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Subject:  Re: How's Your Local Economy? Date:  2/17/2009  8:19 PM
Author:  snafflekid Number:  910 of 23017

I live in San Jose, CA. Ground zero of Silicon Valley. The area is fairly accustomed to boom-bust cycles of the high tech industry. When it comes to employment, it seems Silicon Valley hiring goes through a once-per-decade cycle where finding a job is ridiculously hard or ridiculously easy. We've been lucky to have two of those cycles in the '00s *smirk*

California taxes will go up or government services will be drastically cut in order to balance the budget, when the legislature stops arguging and finger pointing over the squandered resources. Neither scenario is good for the economy.

I have had to take three weeks of forced vacation this quarter, likely three more weeks await me next quarter, and I had to take four weeks forced vacation between Oct '08 and Jan '09. My vacation time is nearly used up already. We have had some professional staff layoffs and many manufacturing jobs lost. Most semiconductor companies are idling their manufacturing which means the recession is hitting the skilled workers hardest. Semiconductor orders have almost stopped since November.

The decline in real estate differentiates this recession from the dot-bomb recession. Back then, people made and lost fortunes in IPO stocks and employee stock options. People felt rich from their paper gains, then lost it all in 2000. Real estate throughout the dot-bomb period still held up in value, and grew. No one was able to spend paper gains in unvested stock options, but unlike the dot-bomb period, people this time were able to tap home equity loans and spend their paper gains on real estate.

The Silicon Valley real estate market has declined, but it is the ex-urbs that are really hurting. During the boom times, people were willing to drive two hour commutes to their spacious, ever-appreciating homes in far reaching communities. When gas prices reached $4 a gallon the equation no longer made those houses affordable and real estate values collapsed. My condo in downtown San Jose has lost 20% from it's peak value, however some of those bedroom community houses are down 60%. In my 100 unit condo there is one foreclosure, and no desperate sales, so real estate in the commute-free locations around the San Francisco Bay Area is moderately safe (so far.)

Restaurants are still busy (I am getting a lot more restaurant coupons now), malls are still busy, rush hour is still busy. This baffles me.

The other shoe has yet to drop here, it seems.
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