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The big R

Say it: Re-sesh-un. Recession.

Say it and it will set you free, free to revise your business plans to accommodate this stagnant economy.

As we have been stating in these pages over the past few months, all economic indicators show we already are in a recession. Whether or not it amounts to a dip or a disaster remains to be seen.

The word is even popping up in major business papers of record. Witness these recent headlines:

“Industrials, S&P 500

Drop 10% From Highs

As Recession Fears Grow”

or

“Recession Fears

Weigh Heavily

On The Markets”

An Internet search for the word in news stories found more than 23,000 uses in the last week alone.

Food banks nationwide are saying a recession is to blame for their dwindling supplies.

For the first time in nearly 13 years, home prices nationwide experienced a quarterly decline, according to the Office of Federal Housing Enterprise Oversight. Even this region saw a slight decline. The agency’s calculations are based on data from sales and refinance transactions, which were 0.4 percent lower in the third quarter than the second quarter of this year.

“Rising inventories of for-sale properties are clearly having a material impact on home prices,” said Patrick Lawler, chief economist with the OFHEO. “Until those inventories shrink, that will be a great source of resistance to price increases.”

The Federal Reserve’s chairman even hinted at another interest rate cut.

And yet, the White House is upbeat.

“We are forecasting solid growth for 2008 of 2.7 percent, and that is good solid growth,” according to Edward Lazear, chairman of the White House Council of Economic Advisers.

Do they breathe the same air as the rest of us?

With apologies to F. Scott Fitzgerald, White House economists are different from you and me.

It’s important to note that in June the White House had forecast a GDP of 3.1 percent. So they remain upbeat despite their downward revision or “correction.”

But where is the good news? There is always at least one bright spot.

The OFHEO found it to be in Utah and Colorado.

The Metropolitan Statistical Areas (MSAs) with the greatest appreciation between the third quarter of 2006 and the third quarter of this year were: Provo-Orem, Utah, with a 14.4 percent rise; Grand Junction, Colo., with a 14.1 percent increase; and Ogden-Clearfield, again in Utah, posted a 14 percent rise.

So why is the Provo-Orem area recession-proof?

They’re about a half-hour drive south of Salt Lake City. Brigham Young University is in Provo. The Osmonds grew up in the city. Novell, a software company, has about 2,000 workers there.

Ogden and Clearfield are also about a half-hour from Salt Lake City, but to the north. Clearfield has Northrup-Grumman and is right next to Hill Air Force Base, one of the state’s largest employers. Ogden has the headquarters of Descente, a ski apparel manufacturer.

All four cities find themselves in an enviable geographic area dominated by the Wasatch Mountains, homes to skiers and hikers. Ditto for Grand Junction, except its mountains are the Colorado. Interesting to note, though, Grand Junction is practically in Utah and just 200 miles away from Provo.

Another demographic that makes the Utah region attractive is the median age; Provo and Orem are 23 and 24, and Clearfield and Ogden are 24 and 29, respectively.

The median age of Westchester and the rest of the Hudson Valley is about 39.

But forget about geography and age, it’s where you live, sleep and play that counts. And, oh yeah, how much taxes you pay.

Although the Utah cities did quite well in the rankings, Wenatchee, Wash., beat them all in the category of house price appreciation with a 15.7 percent increase. Median house value was $155,000 in Wenatchee and state and local tax amounts to 8 percent. Provo’s median house value is $184,000 with a state income tax rate of 7 percent.

The median house value in Westchester is $668,750; bad enough, but then add some 400 taxing entities and well, you get the picture.

William M. Mooney Jr. got the picture and didn’t like what he saw. For the president of the Westchester County Association that meant speaking out like he did a year earlier about health insurance costs. He wants property tax reform and said as much and more at a recent hearing in Orange County of the state Commission on Local Government Efficiency and Competitiveness. He said it was all hands on deck.

“If we don’t solve this problem, the public sector, the private sector and the consumer together, we’re going to get what we deserve. And right now we’re getting what we deserve.”

He also called for “political courage,” which some may consider an oxymoron, to stem the tax scourge.

Whether it’s a recession or the domino effect in play or a combination, we’ll have to wait and watch.

And in case you were wondering, the best place to probably grab a house in the nation is:

Merced, Calif., which saw a depreciation of 13 percent; Punta Gorda, Fla., which had a drop of 11.8 percent; and the Santa Barbara-Santa Maria-Goleta region of California, which dropped 11.6 percent.

Still have a favorable outlook, Mr. White House Economist?

The big R for you, may turn out to be Revision.

 

 

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