Thursday, 16 April 2009

California: What A Recession Looks Like

"A road trip in California, the hardest-hit state by the recession: on the front lines of the U.S. meltdown. In a country that’s always done things bigger—bigger booms, bigger bubbles, bigger busts—California stands apart. Few other places saw real estate mania reach such feverish heights. Fewer still have seen their fortunes plunge to such abject lows that the decision over whether to buy a house comes down to five cents. With the world’s eighth-largest economy brought to its knees, Maclean’s took a road trip through one of the hardest-hit parts of California: the region encircling the San Francisco Bay Area. It’s a ring of misery, where unemployment is nearing 20 per cent in some counties. In cities like Stockton, one in 60 houses are in some state of foreclosure. With shopaholic Californians hunkering down, retailers are shutting their doors, from exclusive boutiques to outlet malls in soccer mom enclaves like Elk Grove. One city, Vallejo, unable to pay its bills, has given up and declared bankruptcy. More are expected to follow. Even Silicon Valley, California’s most resilient region and its best hope to lead a recovery, is struggling. California has always been a barometer for the rest of the country. As the Golden State goes, so goes the United States. Now everyone is waiting to see whether the California dream can be resurrected. “People are watching California closely because what happens here is seen as an indicator of what will happen elsewhere,” says Alex Whalley, an economist who teaches at the University of California-Merced. “California is the leading edge of what’s to come.”" - Business - Written by Jason Kirby on Wednesday, April 15, 2009

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