USA Today is reporting that "dozens of sawmills around the country are laying off workers, shutting down temporarily or trimming hours, as a steep drop in home building hits demand and prices." (Thanks to the Housing Bubble Blog for the link.
This, ladies and gentlemen, is your housing bust spreading into the wider economy. How far it will go and whether it will tip the U.S. into recession is as yet unknown, but this latest tidbit (along with the news that a California mortgage lender has shut down operations completely, laying off 800 employees) is another reminder that focusing simply on what happens to home prices or sales isn't sufficient to gauge the true impact of the end of the boom.
Every time I write about the housing bust, a reader castigates me for being too doomy gloomy, and reminds me that, hey, lower prices are great for people who have been priced out of the market by speculators looking to flip their way to riches. That's a valid point: There is a definitely a silver lining in the end of the bubble.
But not if you happen to be in the construction business, or in any of the other downstream industries that have benefited from the long boom (and that includes, I will reiterate, the entire global economy that has been living off the largesse of American consumers using their home equity as an unending fountain of ready cash); for them the silver gets tarnished pretty quickly. What good is being able to buy a new home if you lose your job right after completing escrow?
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