Is this a recession or media fear mongering?

As I have been preaching the idea that American media could be fueling recession woes, I realized this last weekend that the media could in fact be freaking everyone out about this recession.

Ahh, but is that a good thing?

It was reported last week that California was the first large state to feel the effects of the recession when it reported that unemployment in the state was a whopping 10.1%. 

The County of Los Angeles reported a staggering 10.5% unemployment rate as well.

I find this interesting as I travel across the U.S. helping clients better their businesses where I have not seen the effects of a slowing economy. 

In my home state of California (soon to be Texas), I expected to see this fear mongering rhetoric as I was able to enjoy some time off in and around southern California.

Note that the unemployment rate in California and Los Angeles County is the result of out of work real estate agents, loan officers, and other banking professionals. 

Let’s not forget that California, Los Angeles County is home to the two banks that caused this mess, Countrywide and IndyMac Bank.

Of course unemployment is higher!

What I found was enlightening, optimistic and encouraging as opposed to those of us who sit in front of the T.V. waiting to hear the latest doom and gloom from CNN, Fox News, CNBC, Fox Business News, etc, etc.

Remember, we are talking about California where last week California Governor Arnold Schwarzenegger announced a State of Emergency related to California’s drought.

So I am in Downtown San Diego taking in the sights and good food.  As the day came to a close we figured on staying in a local downtown hotel Saturday night to drive back to L.A. the next day.

Sold Out.

It was difficult to find a hotel room in downtown San Diego this last Saturday night.  Not to mention that the streets were packed with restaurant goers where these crowds are only seen in San Diego in the summertime.

Granted there was a convention in town which created the demand that the hotels responded to with an average room rate of $280.00 per night. Wow.

I did a little survey and found that the Hard Rock Hotel as well as the Omni Hotel in downtown San Diego were sold out or nearly sold out.  Recession?  What recession?

Since San Diego was not the place to be due to the convention attendees taking up most of the rooms, we decided to try our luck at Pechanga Resort Casino in Temecula, California.  On our way to the resort, I decided to call just to make sure they had rooms and check on the rate.

Sold Out.

522 rooms sold out on a Saturday night at a starting room rate of $340.00 per night.

How is this resort able to sell out 522 rooms at $340.00 per room in a place that encourages guests to gamble?

Again, I ask are we in a recession or is the media guilty of fear mongering?

Please do not misunderstand that the U.S. economy is in trouble and the trickle down effects of failed bank mortgages will continue to negatively affect growth across all industries (I give it till June of this year).  But, as I have been writing all along, we need to be prepared.

I would like to think that consumers taking up all the hotel rooms in San Diego and Temecula are savvy consumers and business owners that have realized that credit is probably not the best financial resource…anymore.

I would like to think that these consumers and business owners are stirring this economy with good old fashioned, hard earned cash.

Remember that old rule of having just one credit card for emergencies?

Maybe we should heed that caution.  

8 Responses to Is this a recession or media fear mongering?

  1. Neil Fogarty says:

    Luis, I agree in principal to what you are saying and I do feel that this recession could definitely be a regional or even local phenomenon. Here in Ohio we are being belted with waves of layoffs mostly connected to the auto and affiliated industries. Is there a media frenzy? Of course. Is our country in economic turmoil? I believe yes. Is the depth somewhere in the middle of the mongering and the regional reality? More than likely. I can tell you this, when the death care industry is concerned about customers moving to lower cost arrangements and foregoing traditional purchasing of memorials, something is up. I had a funeral director locally the had the first 8 calls of the year choose cremation over traditional burial. This was not believed to be a philosophical shift but a conscious effort to save money. Look at it this way. More people are invested in the market through mutual funds than ever before. These people are watching their retirement income shrink by one third or more. For our industry’s customers the life insurance money that once paid for funeral and monument is now becoming an income stop gap. In that way I believe the recession is very real. Is a a psychological recession? Perhaps the topic of your next blog.

  2. Geno says:

    While I enjoyed reading your blog entry, I think you fell into the trap of simplifying a very complex issue.

    To question this media-generated “recession” because the hotels you recently visited were sold out is like questioning our actual dependency on foreign oil because we still have a morning rush hour. As an avid watcher of FOX, they too feel that the press harps too much on the issue in a negative way, and I agree. I do believe there is something to the fact that talking bad about the economy almost makes it a self-fulfilling prophecy, especially when it comes to Wall Street and trading. However, let’s not discount the actual damage.

    As someone who was laid off in October from an industry that is not known as being “revenue generating” out of fear for the immediate future in a family-owned business, I can tell you that, compared to a similar situation two years ago (same time of year in fact), I had so many attractive offers, I waited until after the holidays to pick the most attractive. This was after two months of continual telephone calls, interviews and various promises. This time around, if I have had 10 interviews in total, I cannot think of five of them. It’s bad out there. Not only are the jobs not being offered, but the competition for the few jobs there are has increased ten-fold. In addition, I am competing with applicants who have MBA’s and PHD’s for positions that pay less than $40K, one third of the salary I made in previous years.

    The number of real estate and loan-related unemployed in California equal less than 2% of the 10.5% of the unemployed. This figure also doesn’t take into account the severely under-employed, or those who have never filed for UI (like myself). Considering the Unemployment numbers were at 4% when this began, that means almost another 5% of the rate is attributed to something else. With less people working, les people are eating out, leading to less waiters and waitresses and cooks and restaurant workers. Less people working means less car wash attendants, dry cleaning employees, less barbers, less retail clerks, etc.

    That’s the actual “trickle-down” effect of this economy. Talking more positively about might help in the long run, but I have a better idea that would jump-start this economy overnight. Do away with the current adminsitration and their socialist policies and adopt a business-friendly tax cutting policy, since business is what employs the masses. Once that is initiated, you start prosecuting every banker, loan executive and business owner who had been taking advantage of and falsifying loan docs’ allowing illegals and people below their means to purchase homes way above their income brackets. We need to start making examples of these thieves. THAT would generate a more positive and uplifting exchange, at least in my circle of friends.

  3. Luis Luarca says:

    Hi Neil,

    Thanks for the note.

    I appreciate talking to you on the phone last Thursday and am glad you have an insightful view with what is happening to your business. I am excited to hear of your plans and look forward to a follow-up conversation in six months.

  4. Luis Luarca says:

    Hi Geno,

    Thanks for your post.

    These are tough times and I hope everyone ends up OK.

    Let me know if I can be of any help to you.

    Send me an email if you like to catch-up.

    Thanks again,

    Luis Luarca

  5. I live in the heartland, and while I do see some of the effects of the current recession as I traverse my hometown it doesn’t really seem as dire as the media make it out to be. That said, it is quite possible it just hasn’t fully hit here yet, but I am going to NYC in less than 2 weeks (the last time I was there was in December, 2007) and am quite anxious to see what it looks like now.

    My husband and I have been fairly careful for many years now, but when Wall St imploded last fall we made a number of changes just to ensure that our life didn’t become part of the meltdown and since february our income seems to be going further than it had before (february). Undoubtedly part of that is because gas costs less, and we are eating in rather than going out as often as we once did, but prices at the grocery store are going down and that means I can buy more with the money I do spend. I am rather anxious to see how many young kids the grocery stores have working this summer (school is out and the college kids come home for the summer) as that may be a prime indicator in my city about how deeply into a recession we are. Interestingly enough, today I was out grocery shopping, etc and noticed ‘now hiring’ signs in 2 of the stores, but those are pretty low-level jobs, and since my husband and I are retired I have no way of knowing how people looking for professional positions are faring in this area. Maybe those of you who are currently unemployed should start looking out here :-).

  6. Luis Luarca says:

    Hi Ann,

    Thanks for your comments.

    This economy is hard to figure out where I have not been able to figure out if the media hurts or helps.

    Have fun in New York.

    Thanks again,

    Luis Luarca

  7. Chris J says:

    Thanks for getting your insight up and out there, my friend.

    I spent the entire winter cowering over the fact that jobs were disappearing, so there’d be no chance to repay my debt and therefore I’d end up either dead or enslaved to some sort of neo-feudal banker.

    Well, I snapped out of it and came back east this summer, and have found that there is just as much work as last year. Only it is more freelance and contract based. This is not just from personal experience. For, if the hundreds of thousands laid off each month since Fall of ’08 were really “unemployed,” the first several million from last year would have benefits running out and therefore would be starving. Well, I haven’t seen nor heard any signs of starvation among the masses in America, therefore this “recession” seems so far to be more like a flight of propaganda fancy.

    So I’m not dead or slave laboring for some neo-feudal banker. That’s just how things are, and the people who are laboring otherwise are victims of the hype.

    I don’t want to get at my thesis in one silly lil’ blog comment, but I do welcome emails. So hit me up, and realize that the recession is just one silly, silly lil’ emotionally manipulative trick that steals from and drains the common working folk.

    At least until the common working folk realizes that they are being played, then they wise up and the players who push the whole fear-mongering “recession” hype realize that they have to drop it before they consume themselves with their own lies.

  8. It is now July 25 here in Omaha and the recession has really hit — our new mayor is making everyone angry with the cuts he’s making to balance the city budget. And I just heard a story a couple of days ago about how many people here are going to be losing their ‘section 8’ entitlement (this is the program that allows underpaid families/mothers/children to live in a decent place without it costing more than they can afford — they pay on a sliding scale). That means more people are going to need help from the homeless shelters, and they have been struggling for more than 2 years now. My husband and I are still keeping our heads above water and paying all the bills on time, but the money isn’t going as far as it was last winter.
    I realize recessions hit different parts of the nation at different times, but from what I am seeing it would appear it will be a while before any part of this nation starts mending (except for the likes of Goldman Sachs and Chase).

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