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Saturday, August 22, 2009

Inland Empire: "The gold mine was construction"

by Calculated Risk on 8/22/2009 06:40:00 PM

Here is a followup story on the Inland Empire in California, from the NY Times: A Cul-de-Sac of Lost Dreams, and New Ones

This quote caught my eye:

"You have to think of it like a gold-mining town in a Clint Eastwood movie,” Mr. [John Husing, an economist whose expertise is Southern California] said. “Money comes to a place where there has never been any, and next there are tool stores, a saloon, a general store and so on. But the saloon doesn’t exist without the gold mine, and the gold mine here was construction.”
Exactly. And the gold mine closed a few years ago.

Here is how I saw it in 2006 for the Inland Empire:
As the housing bubble unwinds, housing related employment will fall; and fall dramatically in areas like the Inland Empire. The more an area is dependent on housing, the larger the negative impact on the local economy will be.

So I think some pundits have it backwards: Instead of a strong local economy keeping housing afloat, I think the bursting housing bubble will significantly impact housing dependent local economies.