The Problem with Water
Floods and droughts—they’re part of biblical lore. In our history, there have been various hurricanes, the Johnstown flood, and the Depression era Dust Bowl. The Mississippi from time to time overflows its banks and Atlanta’s reservoir system almost ran dry in 2007.Read More
The stock market and number of food stamp recipients (nearly 48 million Americans) hit new records at the same time—both new highs, just as unemployment ticks down to 7.7% and private hiring kicks up—notably in construction. The payroll tax gnaws at weekly pay checks and it’s too early to understand the impacts of federal government spending cuts (sequester)—at least scattered layoffs and furloughs particularly but not exclusively in the public sector. The Fed keeps interest rates low, because the bankers do not see enough evidence of economic improvement, and the big commercial banks pass their stress tests—what a surprise. Instead of hiring, companies feel compelled to return excess cash to shareholders in record dividends or undertake stock buybacks—they can stay more profitable if they keep lean and do their hiring in cheaper overseas markets. The nation’s household wealth has been restored thanks to the recent stock market boom and improvement in the housing market—some folks are at least feeling more affluent. Consumers seem to be borrowing again to buy things after paying down debt. But wages are not going up appreciably and the benefit burden keeps shifting to workers. At least health care costs are not increasing as much as they had been.Read More
Yahoo and Office Demand
Office building owners, struggling with relatively anemic demand, may find some measure of comfort in Yahoo’s decision to rein in its work-from-home employees and mandate their return to the cube-world. Is this the start of a trend reversal that could increase occupancies and buoy rents among office tenants? Probably not, although the Yahoo move may give some CEOs in other companies pause about letting home-officing get out of hand.Read More
Lawyering—Not What It Used To Be
Have you followed the recent commentary about law schools in crisis? The three-year curriculum is too long, the cost-benefit isn’t there except for tenured law professors, graduates emerge with enormous student debt, there are too few jobs, and far fewer that pay well. Law schools are talking about changing curriculums, possibly cutting a year out. The dirty little secret is—many intelligent college grads could pass the bar exam after taking one of those intense prep courses, certainly without all the law school course padding.Read More
Is Slow Growth Sustainable?
The unemployment rate inches back up close to 8%, GDP sinks into negative territory for the fourth quarter 2012, and the stock market heads for new highs as its price-earnings ratio stands at a rather lofty 22. Huh? Are we fooling ourselves again?Read More
Top of the Market?
That looks like a top of the market price for the Sony Building in the heart of Manhattan’s Midtown. Sure it’s a trophy building near the most prime locations in one of world’s best (and certainly America’s top) real estate market(s). But paying $1.1 billion at a time when rents appear to have crested is a swallow hard proposition.Read More
Safe Harbor for Now
My trip to Israel this week (for a speech to Israeli investors in U.S. real estate) reinforced the view that offshore investors see the U.S. as their only sure shot safe haven. Israelis generally have proved extremely savvy investors and the group of over 120 I met with had little interest in Europe—still viewed as a basket case economy—and apparently even less in China and other parts of Asia—not transparent enough.Read More
At least initially the stock market skyed higher over Congress’s down-to-the-wire fiscal cliff vote, but really does raising taxes and putting off dealing with deficit cuts for another two months diminish uncertainty and discomfort about the future course of the U.S. economy? Reality needs to hit home.Read More
Only Ourselves to Blame
Long before Newtown and the ongoing wave of mass shootings gripping the U.S., the fiction of safe suburbs versus dangerous cities had been upended. The urban white flight of the 1960 and 1970s stopped and even reversed in recent years as 24-hour cities appeared safe and secure, especially in upscale neighborhoods. Today young families may move out of cities back to suburbs, looking for better public schools, but today they rarely leave out of fear of violence or for a safer environment.Read More
Snake Oil Anyone?
While our economist friends thought hiring activity would be much more vigorous than it was, they also predicted no way the unemployment rate would go down in the anticipated numberswrong again.Read More