Of foreclosures and the local business climate

Can examining the relationship between Elk Grove foreclosure notices and newspaper ads tell us when things are about to improve? Or will it tell nothing?


Much has written about the national foreclosure crisis and the accompanying recession we find our selves in even though we are not ‘officially’ there yet. Economist are great at telling us we are in a recession well after it has started.

Sometimes they tell us we were in a recession even after recovery has started. In either case, consumers know better on a day to day base when an economy is hurting and there is plenty of hurt going around now.

For those in Elk Grove, we already know we are in a pretty deep recession. Just ask anybody who lost or is about to lose their home.

Just how well we know when things have turned the corner? We can’t rely on economist because they will tell us well after it is common knowledge on the street.

In a very unscientific way, we here at ElkGroveNews.net will take our creative stab at it and work on a rudimentary projection to gauge the health of our local economy.

As ours is primarily a bedroom community, the residential real estate market will by the keystone to our gauge. For most regular people their home represents the most valuable asset that determines wealth.

How wealthy we are (or perceive ourselves to be) in large part dictates our spending habits. Consumer spending fuels the majority of the American economy and if we are not feeling wealthy we won’t be buying.

Even the most casual observer in Elk Grove can see this. Witness the number of business failures like the closing of Elk Grove Ford.

In the next days we will post a gauge that we hope will show micro-trends that indicate the health of our local economy. They will be based on primarily foreclosure activity, local newspaper advertising from locally based merchants and perhaps real estate advertisements.

Again, this is not meant to be a scientific survey but it could shed some light on the direction of our local economy.

Feel free to e-mail us your ideas or post your comments about this study.