The numbers are in, and Nevada’s GDP (gross domestic product) declined 6.4 percent from 2008 to 2009. This was the largest decline of any of the fifty states. The GDP of many states actually improved during this period.
Those states with the largest drops include:
- 1. Nevada -6.4%
- 2. Michigan -5.2%
- 3. New York -4.3%
- 4. Arizona -3.9%
- 5. Indiana -3.6%
See the RGJ’s piece, Nevada’s GDP decline worst in U.S., for more info (i.e. a breakout by industry sector).
RGJ
In a related note, some contributors to the Reno Realty Blog think that this is a great time to buy real estate in Nevada!
“No need to wait through a few more years of price declines, if you happen to find the home of your dreams!”, notes one prolific contributor. “Besides, in 25 years, everyone will be whole again.” Another made that point, “with prices these low at the low end, they just can’t go lower!”
In a related event, the shadow inventory continues to mount, as Nevada continues to lead the nation in foreclosure rates. “No need to worry,” says one contributor, “shadow inventory is irrelevant! I recently bought the house of my wife’s dreams, and, therefore, so should you.”
Norton
This continuing litany of worsts for Nevada…worst in foreclosures, worst in unemployment, worst in budget deficit, and now worst in GDP decline, only serves to make it clear that Nevada will trail all the other states in coming out of the Great Recession. It will be worse here longer than it is anywhere else. No other State will take as long as Nevada to return to economic health.
What this means for the local real estate market is a conclusion that each needs to make on his own.
MikeZ
The numbers are in, and Nevada’s GDP (gross domestic product) declined 6.4 percent from 2008 to 2009.
Excuse me … did anyone else notice that DATES? That’s a year old.
Xavier
Those are the numbers for end of year 2009. Uh, it would be difficult to have the 2010 numbers in at this point. Since 2010, is not, uh, over yet.
Grumpy
MikeZ doesn’t like data that’s orthogonal to his nonsense arguments.
Cicero, in 55 BC stated:
“The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work instead of living on public assistance.”
I can’t imagine anything like that happening today, because history never repeats itself and we always learn from our past mistakes.
MVC/RRBVIP
Very nice reference, Grumpy!
MikeZ
MikeZ rejects the notion that economic data from a period that ended 11 mos. ago should be treated as new or recent or characterized in the present tense.
Guy’s summarized headline and the article at rgj.com are misleading. The first two posters appear to have read the headline only, skipping the section that clarifies the age of the data.
Nevada Appeal did a better job with the BEA press release, pointing out that this was last year’s GDP data in the headline.
MikeZ
Cicero, in 55 BC stated:
“The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work instead of living on public assistance.”
And in 54 BC, Cicero stated: “In the future, some people on the Internet will be gullible enough to believe anything they read.”
http://www.truthorfiction.com/rumors/c/cicero-plan.htm
Grumpy
I was wondering how long it would take you to rebut it.
The actual quote is: “The arrogance of officialdom should be tempered and controlled, and assistance to foreign hands should be curtailed, lest Rome fall.”
As far as the above data being a year late, since when is any government data accurate in a timely manner?
MVC/RRBVIP
I went looking for the quote after I saw it above to see from what oratory or letter it originated. I found the site provided by MikeZ as well as other such criticism. Some commentators have indicated that the quote may have originated in a book called A Pillar of Iron, a fictionalized account of Cicero’s life published in 1965 by Taylor Caldwell.
It is also possible that the above quote may be a bastardized version of different quote than the one listed on truthorfiction.com. It may be based on this quote from Cicero’s Speech in Defense of Sestius.:
“Gaius Gracchus proposed a grain law. The people were delighted with it because it provided an abundance of food without work. The good men, however, fought against it because they thought the masses would be attracted away from hard work and toward idleness, and they saw the state treasury would be exhausted.”
A slightly different translation can be found on p. 272 of Roman Civilization: Selected Readings, Volume 1 (http://books.google.com/books?id=2Dg6TRHG9MQC&pg=PA271&lpg=PA271&dq=Cicero+Speech+%22in+Defense+of+Sestius%22+text&source=bl&ots=fxCvS9kwk4&sig=-efk3p6EJ_HiFfFD1KBEg1ts1rA&hl=en&ei=PBPoTK-9GYecsQPIoJ2xCw&sa=X&oi=book_result&ct=result&resnum=10&ved=0CE0Q6AEwCQ#v=onepage&q&f=false) at the bottom of p. 272.
It may also be that the quote is merely an amalgamate of various sentiments expressed by Cicero in various oratories – a portmanteau quote, as it were.
MVC/RRBVIP
Unfortunately, A Pillar of Iron is not available on Kindle. I did find this on Wikipedia (so take it with the weight it deserves):
“Antonius heartily agreed with him [sc. Cicero] that the budget should be balanced, that the Treasury should be refilled, that the public debt should be reduced, the arrogance of the generals should be tempered and controlled, that assistance to foreign lands should be curtailed lest Rome become bankrupt, that the mobs should be forced to work and not depend on government for subsistence, and that prudence and frugality should be put into practice as soon as possible.” – A Pillar of Iron; this sentence is regularly attributed to Cicero, but it’s Caldwell’s own, not in Cicero’s actual work. It can be found on page 483 of the 1965 edition published by Doubleday (Garden City, NY.)
MVC/RRBVIP
I almost forgot that I wanted to make a comment on the GDP issue. I was caught up in trying to find the purported Cicero quote.
The BEA just released the state-by-state comparison GDP data from 2009, which makes it news, but 2009 GDP numbers are historic data, not contemporaneous data, and thus not useful in the GDP’s regular coincidental indicator role. All we can tell from this data is that Nevada’s GDP declined greatly in 2009, and that Nevada had the largest decline of any state.
Interestingly, in November of 2009, the just released 2008 data showed that from 2000 to 2008, Nevada was first among the states with a 4.3% annual rate of increase in real GDP (http://econpost.com/unitedstateseconomy/state-economic-gdp-growth-rates-nevada-california-texas-michigan-arizona-ohio). Of course, no one in November of last year would have used that data to show that Nevada’s economy was in good shape (or at least I cannot comprehend that they would have done such), and in the same vein, we should not use 2009 data to generalize about the current vitality of Nevada’s economy. It may be that we will find out in November of 2011 that Nevada’s GDP has contracted again in 2010, but we do not know that yet.
Now, as to the relationship of the 2009 GDP to the housing market, existing home sales are typically considered a lagging indicator. I may be wrong, but I would have expected the impact of the reduced GDP in 2009 to show up in the housing market by now if it were going to have a significant impact. However, as has been discussed on RRB a few times, the Reno/Sparks housing market in 2010 has seen a sales increase and has been relatively stagnant in terms of price, especially in the lower end segments.
Reno Ignoramus
Only a couple of days ago particle physics was being discussed here on the RRB and now we have a discussion of Cicero.
About 3 years ago or so, when this was still Diane’s blog, some website rating company evaluated the discourse on the RRB and determined that it was at the Ph.D level. Imagine what they would say now.
What might be next? Perhaps discourse in French, or Italian?
bob_c
my comments bring the prose median down
MikeZ
All we can tell from this data is that Nevada’s GDP declined greatly in 2009, and that Nevada had the largest decline of any state.
Anyone who bothered to read the BEA report can say a bit more:
“The decline in construction subtracted more than one percentage point from growth in Nevada, Arizona, and Idaho, and nearly subtracted a point in Florida. In addition to the decline in construction, declines in accommodation and food services, and real estate, rental, and leasing, caused Nevada to have the largest downturn in 2009 (–6.4 percent).”
Table 2 goes into detail. The top 3 contributors for NV: -1.9% construction, -1.2% accomodations and -1% real estate. So, as severe as the contraction of 2009 was, it was primarily localized in construction, real estate and accomodations.
Report: http://bea.gov/newsreleases/regional/gdp_state/2010/pdf/gsp1110.pdf
MVC/RRBVIP
Mea culpa for the overly generic statement. I did read the report, but in the comment quoted I was addressing the usefulness of the data as a coincidental indicator, not the specifics of the data, so it was a general statement regarding the historical nature of the data. Perhaps more specifics were warranted. I am filled with chagrin to have perpetrated such a foible.
Oh well, at least I can be thankful that I did not do something as foolish as state definitively that current interest rates are so low that “[i]f you wait and pay 15% less for the house, but end up with a 5% mortgage rate, you’ve lost money,” only to be refuted conclusively. Not only would that be embarrassing, it would not need to be re-contextualized to provide a basis for the refutation.
GrandWazoo
This just in from the RGJ: “Now is the best time to buy a home”:
http://www.rgj.com/article/20101120/COL5809/11200302
It must be true if it is in the paper.
smarten
Wazoo –
That’s yesterday’s news.
Furthermore the piece you’re referring to was a guest column by Missy Hinton; the director of communication for the Builders Association of Northern Nevada.
Harold
My wife, who keeps track of these things, advises me that the price of frozen turkeys is up 28% this year from a year ago. This may not mean anything of relevance to a real estate blog. Just thought I would pass it along.
smarten
Harold –
Your wife is correct. Ask her what’s happened to the price of corn/corn based products [I’m informed there are more than 4,000 of them in your local supermarket] in the last year. And this is just the beginning.
So what’s the relevance to a residential real estate blog? MORTGAGE INTEREST RATES! If you can lock-in a long term fixed rate mortgage in the 4%-4.5% range or possibly lower towards the end of the year, while all the insanity is going on around us [a little bit being what you’re wife is talking about], I guaranty you that in the not all that distant future you are going to be very, very happy camper. Right MikeZ?
skeptical
Smarten,
Please don’t ignore the deleterious impact that rising interest rates will have on home prices. Lower prices can significantly offset any potential rise in interest rates. CL commented on this recently, and it has been mentioned ad nauseum here and elsewhere.
I would actually argue that one might consider strongly any purchase in a rising interest rate environment. Purchasing when rates are sinking is a better bet, historically.
MikeZ
Right MikeZ?
Damn right!
Rory
Since Harry Reid took all the credit for saving City Center, can he stomach all the blame for these dismal numbers?
Waldo
Rory, give it up.
There was an election. Everybody who wanted to vote got to vote.
Harry won.
So did Jerry Brown and Barbara Boxer.
Live with it Rory.
Your candidtaes lost Rory. Get it?
One more time Rory. There was an election. Harry won.
Norton
Rory, if you want to post political crap go to the RGJ website. There are hundreds of idiots over there and you will be right at home.
To its great credit this blog maintains itself as a real estate blog and has not fallen into the garbage pit of partisan political comments.
Smarten's Vanishing Equity
“Harold says:
November 21, 2010 at 3:43 PM
My wife, who keeps track of these things, advises me that the price of frozen turkeys is up 28% this year from a year ago. This may not mean anything of relevance to a real estate blog. Just thought I would pass it along.”
That’s funny, I just bought a bone in turkey breast (I don’t like legs, etc.) for $1.79 per pound. This is the same price I paid last year.
Rory
Look at the libs get into a tissy over Harry Reid and his promises! I love it. There may have been an election, but so what? Harry made promises and statements he has to live with. And no amount of leftist venom will keep me from holding my tongue.
Rory
Hey Waldo, cry me a river! Harry barely won against the WORST candidate in Nevada senate history. He has no mandate, and I will ask whatever questions I want. So sit on it!
Sully
Not that it matters anymore but I agree with Rory. Had a credible candidate been running the results might have been different. However, I can see why the casino bosses didn’t like the idea of losing the senate majority leader. Hope things are different in 2012.
CommercialLender
Turkeys are up 28% YoY?! This just in from the National Association of Sellers of Turkeys (“NASTY”):
“Better buy now or be priced out forever! Now is the time to buy! It’s always a great time to buy a turkey! Besides, interest rates are low, so hurry up now and lock in your turket before its too late!”
🙂
smarten
Hey CL –
What’s the web site for NASTY? I wanted to look up your numbers. So I went to nasty.com [I recommend all of you do] and what I found…Well let’s just say there weren’t any turkeys! Then I went to nasty.net. It was even worse [or better, depending upon your perspective]. I then reluctantly went to nasty.org. I’m afraid to open up what I see!
Let this be a lesson to all of us. See what happens when we start making up numbers from questionable sources to substantiate our respective biases?
MVP/RRBVIP
Well, the turkey issue intrigued me, so I did a modicum of digging. As it turns out, wholesale turkey prices are at a historic high, about 25% higher than wholesale prices last year. However, retail prices are lower than last year.
According to a Milwaukee Journal Sentinel article (http://www.jsonline.com/business/109366859.html):
“Supermarkets are paying record wholesale prices for turkeys this year, but that doesn’t necessarily mean shoppers will shell out more for the centerpiece of the Thanksgiving meal.
Turkeys are a Thanksgiving loss leader, which means supermarkets sell them below cost to compete for customers. The pricing typically depends on the shopper making other purchases to make up for the loss.”
Now, I was not as brave as smarten, so I did not check any of the NASTY web sites, so perhaps there is some relevant information I missed (although I suspect not).
MVC/RRBVIP
oops… the name should be MVC/RRBVIP, not MVP/RRBVIP. I don’t want anyone to think that I am annointing myself MVP.
smarten
Okay, I nominate MVC/RRBVIP for MVP! That would make him RRB’s MVP/VIP! Wow, he’s come so far in so little time.
smarten
Hey MVC/RRBVIP/MVP and CL –
It’s NOT “NASTY;” it’s the National Turkey Federation [ http://www.eatturkey.com/home.html ]. No wonder we couldn’t find it!
Happy T’Day to all.
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