement framework and maintain strong
capital and loan loss allowances.” FDIC
Chairman Sheila C. Bair
– This is potential problem for small/regional or
California lenders
– FDIC to hire 60% more staff for anticipated
bank failures
Concerns for Humboldt County
• Residential Housing
–New Housing & Real Estate Index
Webpage
Annual Appreciation of Inflation-adjusted Median House Price,
Humboldt County
40%
30%
10%
0%
-10%
Year
Source: Humboldt Economic Index
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
-20%
1990
Percent
20%
Housing
What will happen to sales and prices
over the next few years?
• More difficult to obtain a mortgage today
– Stated income, down payments, teaser rates
• Continued drop in Demand for housing
– Prices and sales will fall
• Humboldt County appreciation has been
similar to Central Valley, Southern
California, and Northern California
Four-Quarter House Price Appreciation, OFEHO
30%
Redding
Sacramento
San Francisco
San Jose
Santa Rosa
10%
0%
-10%
Year
2007
2006
2005
2004
2003
-20%
2002
Appreciation
20%
Year
Jan-08
Sep-07
May-07
Jan-07
Sep-06
May-06
Jan-06
Sep-05
May-05
Jan-05
Sep-04
May-04
Jan-04
Sep-03
May-03
Jan-03
Sep-02
May-02
Jan-02
Appreciation
Twelve-Month House Price Appreciation, Case-Shiller
40%
30%
20%
10%
Los Angeles
San Diego
San Francisco
0%
-10%
-20%
Annual Appreciation of Median House Price and
12 month Moving Average, Humboldt County
40%
30%
10%
0%
-10%
Year
Source: Humboldt Economic Index
2008
2007
2006
2005
2004
2003
-20%
2002
Percent
20%
What are the Forecasts?
• Case-Shiller Housing futures
contracts predict price drops of
23%, 18%, and 12% in Los
Angeles, San Diego, and San
Francisco over the next 4 ½ years
Foreclosures
• Foreclosures in Humboldt County have
gone from record lows to record highs
The Humboldt County
Economy in 2008
By Erick Eschker
Department of Economics
Humboldt State University
Humboldt Economic Index
www.humboldt.edu/~indexhum