Real estate's contribution to the local GDP

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graphrix_IHB

graphrix_IHB

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<p>Lansner's blog has the numbers of the BEA's LA/OC GDP numbers and how much dollar wise RE contributed. Well your resident ubernerd wasn't going to let Jon get away without adjusting for inflation. Especially when the BEA is kind enough to do it for you already. And of course I have some more stats to add. Jon left out a very important category of credit intermediation. Probably because you had do some of the math manually but the margin of error is about +or-1%. Also the credit intermediation category included Federal Reserve banks but really it couldn't possibly make that much of an impact.</p>

<p>OC's GDP increased by $71.1mil in real dollars or 14% from 2001 to 2005.</p>

<p>Construction grew by 8.5%.</p>

<p>Real estate grew by 23.9%.</p>

<p>Credit intermediation grew by 31.9%.</p>

<p>These three sectors accounted for 38.1% of the entire growth of OC's GDP.</p>

<p>So what does this mean? Well it's not like you can compare it to the past because the BEA just started this and only goes back to 2001. But if these sectors drop in GDP as much as sales are we could return to 2001 GDP in real dollars. The other sectors grew on average by 8% and these sectors should have kept pace with the other sectors. I think that this adds for further proof to my <a href="http://www.irvinehousingblog.com/2007/05/23/the-real-jobs-situation/">jobs analysis post</a> that OC has been over-employed in the real estate sector. This is a more serious problem than most people think. I think Lansner gets it by his sarcastic remark of "get the picture".</p>

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<p>Allow me to interpose (after my 3rd glass of Pinot Grigio, La Famligio on sale at Tj's for $2.99/bottle or something like that - so please forgive me!)</p>

<p>Basically, a lot of fake wealth has been generated by people involved in the greatest Ponzi scheme ever (since the Tulip deal, way back when...) and many of the folks involved in the Ponzi scheme (mortgage brokers & subordinates, RE agents & subordinates) actually BELIEVED the rhetoric that their industry-paid shills were spewing and bought (after drinking a LOT of the KoolAid) houses, and for some "investment properties", that they THOUGHT would rise in value indefinately!!!!!!!! Well, NOW these people are OWNED along with lots of other folks who drank the Kool Aid more than they should have (kind of like me with this La Famligio).</p>

<p>The Fed can go ahead and lower rates all he wants, but that aint gonna save these folks.</p>

<p>Basically, what Graph is saying is that our economy THOUGHT it was real hip for the past 5 years, BUT it wasn't as great as it actually seemed. The funny thing is that our (OC) economy probably would have been just fine the past 5 years WITHOUT the fake wealth generated by the Ponzi scheme. But now we have to live with the consequences of its demise. It may hurt...</p>

<p>Unless you didn't the Koodaid and are renting. Sure, you were called a loser for the past 5 years, but at least you have CASH to buy the wine without the stress of "am I gonna have enough money to make my next dept payment???!!!"</p>

<p>In Vino Veritas!</p>
 
"In Vino Veritas!"





Hah! Indeed!





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