Wednesday, April 22, 2009
Recession stories: local businesses hunker down and prepare for a long, hot, stark summer
Had the opportunity over the past week to spend some time catching up with local business leaders, first at a charity golf tournament and later at a couple of fund raisers. If there is one common theme it is this: nobody sees an end to this recession and everyone is preparing for a long, hot Bakersfield summer in a sick economy. Trust me, I'm trying to look for silver linings and signs of an uptick, but I just can't find them. Among some of the disturbing indicators:
* MORE FORECLOSURES: California and Florida led the country in home foreclosures in the first quarter. California had 13 cities among the top 25 with the highest foreclosure rates, including Bakersfield holding down the No. 7 position. (for the full story read it here). Others on the foreclosure hall of shame list include Merced, Stockton, Riverside-Ontario, Modesto and Vallejo-Fairfield.
* MORE JOBLESS: Our local unemployment rate is an astonishing 14-plus percent and it may get worse, according to RealtyTrac, a seller of default data.
* STUDENT LOANS: Defaults on student loans are also skyrocketing across the country. According to the Wall Street Journal, a combination of a weak job market for graduates, higher tuition costs and parents losing their jobs is leading to a sharp spike in defaults.
* BANKING MESS: It's clear that there will be no recovery until credit eases and the banking industry gets healthy. So it didn't help when the Bank of America reported a $4.25 billion profit but the stock slid because the bank reported a 46 percent increase in non-performing loans. Even a stalwart locally-owned bank like San Joaquin Bank is under the microscope to clean up questionable loans on its books.
* WHO'S BUYING CARS?: Our local car dealers continue to struggle, even with some new fuel efficient and reliable lines on their lots. One problem: even people with good credit are having trouble getting loans while others who have the money are hunkering down and hording cash.
* NON-PROFIT CRUNCH: I won't name them here, but non-profits and foundations across Bakersfield have been slammed by a downturn in donations and charitable giving. They too are cutting back on expenses and staffing.
Enough said. I'll share some good news when I get it!