The recession is over-that´s what we´ve been told. Job lossescontinue-albeit at a slowing rate. The car industry got a shortterm boost late last summer with cash for clunkers, but it´s beentougher going in showrooms since then. The housing sector appearsto have bottomed, but house sales are off since the governmentstopped handing out tax credits to buyers and borrower defaultscontinue to increase. After Christmas, retailers breathe a sigh ofrelief-they registered some modest gains during the holidays offlast year´s horrendous results, but wonder if consumers have tappedthemselves out. Banks stock prices rebound and so do bonuses, butthey aren´t lending much and haven´t had to recognize all the badassets on their books yet even after hundreds of billions ofdollars in various federal capital transfusions. The stock markethas scored a very healthy rebound, including REIT shares, but youneed to wonder seriously whether players haven´t over anticipatedthe recovery.
So the past few months haven´t been totally reassuring. Then yousize up the past 10 years-those numbers about zero net jobs growth.Zero after all the tax cuts, low interest rates, internetbreakthroughs-zero!!! And now the President promises to creategreen jobs through tax credits. That should help fill the jobs gap,which some economists estimate at around 10 million given on-goingpopulation and demographics changes. Sure, green jobs will do thetrick.
The big question facing the economy and real estate marketscoming into the New Year is simply what happens when stimulus runsout and the feds curtail printing money and spending it? We know wewill be left with a large deficit and a ton more of debt service topay off. The dollar has tanked and bond buyers get increasinglynervous about investing in T-bills. We know interest rates willincrease.
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