Here is the latest from the Bureau of Labor Statistics 

for early December on unemployment:

"The unemployment rate, at 6.7 percent, continued to
trend up in November and has risen by 1.7 percentage points since
the recession started in December 2007 (as designated by the
National Bureau of Economic Research).

     Over the past 3 months, job losses have averaged 419,000 per
month, sharply higher than the average loss of 82,000 per month
from January through August.  About two-thirds of the recent job
declines have occurred in the service-providing sector of the
economy.  In the first 8 months of this year, job losses were
largely limited to construction and manufacturing.

     Manufacturing job losses continued in November (-85,000).
Factory job losses would have been larger were it not for the
return to work of 27,000 aerospace workers who had been on
strike.  Over the month, employment declines occurred throughout
the manufacturing sector.  Motor vehicle and parts manufacturers
shed 13,000 jobs over the month; employment in this industry has
fallen by 135,000 since December.  Manufacturing hours and
overtime each declined by 0.2 hour in November.

     Construction employment was down by 82,000 over the month.
Since a peak in September 2006, employment in this industry has
fallen by 780,000, largely in the residential sector.  Over the
past 3 months, job losses have been evenly distributed between
residential and nonresidential construction.

     Employment also declined throughout the service-providing
sector.  The largest loss (-101,000) was in employment services,
which includes temporary help agencies.  Employment services has
lost 495,000 jobs so far in 2008.

     Retail trade employment fell by 91,000 in November, with the
largest job loss among automobile dealers (-24,000); since
December, auto dealers have shed 115,000 jobs.  Employment also
decreased after seasonal adjustment in clothing stores; sporting
goods, hobby, book, and music stores; and furniture and home
furnishings stores.  Wholesale trade employment fell by 25,000 in
November and by 123,000 so far in 2008.

     Leisure and hospitality employment contracted by 76,000 in
November; the accommodation and food services industry accounted
for most of the decrease.  Elsewhere in the service-providing
sector, sizable employment declines also occurred in financial
activities (-32,000), transportation and warehousing (-32,000),
and information (-19,000).

     In contrast to most industries, health care added jobs in
November.  Employment in the industry rose by 34,000 over the
month and has increased by 341,000 so far this year.  The
November gain reflected jobs added in nursing and residential
care facilities, hospitals, and offices of physicians.

     Average hourly earnings for production and nonsupervisory
workers in the private sector rose by 7 cents, or 0.4 percent, in
November.  Over the past 12 months, average hourly earnings have
increased by 3.7 percent.  From October 2007 to October 2008, the
Consumer Price Index for Urban Wage Earners and Clerical Workers
(CPI-W) rose by 3.8 percent.

     Turning to labor market measures from the survey of
households, the unemployment rate continued to increase in
November.  At 6.7 percent, the rate was up by 0.2 percentage
point over the month and by 1.7 percentage points since December.

     In November, 10.3 million persons were unemployed, up by 2.7
million from December.  About 2.2 million of the unemployed in
November had been jobless for 27 weeks or more, an increase of
868,000 thus far in 2008.

     Both the labor force participation rate, at 65.8 percent,
and the employment-population ratio, at 61.4 percent, decreased
over the month.  The employment-population ratio has declined by
1.3 percentage points since December.

     The number of persons working part time who would have
preferred full-time employment increased by 621,000 in November
to 7.3 million.  Thus far in 2008, the number of such workers has
grown by nearly 2.7 million.

     In summary, nonfarm payroll employment declined by 533,000
in November after having fallen by 723,000 over the prior 2
months combined.  The unemployment rate rose to 6.7 percent in
November, 1.7 percentage points above the December rate."

IN DECEMBER, The U.S. Department of Energy is awarding as much as $80 billion for 16 contracts 

covering energy efficiency, renewable energy and water conservation projects at 

federal facilities...

As further evidence of a turning of this terrible time .Wells Fargo & Company's environmental

 financing has exceeded $3 billion, hurdling past its goal of providing $1 billion in 

commitments to Earth-friendly projects and doing so two years earlier than expected.

"Our environmentally-focused investments and loans are a significant new area of business for Wells Fargo," said Barry Neal, director of Environmental Finance, in a statement this week of his company's progress. "Over the past three years we've focused on renewable energy, resource efficiency, and sustainability in our work with our customers – helping to protect our environment and grow our businesses."

Wells Fargo's $1 billion goal was included in the 10-point environmental commitment the firm issued in 2005. Its financing of projects thus far and progress on other points are noted in updates about the pledge.

THROUGH August, the job losses were mostly in residential construction and manufacturing. 

Since then the losses have been in employment services and retail, while 

the health care industry increase their total jobs. I was surprised that the 

financial industries were not a significant source of layoffs. 

We have heard constant talk from Candidate Obama about the urgent need for change. Now the country is waiting 

for the changes that President Obama promised.

Now that the Barack Obama will take office in 29 days, we are all looking forward to the huge 

injection over a Trillion Dollars in our economy. The question is when will this create a

positive attitude about the economy on Main Street,U.S.A? 

What about 2009?  On December 6, President-elect Barack Obama revealed key elements of his 

sweeping economic-recovery plan, part of which calls for building roads,

 greening federal offices, and making schools more high-tech, 

all of which should bode well for those in the design and construction industries.

These public projects could put a sizable dent in the construction industry’s 

10.8 percent unemployment rate, says Tony Dorsey, a spokesman for the American Association of 

State Highway and Transportation Officials, an advocacy group. “We are very hopeful that in 

the near future we will see spending on transportation projects that could 

create 1.8 million jobs,” Dorsey says.

Schools will also be targeted by Obama’s infrastructure campaign, which already has mayors and 

governors vying for slices of the pie. In December, the National Governors Association unveiled 

a request for $136 billion, part of which would go toward fixing up classrooms; 

the U.S. Conference of Mayors also recently debuted a $73.2 billion plan with similar aims.

Barbara Nadel, FAIA, a New York architect who has represented the AIA on Capitol Hill for years,

 says she suspects school construction will be a significant portion of Obama’s spending plan 

because it “touches every community in America.” Nadel is also hopeful that veterans’ hospitals 

and embassies will be rebuilt or renovated.

In his December address, Obama said “our government now pays the highest energy bills 

in the world. We need to change that.” Creating more-efficient heating and cooling systems

 in federal offices, plus adding more daylight and cleaner air, is embraced by 

Mr. Cook, FAIA, a partner at Cook + Fox, a New York City firm that’s been active for more 

than a decade in the “green” building movement. “The real pay dirt is in human productivity

 and health, which is slightly hard to quantify,” Cook says. “But I think it’s absolutely 

mandatory the new administration take a leadership role in creating of green-collar jobs.”
Certainly City,State, architectural, construction, school, and alternate energy  special interest
groups are  competing for a large share of these economic recovery funds. The danger is that 
this may result in Congressional squabbling because some members of Congress are strongly 
advocating only those special interests that directly affected their constituents. This was seen in the 
in the voting for the Economic and Housing Recovery Act of 2008.
Have a Happy Holidays and a great NEW YEAR.

I am traveling in the East Coast this week. See you at this blog on Monday-Dec.22

Happy holidays to all and have a happy and healthy New Year.

We lost 533,000 jobs in November. This was the largest U.S. job loss since December 1974. Recent job losses have increased the U.S. unemployment rate to 6.7% according to  the U.S. Bureau of Labor Statistics.  A note of caution – remember in the JFK administration full employment was an unemployment rate of 6%.  

Yesterday the House passed the auto rescue bill, the present Senate Republicans vowed to stop passage with filibusters etc. Senator Reid, the Dem Senate leader, then met with the Bush administration folks and worked out a compromise that was acceptable to the House. In spite of this agreement, the Republican Senate leadership still vows to stop passage of  this compromised auto recovery bill.  

This shows the power vacuum in Washington, with the lame-duck Bush administration. Thus the political football of costly efforts to prop up the economy is tossed  to President-elect Barack Obama, who will not take office until Jan 20.  Fortunately, the new Democratic strong Congress takes over right after the New Year. This is not too soon. These emergencies need to be addressed yesterday – not a month from now. 

Here are some of the possible scenarios for attempting to stem the economic slide:

• FISCAL STIMULUS

Obama has said the economy needs a “jolt,” and is likely to propose multi-billion-dollar spending on infrastructure such as crumbling roads and bridges and outdated schools, mass transit, and to ramp up alternative energy investments.

Consumer spending is 70% of the Gross Domestic Product. Many pundits hope that Obama can craft a package that pushes money into the economy quickly, encouraging the idled gears of consumer spending to start cranking again. 

A House aide has said the package could be on the order of $500 billion. Obama hasn’t shown his hand so far, but on Friday, responding to the jobs report, said there were “no quick or easy fixes” on the horizon. Others have guesses up to a trillion dollars. 

House of Representatives Speaker Nancy Pelosi, a California Democrat, has said the plan is to have something on Obama’s desk by the time he takes office.  The Brookings Institute is working overtime preparing legislation requested by the Obama advisers.

“The rapidly worsening job situation significantly increases the probability of President-Elect Obama proposing a $500 billion to $700 billion fiscal stimulus package,” said Mohamed El-Erian, who helps oversee $830 billion in assets as chief executive at the bond fund PIMCO.

• FEDERAL RESERVE INTEREST RATE CUTS

The U.S. central bank’s policy-setting committee is widely expected to lower benchmark borrowing costs by one-half percentage point to 0.5 percent at a meeting on Dec. 15-16. A half-point cut would take overnight interest rates to their lowest level on records dating to July 1954.

“We doubt that action will hasten an economic recovery. Traditional monetary policy is essentially impotent in this situation,” said Bernard Baumohl, chief global economist at The Economic Outlook Group in Princeton, New Jersey.

Fed officials have said they will consider alternative steps to stimulate the economy, as rates are already approaching zero and the data stream only continues to worsen.

Many analysts now expect the central bank to set rates at zero at its subsequent meeting in January and then push full-bore into “quantitative easing”, flooding the economy with cash in an effort to spur spending.

“The outlook has clearly deteriorated… we need to make policies appropriately accommodative,” Chicago Federal Reserve Bank President Charles Evans said on Thursday.

• ALTERNATIVE FED MEASURES

If the Fed opts for a zero interest rate policy, it has other ways to support the economy, some of which were outlined by Fed Chairman Ben Bernanke in a speech on Monday.

Bernanke said the Fed could buy long-term Treasury bonds and debt issued by government-sponsored housing finance companies, which could lower mortgage costs. 

The Fed could also pump funds directly into specific credit markets, as it has been doing for the commercial paper market that many corporations tap to fund day-to-day operations.

Since September, the Fed has ballooned the size of its balance sheet to over $2 trillion from about $800 billion to provide liquidity to strained financial markets, and it could continue to do so for now subject to the caveat that these funds must be used for easing the banks credit strike.

The Fed could also make an explicit commitment to keeping interest rates low for a foreseeable period — another way to push down longer-term interest rates.

• MORTGAGE PLANS

The federal government is considering additional ways to bring down mortgage rates and stem the flood of foreclosures that is undermining housing prices. Various agencies have floated competing proposals.

The Federal Deposit Insurance Corporation has crafted a plan to modify about 2.2 million home mortgage loans, complete with financial incentives for mortgage services to modify loans and set affordable monthly payments for homeowners.

The FDIC, with support from many Democratic lawmakers, has called on the Treasury Department to fund that plan under a $700 billion financial rescue fund. The Treasury, however, has said the fund is only for investments, not subsidies.

For its part, the Treasury has said it is considering a number of proposals. According to sources, one plan would aim to set rates for newly originated 30-year mortgages at a rock-bottom 4.5 percent — a move some pundits say falls short of providing a full solution to the nation’s housing ills.

“The irony here is that the homeowners who most need help, those facing foreclosures, defaults, or resets of their loans, would be shut out of this program,” said Kurt Eggert, a law professor at Chapman University School of Law in Orange, California. Bernanke on Thursday suggested other measures to help out the housing market, including write-downs of loan principal. As many as 20 percent of home borrowers might be under water on their mortgages — owing more principal than their homes are worth.

With millions of household being evicted from their homes because of their inability to make mortgage payments, where will these families live? Apartment vacancies are vert low. Affordable housing starts  are at close to zero because these programs do not work in this economic climate. The State Housing Agencies that administer these programs recently met in Washington to devise scenarios to get affordable housing back on track. Their suggestions were to increase the Federal subsidy for affordable housing.  The late Senator Robert Kennedy created successful affordable housing programs by providing incentives for private investors to fund the necessary subsidy for affordable housing. This is what we need today.  

Some of the  foregoing was taken from reports from Reuters, Bloomberg news, and other financial news services.

President Obama’s recent announcements of what his administration and Congress will do to spark the economy are both promising and insightful.  On Monday, Stocks rose around the world, sending the Standard & Poor’s 500 Index to a one-month high, as President-elect Barack Obama pledged to boost the economy with the biggest public-works spending package since the 1950s.

U.S. Steel Corp. and Alcoa Inc. climbed at least 19 percent, while Chevron Corp. added 5 percent, as Obama’s plan to increase infrastructure spending spurred gains in commodities. General Motors Corp. jumped as much as 25 percent as lawmakers agreed in principle with the White House to provide funds to shore up the car industry. Benchmark indexes in Germany and France added more than 7.6 percent, while Tokyo’

s Nikkei 225 climbed 5.2 percent, as Siemens AG and Komatsu Ltd. rallied. Today the Dow was down.

 Nevertheless, The present Credit Strike by the Banks has been causing disastrous results throughout our economy. For example, Car sales are down because car buyers can not finance. Home sales are down because potential buyers can not obtain home loans.  We hope that this world wide ebullient attitude towards our financial future is contagious- the banks will catch it and will finally stop striking and start to use the huge cash subsidy they have received from the Feds to jump start lending.

One of the features of the Obama stimulus package is the new Transportation Bill.  The network of highways, railroads, public transportation, walkway, and bikeways is the backbone of our economy. But today the system is broken.  The interstate highways need upkeep. Bridges are crumbling.  The Dept. of Transportation is predicting gas prices will soon rise to even higher prices, based on gas consumption is up, oil production is down, and oil imports are way up. Many Americans are looking to cut back on driving, but this is difficult because half of U.S. households do not have access to public transportation. The places they live in were built to be car dependent,.  With the huge increase in the use of public transportation,  many of the remaining half in metropolitan areas have over taxed public transportation systems that are overcrowded.

We must catch and pass competitors in China, Japan, and Europe, by modernizing and expanding our rail and transit networks to reduce oil dependence and connecting the metro regions that are the engines of the modern economy. Our nation’s clean energy future will requirer cleaner vehicles and new fuels, but also must include support for cleaner forms of transportation – modern public transit, walking and biking- and for energy-efficient, sustainable development. 

Heretofore, Transportation has been the sixth largest federal appropriation at $70 billion per year. Most of these funds went for highways. Now a coalition of national, state, and local organizations working to improve the ways we plan and build the cities, towns, and metro areas we call home have organized to change the priorities in the new Transportation Bill. They believe our financial security, economic success, and health require us to reduce our dependence on oil.  Further that everyone living in America deserves to have ample and affordable options for living and commuting with fewer hours in traffic, and more hours for recreation. 

They state that after bailing out Wall Street, Congress and President must now invest in Main Street. They strongly advocate more mass transit including railroads, commuter trains, bike. hiking and walking trails. This is an essential part of solving the health problems caused by green house gases.  Families that are living in neighborhoods adjacent to public transportation spend 9% of their household budget on transportation as compared to 25% in car dependent areas. The person taking public transportation has an annual average savings of $9,500. 

How is this additional mass transit to be paid for with gas taxes down?  The proponents of the new Transportation Bill concentrating on mass transit, etc. are proposing that the developers of the new transit stops make the public a 10% to 20%  limited partner in the development of the Transit oriented development(TOD). The developer of a TOD has a zoned site adjacent to a new transit stop. This limited partnership interest  reminds me of the argument of the famous journalist Henry George calling the increase in value of a site the unearned increment. George proposed that the unearned increment belonged to the public.  

During this century, the U.S. population will increase by 100,000,000.  As public transportation becomes more AVAILABLE, this will mean denser mixed use developments.  Much of this new development will happen in metropolitan areas of major cities, not in the major cities.  The price of land is finally coming down because there are NO buyers. Those who obtain these new TOD sites will have a great opportunity 

For 20 years, California Planning & Development Report has been regarded as the authoritative periodical on planning and development issues – required reading for planners, land-use lawyers, developers, environmentalists, citizen activists, and others interested and involved in the process of planning and development in California.  Here is their take on the unprecedented opportunity the Obama administration has to solve urban problems.  In thought this analysis very insightful and persuasive. So here it is :

Could Obama’s Urban Policy Embrace Regional, Suburban Issues Too?

Now in its 30th year, Emerging Trends is the oldest, most highly regarded annual industry outlook for the real estate and land use industry and includes interviews and survey responses from more than 600 leading real estate executives, including investors, developers, property company representatives, lenders, brokers and consultants. Yesterday I attended a urban Land Institute conference that featured Jonathan Miller, author of the annual report, Emerging Trends in Real Estate 2009. This annual report is prepared jointly by Price-Waterhouse and the Urban Land Institute.  This report states:” The credit crisis and ensuing recession promise to drag commercial real estate markets into a difficult period marked by value losses, rising foreclosures, and reduced property revenues.  In 2009, expected total private equity returns will likely register in negative territory for the first time in nearly two decades. After an unprecedented melt down=, housing values should finally hit bottom during the year, followed by later correcting commercial sectors. Cap rates continue to continue to more historic levels, raising yield expectations and triggering depreciation.   Beginning in 2010, Emerging Trends interviewees anticipate a slow recovery, hampered by risk aversion, constricted financing sources, and a weakened economy. REIT stock portfolios , which have already suffered significant losses, will lead any rebound.” 

The best rated real estate category is multifamily, next is industrial. then office. The two worst effected real estate categories by this econmy are retail and hotels.  

 The report predicts that capitalization rates(cap rates) will rise at least 2% .  This can have dire consequences for owners. Imagine a mere 2% change in cap rate. Say your building has an NOI of $1,000,0000. The NOI stays the same. The cap rate was 6%- value was $16,666,667, Although everything remained the same except the cap rate changed to 8%-now your value is $12,500,000, Your loss of value is $4,166,667. A 25% loss of value from a 2% change in cap rate.

Before a rebound, Emerging Trends says the following needs to happen:

• Private real estate markets need to correct-–lenders must force distressed owners to become motivated sellers.
• Debt capital needs to flow-–lenders will need to learn to deal in a more stringent regulatory landscape. The commercial mortgage-backed securities (CMBS) market must “reformulate.”
• Regulators need to restore confidence in the securities market. The government will insert itself into overseeing mortgage securitization markets. Systemic overhaul promises more measured debt flow.
• The economy needs to improve. Falling demand for space won’t affect real estate markets severely until 2009.
• The housing condition is no better and shows no signs of recovering quickly. For lenders, the “subprime mess is the tip of the iceberg.” Stricter lending standards and the weak economy will continue to drain the homebuyer market.  “Forget the quick fi

We must quickly change the nation’s banks lending practices for all of us to economically survive!!!

For all the recent election slogans about change, let’s face it change is hard, for us and institutions alike. We like our ways, as inefficient or old fashioned as they may be. They bring us a measure of comfort. When we must do things differently, we lose that comfort.

Confronting barriers to change is one of the top challenges for the “Obama Drama”. Organizations are naturally resistant to change. Just look at the efforts of our past Presidents to unsuccessfully change the governments bureaucracy.  The same applies to efforts to change corporations. It is a simple equation. You take an individual’s resistance and multiply it by hundreds, thousands, or more – that is what the Obama Drama is facing!!

Everyone will agree that businesses and individuals can improve their bottom lines if credit is available again. So, why is this not happening? When the Fed started discussions with banks about returning to lending, the banks said they were ready to barrel down the lending superhighway at top speed. The Fed and the Treasury gave them funds to take them from 0 to 60 in seconds only to find out that the banks were insistent about the necessity to creep along at a snails pace. Our economy cannot survive this snail’s pace. The issue was not the bank’s figuring out what to do- the banks have been lending since their beginnings. The real challenge is getting a conservative banking culture to become progressive. Conservatives are cautious: progressives throw caution to the wind. Conservatives think they are the only ones grounded in reality, they look upon progressives as being based in lala land, wide-eyed dangerous liberals. In today’s highly charged political environment, any issue, particularly lending, is subject to sweeping generalizations and half-truths. So how do we chart a course for change within a conservative culture without being called wide-eyed progressives or liberals?

1. Personal Commitment. The authors of the economic recovery program must show they are knowledgeable about the economy and the lending institutions. This what the Obama team demonstrates.  
2. Education. Conservatives don’t want to be sold to, but they do want to be informed. What tends to hold people back, even CEOs, from jumping into new territory are concerns that they can’t quite articulate. People need to develop a comfort level with the new ideas.  Remember – The banks missions is their lending their depositors and investors funds. 
3. Collaboration. All the various interests that want these lending practices TO BE PUT IN PLACE  must make there support known to all. Leaders of the  Banking Industry associations must be converted to believers who  will articulate this message to all. 
4. Enthusiasm.  Enthusiasm is the antidote to burnout for anyone steering an initiative inside a change-resistant culture.

Having the right people in place is half the battle. The other half involves strategy. To drive progress in a conservative culture, you must demonstrate the following:

1. Top-level support. While a progressive culture will take grass roots efforts seriously, a conservative culture is more likely to follow the direction of top-level leadership. 
2. Management-level and administrative support. A major stumbling block in organizations that fulfill the first prerequisite is failure to engage other rungs of employees. Engaging stakeholders requires a sincere statement backed by action on the part of the leader, as well as education and incentives to motivate staff that may be reticent to support “progressive” ideas.   This is exactly why plans for reorganizing the Federal bureaucracy have failed.
3.  Minimal risk. Any initiative perceived as a grave risk to the institutions involved will not gain support.
4. A clear path. Conservative cultures are not innovative by nature. Remember the three C’s of Banking: character, capacity and collateral are the basis of most bankers training. It is imperative  that any new programs for lending must have these basic axioms included in them.  By sharing case studies of similar  initiatives, change agents can offer a concrete path to follow.
5. Bottom-line value. The numbers have to demonstrate a relatively short payback period with a clear ROI.
6. Political awareness. Know the culture. I had to learn this lesson the hard way. Sometimes you can have everything else in place and the plan can still fall flat. Never underestimate the importance of hierarchy in the planning stage. Know your audience. If you don’t engage the right people early on, they will not appreciate the value of a plan that may require funds or behavioral changes, even if the numbers work on paper