Last week I wrote a piece, "Top military contractors not hurt by sequestration," based on a story on Barry Ritholtz’s blog, The Big Picture. The gist was that, despite the billions of cuts of sequestration, the stock price of the country’s top military contractors was going up.
The data were right, but the conclusion was wrong.
Sequestration, in fact, is hurting: The companies’ bottom lines might be doing fine, but the employees — you know, the folks who buy homes and pay mortgages? — aren’t doing so well.
Monica Balzano put this in the comments of that original post, and I don’t want to see it lost:
I am a REALTOR and employee of a large defense contractor as well as live in a area where there are over 300 defense contractors (Hampton Roads area), and I know for a fact, that the defense contractor industry are laying off employees as a result of sequestration cuts.
To directly relate their stock prices to “Military contractors seem to be doing pretty well” is not factual. You need to do more research on this topic, rather then make a statement “they seem to be doing well” while people are losing their jobs.
I suspect there are more stories from Hampton Roads, Northern Virginia, and other places with a heavy reliance on the defense industry.
So: Mea culpa, mea maxima culpa. I had received some comments about being too negative about the effects of sequestration, and was trying to find a silver lining. Unfortunately, I made a foolish mistake.
Yes, defense contractors are doing just fine as corporations, but a good part of that could well be because of layoffs and other cutbacks made as a response to sequestration. And as the people who buy homes begin to worry about their jobs, you can bet that house-hunting is going to be put on a back burner.