UCLA study: Slow going through the end of the year
The Anderson Forecast, a widely watched outlook for both California and the nation, predicted “normal growth" for the U.S. economy through 2013, with "normal" defined as 3% GDP growth but unemployment stuck at high rates.
The June 2011 report, published by economists at the UCLA Anderson School of Management, called for slow growth through the end of the year in California, as the state attempts to re-generate the 1.3 million jobs lost in the recession.
UCLA senior economist Jerry Nickelsburg cited two key elements impeding California’s recovery. The first lies in the national forecast, which calls for slower growth in consumer spending. The second is a shift occurring in the residential construction sector.
The shift in residential construction is rooted in demographics and geography, Nickelsburg said. The demographic shift, confirmed by the 2010 census, suggests a significant shift in demand toward condominiums and apartments. As a result, future construction will move toward multi-family units. This will hurt inland California because workers are less likely to move inland into an apartment and commute toward the coast. Fewer construction workers are required to build multi-family units, according to the forecast, and the inland areas of California are more dependent on construction to fuel their regional economies than coastal areas.
“Taken together, these shifts are going to be a significant drag on inland California economies that in turn becomes a drag on the state’s economy as a whole,” the report said.
The forecast calls for 1.7% employment growth in 2011 in California, 2.4% in 2012 and 3.1% in 2013.
Help wanted: Universal Forest Products seeks CEO
Grand Rapids, Mich.-based Universal Forest Products has announced that CEO Michael Glenn is retiring due to health reasons and to make way for new leadership to "build on Universal’s strengths and prepare for future opportunity." The board of directors is currently in the process of evaluating candidates for the position. Glenn, who was appointed CEO in 2006, has agreed to stay on until a new CEO is named.
"I’m proud of what we’ve been able to accomplish in the toughest years in our 56-year history," said Glenn, who has been with the company for 37 years. "I’m proud we were able to generate cash flow, pay off more than $320 million of debt, and remain profitable at a time when others in our industry were struggling to survive.
"But closing or consolidating nearly 30 operations and cutting thousands of employees as we implemented strategies to carry us into the future have taken a toll," he added, "and for the sake of my family and of my health, I decided it was time to hand over the reins to new leadership, who will build on Universal’s strengths and prepare for future opportunity."
Chairman William Currie said: “The board thanks Mike for his many contributions to Universal. He created success in plants, regions and divisions in his long career at Universal.”
Existing-home sales decline 3.8% in May
Existing-home sales fell 3.8% to a seasonally adjusted annual rate of 4.81 million in May, compared with a downwardly revised 5 million in April, according to statistics released today by the National Association of Realtors.
“Spiking gasoline prices along with widespread severe weather hurt house shopping in April, leading to soft figures for actual closings in May,” said NAR chief economist Lawrence Yun.
Compared with the 5.68 million pace of May 2010, which benefited from a surge of sales to beat a deadline for the home buyer tax credit, the current reading is down 15.3%.
“Current housing market activity indicates a very slow pace of broader economic activity, but recent reversals in oil prices are likely to mitigate the impact going forward," Yun said. "The pace of sales activity in the second half of the year is expected to be stronger than the first half, and will be much stronger than the second half of last year.”
Meanwhile, the median existing-home price for all housing types in May was $166,500, down 4.6% from May 2010. Distressed homes accounted for 31% of sales in May, down from 37% in April.
Total housing inventory at the end of May fell 1.0% to 3.72 million existing homes available for sale, which represents a 9.3-month supply at the current sales pace, up from a 9-month supply in April.