What’s next for the economy? Look at California

[moh malekpour]

http://www.financialweek.com/apps/pbcs.dll/article?AID=/20080519/REG/533900601/1036

Tough times in world's seventh largest ecomomy: consumer spending down, unemployment up, municipalities going bust

As it did when the housing bubble began to burst, California is leading the way in the next leg: a consumer bust.

Squeezed by rising unemployment, inflation in food and energy costs and plunging house prices, Californians are cutting back on spending. Besides causing woes for state and local government, this is giving California’s economy another knock and makes further job losses, home repossessions and banking problems more likely.

The figures are pretty bad. The median home price has fallen by 29% in the year to March, according to the California Association of Realtors, and repossessions are surging. Unemployment has risen by 24%, to 6.2%, in the same period.

 

[Lloyd Bonafide]

One good thing is, when I go into my local Lowe's or Home Depot, there is no waiting in line, because there are very few customers - a real ghost town.

http://online.wsj.com/article/SB121119597411003301.html

Lowe's Cos. reported an 18% drop in fiscal first-quarter net income and lowered its outlook for the year, sending its shares lower.

For the quarter ended May 2, the home-improvement retailer posted net income of $607 million, or 41 cents a share, down from $739 million, or 48 cents a share, a year earlier. Net sales dipped 1.3% to $12 billion, with same-store sales falling 8.4%.