A Sign of Things (unemployment) to Come?

December 26, 2009

The Pink Flamingo was recently talking to someone whose name is being withheld to protect her guilt (for voting for Obama). This person has owned and operated a small business for nearly two years, employing roughly 28 people. Her sales tax for this month is around $8000. The direct debit from her business account is on the 20th. The state where this lives decided to withdraw the funds on the 28th since the 20th falls on a Sunday and is now $5000 overdrawn. If the debit had taken place on Monday the way these things normally work my source would have had the money in the bank.

My source is facing a $30,000 debit for social security, employment taxes, medicare withdrawals, etc. That comes along in a week or two. A person was injured on the job the other day. Because this person is not happy with the situation at work (having been chastised several times) we all know what sort of a law-suit is coming.

The person I know was thrilled about going into business. Now the comment is, “No one in their right mind would own a business that employees people. It just isn’t worth it.”

I suggested the next time this person goes to the polls they vote straight Republican.

An “source” suggested I include the following information in a post. Regular Pink Flamingo readers know I do not spend a lot of time on economic topics simply because I am not an “economy” person. This said, even I know when things do not look good.

According to my source – and I am quoting here:

“…Unemployment in construction and engineering is 30%–these people don’t apply for unemployment insurance because they pick up odd jobs and may be working part-time. Construction union dues are not flowing into their coffers—rather they are hemorrhaging money because many of the benefits continue when a member is out of work….”

This is information we are not hearing on the news. At my source’s suggestion, I dug a little deeper and found that we do indeed have a problem – or rather Obama has a problem – a huge problem.

“...Nonbuilding construction, at $131.3 billion (annual rate) in November, dropped 7% from October. The most pronounced decline for the month was electric utility construction, which retreated 37% after October’s heightened amount. Even with this downturn, the electric utility category did have several large projects entered as November starts, including a $700 million natural gas power plant in New York and a $400 million wind farm in Texas. The public works categories in November showed a mixed performance. Highway construction settled back 11% after its 12% gain in October, and decreased contracting was also reported for water supply systems, down 8%; and miscellaneous public works (site work and mass transit), down 26%. In contrast, river/harbor development jumped 46% in November, with much of the lift coming from more hurricane reconstruction efforts in the New Orleans LA area. Bridge construction climbed 33%, helped by large projects in Washington DC ($156 million), New York ($140 million), and California ($106 million). Sewer construction grew 14%, boosted by a $192 million waste treatment facility in New York.

During the January-November period of 2009, nonbuilding construction was 12% below the same period a year ago. Electric utility construction dropped 47% from its record pace in 2008. Year-to-date declines were also shown by sewer construction, down 22%; water supply systems, down 20%; and miscellaneous public works, down 8%. Year-to-date increases were reported for highways, up 5%; and bridges, up 8%; with much of the upward push coming from the federal stimulus funding. River/harbor development work advanced 27% year-to-date.

Residential building in November came in at $127.6 billion (annual rate), essentially unchanged from October. Single family housing edged up 1% after slipping 2% in October, as it regained the very gradual upward trend that’s been present since April. The November pace for single family housing was still 11% below the monthly average for 2008. Multifamily housing in November dropped 6%, falling back after a brief upturn in October. The largest multifamily project entered as a November start was a $45 million townhouse complex in Stafford VA, considerably smaller than the large projects in excess of $100 million that typically reached groundbreaking in recent years. The November pace for multifamily housing was 52% below its monthly average for 2008.

During the first eleven months of 2009, residential building was 34% less than the same period a year ago. Single family housing fell 26% year-to-date, as the result of this performance by geography – the South Central, down 18%; the Midwest, down 23%; the West, down 28%; the Northeast, down 29%; and the South Atlantic, down 33%. Multifamily housing on a year-to-date basis plunged 58%, as the result of this performance by geography – the Midwest, down 27%; the South Central, down 52%; the Northeast, down 57%; the South Atlantic, down 65%; and the West, down 70%.

The 28% decline for total construction starts at the national level during 2009’s January-November period was reflected in similar declines for total construction at the five region level. The year-to-date reductions for total construction by region were as follows – the South Central, down 26%; the Northeast, down 27%; the Midwest and West, each down 28%; and the South Atlantic, down 29%….”