NewGeography.com blogs

One interesting thing about the luxury economy today in the U.S. is how much of it is being driven by tourists and non-residents. Another salient point: how the very wealthy have been largely immune to the current downturn.

An article in the LA Times about the shopping habits on Rodeo Drive brings both these points home. "Business has been crazy-great," said a manager of the Christofle shop just off of Rodeo Drive in LA - a purveyor of silver flatware and other furnishings. "It's like Christmas in here."

Apparently, the famed street of tony boutiques and celebrities has been annexed for the time being by flush foreigners. "Saudi princesses," confided a saleswoman at one Rodeo Drive clothing store. "That's who's doing all the buying." Where's US Weekly's article about how those poor starlets are feeling marginalized by all this?

And today, an article in the New York Sun reveals that a full third of New York condo sales are being grabbed up by Europeans who now constitute 15 percent of the entire market.

- Former San Francisco Mayor Willie Brown, who's new column in the SF Chronicle I am thoroughly enjoying, had this vignette about walking around the shops at Union Square:

"At Bloomingdale's - packed and nobody speaking English. Neiman Marcus - no English. And nobody, but nobody, was speaking English in Prada.
It's all Italian, Dutch, French, German and heavy, heavy Russian.

The Europeans are absolutely the biggest retail customers these days downtown, and they are spending like crazy."

But this could change, the dollar rose eight percent against the euro in the last month. Better grab those $10,000 silverware sets while you can.

But nativist shoppers, fear not - I heard nary a foreign tongue as I flipped through the sales rack at Gap.

One of these cities is the perennial Cinderella to urban planners; the other the ugly sister who always crashes the party. One is the well-planned "City of Roses" (no, not Pasadena), a bastion of mass-transit and controlled development along the Columbia River while its gargantuan sister to the south eschews all such enlightened principles.

That's the gist at least from this paean to Portland in the LA Times today about what the city could learn from its lithe Northern cousin.

A few key differences between these two:

• The vast majority (90%) of job growth in Portland has been in the suburbs

• Portland is actually far less dense than LA

• It has a tiny population of immigrants and poor vis-a-vis LA

• The city is losing families and children and rivals San Francisco for having the lowest percentage of its population under the age of 18 of any major U.S. city.

And he doesn't mention Portland's greatest comparative advantage to LA: amazing beer!

One thing both cities have in common right now: two of the most dynamic music scenes in the country.

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Here's Joel Kotkin's piece about Portland a few years ago.

New home sales went down by a whopping 73 percent in the Windy City during the first six months of this year. But developers, anticipating high demand - especially for the condo market - have committed to keep building them. From the article in Crain's Chicago:

"Developers are building at a record pace, with 9,528 units scheduled to be finished by the end of next year, Appraisal Research says. Nearly 33% of those remain unsold, a high percentage but slightly better than the first quarter's 35%."

Mirroring a national trend, the income gap is increasing in the Bay State. From the Boston Globe article:

"The gap between rich and poor has widened substantially in Massachusetts over the past two decades, according to a new study by the University of Massachusetts. Only those earning the highest incomes benefited from gains in technology, productivity, and globalization, while middle-class earnings stagnated and incomes for poor families plunged 15 percent."

According to this report by Greenberg Quinlan Rosner research, the American public is restive for "bold change." One of the key findings of the report is that: "Voters are looking for dramatic action. Just 35 percent of voters say we can solve America’s problems with minor changes, while nearly two-thirds believe it will take 'major changes' to bring about solutions." And these respondents look more favorably upon the political legacy of FDR, rather than Reagan, to affect that change.

This climate of political disenchantment is similar to the one that greeted FDR when he entered office. Americans had gone through 12 years of Republican administrations; they viewed Hoover as grim and ineffectual as a leader. His predecessor, President Coolidge, had a famous line that "the business of government is business" which did not exactly resonate with the masses in the fall of 1932. People were ready for boldness and a different approach to economics and government and they got it.

Memo to the candidates to "make no small plans."

The Chicago Tribune reported recently on the state of the finance industry in the Chicago area. Reports indicate smaller, more nimble finance companies in Chicago are tapping an exodus of traders, bankers and investment managers:

Employment in the securities and commodity industries has held steady in the Windy City, showing an unusual resilience while marquee names such as Citigroup, Merrill Lynch and Lehman Brothers hemorrhage billions of dollars in connection with subprime mortgages. Members of the Chicago trading community say the transparency and technology provided by the futures and options exchanges has insulated them from losses the International Monetary Fund estimates will total $1 trillion.

Looking at the historical numbers, Chicago passed NYC in banking employment in 2001, but that industry is in slow decline in Chicago after peaking in late 2006. Securities jobs in Chicago have remained steady, while this sector in New York City began its sharp decline in September 2007. I'd say any evidence of Chicago growth based on New York's finance job loss is still anecdotal. (Click the chart for a bigger image.)

Chicago Trib link via Steve Bartin.

This recent article in the San Francisco Chronicle discusses how politicians in the city are trying to stem the flight of blacks from the city - who now only make up 6.5 percent of the city's population (it was 13.4 percent in 1970).

There are two problems with this article. One is it fails to contextualize the pattern of black migration in America. As this report from William Frey of the Brookings Institute points out, black population growth is shifting to the South and to newer communities in the West with a lower cost of living. If you look at a map of California in Frey's report, you'll see 25 percent population growth of blacks in some suburban communities.

Secondly, the article doesn't link this occurrence to current economic trends in San Francisco. The city is increasingly becoming a haven for the very wealthy which is pushing out the middle and lower earners - and blacks in the city are more likely to fall into this income bracket.

Finally, albeit a small reason, Section 8 vouchers are moving some working class blacks to the suburbs.

If you read the Chronicle article, it sounds like the City is being very antagonistic towards the black community. Perhaps it is in an inadvertent economic way. I think that perhaps the bigger culprit is that the city is not hospitable to the middle class and families any longer. And secondly, college-educated and affluent blacks are choosing to live in cities like Atlanta where there is a higher concentration of black professionals and business and cultural centers.

With 36 Chicago Public School children murdered in the last 12 months, the Chicago Sun-Times reports that getting shot has become the number one fear of children in the city's violent neighborhoods.

The fear seems most pervasive among fifth to eighth graders.

The Financial Times recently made note of the biggest drop in commodity prices in 28 years. This, of course, is a fall from record highs and some analysts are continuing bullish forecasts. The Reuters/Jeffries CRB index has continued its decline the past few days:

It's a trend to keep an eye on.

Yesterday, an article appeared in the SF Chronicle by C.W. Nevius about an Internet salesman who lives in a tent in Golden Gate Park because housing costs are too high. He works by day at a cafe and pitches his tent at night getting up before dawn when the police do raids to evict illegal campers.

With much of the new development in SF geared towards the flush Web 2.0 crowd, there are fewer and fewer places for the lower middle-class to live. The resident hotels in SF are not pleasant places to live or even visit (I went voter canvassing in a few three years ago).

What is the housing solution for the Tom Sepas of the world? If we ever start seeing 21st Century Hoovervilles, they could be populated by people like him.

A very sobering tale that shatters the popular vision of the everyman Internet worker as some high-flying urban hepcat.