BOMA San Francisco Members:
Click here to view the economic outlook for 2010 authored by Dr. Mark Dotzour, Chief Economist of the Real Estate Center for Texas A & M University.
Marc Intermaggio, BOMA San Francisco's Executive Vice President, has kindly summarized Dr. Dotzour's analysis. Please find his abstract, below:
Dr. Dotzour’s perspective is bleak, but there is some good news. While he doesn’t see an economic recovery until 2011 into 2012, he does observe that corporate profits are up, minimizing pressure to cut costs and jobs, personal savings levels have built back to the 4% level with consumers beginning to spend again, and private domestic investment is up. In terms of corporate hiring, sentiment has improved and some hiring should begin this year. The negative on net employment is the projected $180 billion in state deficits for the coming year with the potential for 900,000 layoffs – he believes the government will print more money to prevent this from happening.
In terms of bank lending, Dr. Dotzour does not believe the government is being honest. They (Fed's Ben Bernanke, Treasury’s Timothy Geithner and FDIC’s Sheila Bair) know they do not have the money to cover $1 trillion in bad loans and have 'built a giant firewall around the banks' to prevent a massive reconciliation of balance sheets to allow deals to get going. It will be a very slow process he believes, complicated by the federal government continuing to change bank rules and regulations.
He predicts recovery beginning in 2011. Besides finance, his other big issue is the federal government’s continuing dishonesty about how it cannot come close to covering trillions of dollars of entitlement promises (Social Security, Medicare, etc.) and how at some point we are going to have to reconcile the gap with economic pain for all.
Grim, but a useful perspective I think. BOMA San Francisco members want to be optimistic – but we must keep our hopes in check by looking at the data.
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