Who needs the GDP?

As if it wasn’t unpleasant enough, this recession comes with an info glut, all this economic data purporting to answer a simple question: Are things getting better? The answer is rarely straightforward. The numbers aren’t just confusing. They seem to be measuring some other planet.

In New York, we have our own economic indicators, often based on the degree to which people are being thwarted by the lack of opportunity. An old standby is the Overeducated Cabbie Index. The Squeegee Man Apparition Index is another …

Earlier this week, I was surprised when I read that Moody’s put the decline in commercial real estate at 16% over the last TWO MONTHS. That’s a stunning rate of decline that has very negative consequences for banks who are still carrying commercial whole loans on their balance sheet at close to 100¢ on the dollar.
For comparison, consider the chart to the right, which compares the Case-Shiller Composite 20 Index for residential real estate prices with the Moody’s/REAL National All Property CRE Index.*
Peak to trough the declines are similar: …

Living beyond your means is a sure way to guarantee financial ruin. Today, millions are dealing with the fallout from artificially-inflated real estate values and accessible, unsecured credit. For those recently (or still) in this situation, a number of temporary solutions were once readily available – refinancing, taking out home equity lines, taking on additional credit cards – but, these quick fixes all had one thing in common: they only delayed the inevitable. But it’s one thing for an individual to act irresponsibly, and quite another for an entire …

Steep discounts, unprecedented incentives not enough to lure tourists

Despite steep discounting and unprecedented incentives, hotel occupancy in Hawaii continues to slide to new lows because of the slowed global economy, especially on the Big Island where only half of rooms were booked in May, according to a report released Monday.
Hotel occupancy fell 6.9 percentage points to 62 percent in May, marking the worst May on record since Honolulu-based Hospitality Advisors LLC began its monthly survey in 1987.
It’s unlikely Hawaii will see any sign of recovery until well into 2010 …

Given cutbacks, not all employees are playing nice when they quit

Richard Laermer, CEO of New York-based RLM PR, has noticed a disturbing trend lately. Employees who quit aren’t giving the customary two weeks’ notice, and some are even breaking noncompete agreements they signed.
“It’s the weirdest thing,” he says. “After 19 years of doing this job, as a CEO no less, I find myself shocked at how people are doing this.”
Laermer suspects it all started after he announced layoffs in November and then canceled the Christmas party.
Many of the employees …

California suffered a new setback in its financial crisis on Monday when Fitch Ratings cut its rating on the state’s general obligation debt to just two notches above junk status.
Fitch cut its rating on California’s long-term bonds to “BBB,” two notches above speculative grade, citing the state’s budget and cash crisis. The state last week started issuing “IOU” promissory notes to pay for some bills in order to conserve cash.
The credit rating agency also kept the debt of the most populous U.S. state on watch for additional downgrades. California …

Office building down 57 percent off peak

A downtown San Francisco office building that sold for $400 a square foot in 2006 has traded for just $172 a square foot, a 57 percent decline that industry experts see as an important milestone in establishing new, recession-era values for financial district property.
A private equity fund controlled by an unidentified “domestic billionaire” has paid $19.9 million for 250 Montgomery St., a 116,000-square-foot building on the corner of Pine Street that Lincoln Property Co. bought for $46 million in 2006. Technically, the buyer …

You know the economy is in trouble when the good news is unemployment increased at a slower rate and pending home sales stood basically still all month. Brace yourself because it looks like the “good news” is going to get much worse, too.
Home prices appear to be approaching a valley, though no one can know for sure if they are near a bottom or if they have further to drop. However, credit is still hard to come by, and it is becoming more expensive as interest rates rise on …

O.K., Thursday’s jobs report settles it. We’re going to need a bigger stimulus. But does the president know that?
Let’s do the math.
Since the recession began, the U.S. economy has lost 6 ½ million jobs — and as that grim employment report confirmed, it’s continuing to lose jobs at a rapid pace. Once you take into account the 100,000-plus new jobs that we need each month just to keep up with a growing population, we’re about 8 ½ million jobs in the hole.
And the deeper the hole gets, the harder …

Back when the Troubled Asset Relief Program was being shoved through Congress, some legislators tacked on hidden tax breaks for firms in dozens of industries.
One of these was the British company, Diageo, the world’s largest liquor distiller, which received $2.7 billion from the program.
“You had this remarkable brief period with no transparency, filled with backroom deals being made and an absolute blackout of information,” Jin Lucier, a senior political analyst at Capital Alpha Partners, told Bloomberg.
“It’s ridiculous and it’s a product of the legislative sausage-making machine,” Lucier said.
Diageo is …

We all associate recessions with negative things. Unemployment, slowdowns, and lost profits dominate the headlines and color most every recession-themed discussion. But this is only part of the story. Desperation breeds creativity, as many know. And as a testament to this timeless axiom, a number of the world’s foremost innovations came about during recessionary times. From increased convenience and food products, to formidable technological advances, the following represent some of the most noteworthy recession-borne innovations. (Read more at: BillShrink.com)
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{Photography by compujeramey}

Financial Trust Index Researchers Study Economic and Moral Factors In Strategic Default
While the Obama administration’s housing policy has been largely influenced by a study of the Boston housing market during the 1990-91 recession in which homes devalued by approximately 10 percent, new research suggests that a novel phenomenon is at hand in the fallout of today’s more severe housing crisis – strategic default on mortgage loans. Given that homes in numerous parts of the country have lost more than 30 to 40 percent of their value, many homeowners say …

Akio Toyoda, the new President of Toyota and grandson of company founder Kiichiro Toyoda, is predicting another two years of tough times for the auto industry. In order to stay afloat, the Japanese automaker, under the direction of Toyoda, will build more autonomous operations in North America and concentrate on a more region-specific lineup to help the company pull through the recession. (Read more at: autoblog)
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{Photography by Mike Babcock}

The revolving door of venture capitalists is swinging fast.
Not since the dot-com bust has the industry experienced as much turnover as it is now. Since the end of 2007, the number of venture-capital principals, who make investment decisions and are directors of start-up companies, has tumbled by more than 15%, according to the National Venture Capital Association.
The exits just in the past few months include a Who’s Who of firms and partners, say venture capitalists and recruiters. General partners and underperformers are being dumped by recession-wracked firms, some of …

Big banks in the U.S. say they’re on the mend. The five largest were profitable in the first quarter, rebounding from record losses for the industry in the fourth quarter. Share prices have jumped, with the KBW Bank Index doubling since March 6.
Treasury Secretary Timothy Geithner, after “stress testing” 19 banks on their ability to withstand a worsening economy, declared in early May that Americans can be confident in the banks’ stability and resilience. Wells Fargo & Co. and Morgan Stanley were among banks raising $43 billion in new …

FIVE years ago Michael Silverstein and Neil Fiske wrote a book, “Trading Up: The New American Luxury”. They argued that Americans, even those of modest means, were abandoning merely adequate products for luxurious ones. Jake the construction worker, for example, splurged $3,000 on Callaway golf clubs, though he could have bought a set nearly as good for a third as much. (“They make me feel rich,” he said.) A shipping clerk on $25,000 a year bought silk pyjamas from Victoria’s Secret. A couple making $125,000 ordered a $4,000 brand-name …

Carlos Araya used to order lobster, filet mignon and $200 bottles of red wine at the Palm Restaurant in midtown Manhattan.
Now, he seats customers at its Tribeca branch.
Mr. Araya, 38 years old, lost his job in 2007 as a crude oil trader on the New York Mercantile Exchange. After visiting dozens of headhunters with no luck, he applied in August 2008 to be a host at the Palm to support his wife, two young daughters and mortgage payments. His salary has plunged from $200,000 to $25,000. (Read more at: …

In the midst of a global recession, businesses struggle to find the value in buying powerful new computers. It is a situation that continues to prove torturous for Dell and seems to have paralyzed parts of the company’s turnaround efforts.
Dell, based in Round Rock, Tex., depends on selling computers to businesses and government bodies more than any of the other major computer makers. About three-quarters of its products go to such customers, while consumers make up the remainder. As businesses appear to be recovering more slowly than consumers, Dell …

U.S. home prices showed no signs they’ve hit bottom, according to a series of national indexes released today. The Standard & Poor’s/Case-Shiller national home price index showed a record 19.1% drop in home prices for the first three months of this year.
Los Angeles area home prices, which include Orange County, were down 41% in March from their 2006 peak. Los Angeles is one of 10 metro areas down more than 30% from its peak price level, with Phoenix’s 53% decline in March from its peak the most severe. (Read …