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The Big Picture: Unglued

Justin Fox: The Real Estate Slump and Newspapers

Justin Fox writes:

The real estate slump claims another victim: newspapers: The real estate boom/bubble of the past few years had a lot of interesting effects on the American economy that are now being unwound. One was that everybody's brother in law became a mortgage broker. Another was that consumer spending kept rising even though incomes were stagnant. Yet another, which I hadn't really thought about before, was that it made the struggling newspaper industry look slightly healthier than it actually was. From today's W$J:

In the first quarter, revenue for every major ad category -- classified, national and retail advertising -- was down. The sharpest declines were for classifieds, where spending dropped 13.2% -- not so much a result of competition from the Web as of economic woes affecting certain categories of advertisers. Real-estate classifieds, until recently a bright spot for the industry, have plunged along with the property market. Auto and employment classifieds are also sinking. Financial-news outlets such as the Journal are being hurt by a slump in technology advertising.

"Right now, you've got a perfect storm," says Edward Atorino, an analyst with financial broker Benchmark Co. He predicts total ad revenue will fall 4.3% this year. The decline will be one of the steepest in history...

Nevertheless, the macro numbers don't look all that bad. Overall consumption spending is still stronger than I, at least, expected. And maybe we will get some exports...

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