Infotheque Network

This is all about the US economy - what's the connection to Baja and Mexico?? Well, is their not the saying: "If the American economy coughs the Mexican economy has a flu" or such?? Woth all the positive thinking and hopes: does not look so good at all to the editor. Look at the whole picture.... Does a 20% occupation around xmas at one of the main resort areas in Mexico, Loscabos ring a bell?? How long will the living in self denial within the Baja business people continue until they think of plan "B" ??? One is wondering when observing some of the actions that are going on within some industry. Noticeable in the so called 'luxury" real estate industry...
The US Commerce Department said Thursday durable goods orders, excluding transportation, slipped 0.6 percent last month, but overall orders jumped as civilian aircraft bookings surged 126 percent. Separately, the number of people filing initial claims for jobless aid rose for a second straight week last week, topping analysts' expectations, although the figures were likely affected by snowstorms that blanketed parts of the country. "Rising jobless claims and weaker orders suggest the economy is retrenching in the first half of the first quarter," said Chris Low, chief economist at FTN Financial in New York. Still, he said the data did not suggest the start of a "double dip" recession. "Some back-and-fill is standard operating procedure in recoveries," Low said.
The weak reports and threats from rating agencies to downgrade Greece's sovereign debt pulled U.S. stocks down. Prices for U.S. government debt soared, while the dollar neared a nine-month high against the euro.
The data, coming in the wake of reports showing a drop in consumer confidence and a plunge in new home sales to a record low in January, supported views economic growth would slow in the first quarter after a brisk 5.7 percent pace in the October-December period.
"The fourth quarter was supported by a swing in inventories. That adds to growth, but it's not something that can be sustained over time," said Andrew Gledhill, an economist at Moody's Economy.com in West Chester, Pennsylvania.
"First quarter (growth) will be more dependent on how the U.S. consumer is doing and what kind of production levels manufacturing is doing. It's more the underlying economy, less the kind of temporary technical factors."
The economy resumed growth in the second half of 2009 after the worst downturn since the 1930s. However, employment is lagging the recovery and weekly jobless claims have failed to hold retreats made since mid-November.
The latest report from the Labor Department Thursday showed first-time filings for state unemployment benefits rose to 496,000 last week from 474,000 a week earlier. An analyst with the department said snowstorms may have kept some workers sidelined and could have delayed the processing of claims, leading to the unexpectedly large spike.
While economists remained optimistic the economy would start to create jobs in the first half of the year, they worried the continued rise in jobless filings could be a sign of a shift in the downward trend that layoffs had displayed. Federal Reserve Chairman Ben Bernanke also acknowledged the harsh weather could negatively impact employment data, but he said he expected the effects to be temporary.
"We will have to be particularly careful about not over interpreting the data," he told a congressional committee. Since the start of the recession in December 2007, payrolls have dropped every month, except in November last year when employers added 64,000 jobs.
Durable goods orders, excluding transport, were pulled down last month by the biggest decline in a year in orders for machinery. Economists had expected a 1 percent gain. Disappointment was tempered by an upward revision that showed non-transport orders increased 2 percent in December.
In January, motor vehicles and parts orders saw their largest fall in eight months, and a closely watched gauge of business spending dropped 2.9 percent after a 3.3 percent rise in December.
Shipments, which go into the calculation of GDP, slipped 0.2 percent. They rose 2.4 percent in December.
Some analysts drew comfort from gains in some categories, in particular large orders for computers and electronic products, which they said pointed to increased business investment in equipment and software.
"Unfilled orders increased for the first time since September 2008 and inventories did not fall for the first time since December 2008," said Tony Crescenzi, portfolio manager at PIMCO in Newport Beach, California. "In this context these data are not as bearish for the economy as the core data suggest."
Durable goods inventories were flat last month after easing 0.2 percent in December. Unfilled orders rose 0.1 percent, snapping a record 15 straight months of decline.

Interesting reading, in particular when considering the blown out of proportion "lifestyle" area around Loscabos. We all see how the recession did affect that area and the people living and working there. (Yeah, the editor does know: we just see things NOT the right way and without having a vision..... sure...!!) Luxury hotels with $1,000-a-night room rates and extravagant resorts may face a tougher recovery than the rest of the industry. "The most over-the-top excesses will probably be a long time -- if ever-- coming back," Marriott President Arne Sorenson told the Reuters Travel and Leisure Summit. He drew a distinction between these hotels and the typical Ritz-Carlton luxury hotels the company operates. Marriott's other brands include its namesake properties and Courtyards. Sorenson added that some projects in the Caribbean, which tend to be smaller and partly rely on residences, "may never come back" because they rely on the kind of lavish spending that has gone out of vogue with travelers. "They require really that conspicuous consumption to support their entire business model," Sorenson told reporters in a telephone interview. Of all hotels, luxury properties were the hardest hit last year. While rates sank nearly 9 percent for the U.S. hotel industry, luxury hotels saw their rates tumble more than 16 percent, according to PricewaterhouseCoopers.
Many hotels across the spectrum have buckled under their debt loads in this downturn, as lower room rates constrain cash flow used to service these payments. The Renaissance Mayflower Hotel indicated last year that it would no longer be able to meet debt service, Fitch Ratings said last month.
Ritz-Carlton Hotel Co, a division of Marriott, will close its Lake Las Vegas property this year. Some distressed properties have bristled against standards set by companies like Marriott. Sorenson said the company is working with some hotels to manage their payments, and has extended the deadline for hotels to put flat-screen television sets in rooms.
"We've also got some one-off owners who just don't have two nickels to rub together," Sorenson said. "If it goes too long or if it is too severe, that is a place where the response is really to pull the flag." Chief Financial Officer Carl Berquist and Sorenson said typically 5,000 rooms leave the Marriott system each year, but this year a few thousand more rooms could be shown the door.
These properties would largely fall in the limited-service category in tertiary markets. In the event that a hotel goes into foreclosure, Marriott has "non-disturbance agreements" on many hotels, which prevents that hotel from leaving its brand, Berquist said.
Widespread distress in the hotel industry, lower rates and tough economic conditions do not mean all luxury hotels will go belly-up, Sorenson said. Some of these hotels will be able to restructure their debt with their lenders. "There's a whole bunch of hotels that are in established destinations, dealing with meaningfully lower rates," Sorenson said. "Over the next number of years (these hotels) are going to see their owners work with their lenders."
Interesting reading for one living at Baja Sur with all of it's Baja luxury.... Read that and the next post and then go back to our post last year about the 'W" of double-dip and build yourself a opinion....

If you’re looking for ground zero in America’s longest and deepest recession, El Centro in southern California appears on first glance to fit the bill. The unemployment rate here and for the whole of Imperial County hit 30.1 percent in September, the highest rate in the United States. Locals say there is no denying that El Centro has suffered as a result of the recession and that jobs are more scarce in an area where agriculture is the backbone of the community and forms 25 percent of the local economy.
El Centro city manager Ruben Duran say the jobless numbers don’t tell the full story. Duran points to the fact that back in March 2006 unemployment in Imperial County fell to 12.2 percent and the number of employed people in this county of around 160,000 totaled 54,057.
But when unemployment hit 30.1 percent – well over double the rate in March 2006 — the number of employed workers slid less than 1 percent, to 53,734. City revenue from taxes is only down about 10 percent this year, Duran said, which also does not tally with the sharp rise in the jobless rate. “Yes, there has been hardship and suffering here,” Duran said. “But where did all those extra unemployed people come from if the number of people in work has barely fallen?”
Drive around El Centro, a city of some 48,000, and it does not feel like some of America’s long-suffering communities like Flint, Michigan, where collapsing auto sales amid the recession have led to an unemployment rate of 15.8 percent. Whereas Flint is dealing with shuttered businesses and abandoned homes, relatively few stores have closed in El Centro.
Duran said the key to understanding the local economy and El Centro’s high jobless rate lies just across the border in the city of Mexicali, a city of more than 1 million people. “The border bleeds both ways,” he said. “Many people who live here work in Mexicali. The trouble with the statistics is they stop at the border and don’t take into account the role a major city across the border plays in our economy.”