The Small Space Marketplace

List Your Space

Find Space

Home About Us Executive Subscriber Membership RENTV Conferences Newsletter Contact Us Advertise
March 28, 2024
 Search RENTV
   Go!
 The REview
 News
News Home Page
Southern California
Northern California
Pacific Northwest
Texas/Southwest
Retail
Multifamily
Financing
Prop. Management
Archives
Press Releases
 R. E. Marketplace
Service Providers
JobWorks
Property Spotlight
 RENTV  Conferences
Subscriber Login:
  
Email      
    Go!
Password      
Forgot Password?



ETC... ETC...
Printer-friendly Version   Email an Associate
Economic Update

By David Rosenthal
2/25/08


Friends and Colleagues:

This week Scott Anderson, Senior Economist at Wells Fargo Economics talks with us about a throwback to the 1970's....that persistent scourge known as Stagflation. Dr. Anderson is generally an optimist, which makes his current report all the more unsettling, as we can see from some of his quotes cited below:

• "I find very few positives that I can point to over the near-term."
• "When I predicted back in early December of last year that 2008 was going to have a decidedly "stagflationary" feel, I didn’t plan on things being this stagnant or this inflationary."
• "Stagnation implies some growth, however, recent data suggests the economy may already be in recession."
• "A growing number of sentiment and opinion surveys are already pointing to recession, and not a mild one either, having more in common with the recession of 1990-91 than the recession of 2001."

Dr. Anderson usually finds some light out there in the midst of the madness. So what fundamentals are driving his downbeat comments this week?

• The National Federation of Independent Business Small Business Optimism Survey for January and the University of Michigan’s Consumer Sentiment Survey for February both dropped to levels not seen since the depths of the 1990-91 recession.
• The ISM Non-manufacturing Index for January, Philly Fed Manufacturing Index for February, and Empire State Manufacturing Index for February are now well into recession territory.

1990-91...as I recall, that was the Mother of all Recessions....and it lasted a long time.......
Dr. Anderson shares that the 1990-91 recession didn’t last long by historical standards – only eight months – but job and income growth didn’t really return until 1994. It was the original jobless recovery.

But Dr. Anderson, won't consumer spending bail us out of this mess? Not this time he says, as the pressures on real consumer spending continue to intensify. With oil prices above $100 per barrel, energy prices are up 19.6% over the past year, and they are rising at an annualized rate of 43.6% over the past three months!

• Consumer price inflation has flared to a 4.3% year-on-year pace through February.
• Food prices rose 4.9% over the past twelve months, and forecasts are for it to accelerate toward 8.0% this year.
• Consumer medical care, tobacco, and commodities prices are all rising at 5.0% or greater rates.
• Even personal computer prices, which always seem to go down, rose 1.0% in January.
• There doesn’t appear to be much left over for discretionary spending.

Well, Dr. Anderson, how bad is all of this inflation for the economy and the financial markets?
In a word....Huge!

• Inflation crimps real income gains and therefore real spending gains as employers have trouble keeping up with nominal wage increases.
• Inflation will lead to rising bond yields, creating further stock and bond market losses and financial wealth destruction.
• Finally, inflation will hamper the Fed’s ability to provide relief to the housing market as mortgage rates rise instead of fall, and the ARM resets continue at a punishing pace.

This doesn't sound pretty......and only time will tell where this road will lead. So in the meantime, as always....stay tuned........


THOUGHT FOR THE WEEK

Good health….

A nasty bout of the flu has taken this country by storm. After spending all of last week burning off a fever that sapped my strength, my energy and my creativity, I am humbled by how fragile good health can be.

When we were young, good health was a cheap commodity...because it was always there. But as Joni Mitchell once sang...."Don't it always seem to go that you don't know what you've got till it's gone...."

Good health is a privilege, not a right...it is something that we need to honor when it is there, and nurture to keep it there. Some random health tips to consider:

• Wash our hands more frequently....according to doctors, this is the single most pro-active thing we can do to prevent the flu.
• Get a good night's sleep....every night.
• Eat well....fresh foods including colorful fruits and vegetables.
• Drink more water.
• Turn off the Blackberry at night and on the weekends....and read a book to relax.
• Breathe deeply.

In the weeks ahead, may we each remember to take better care of ourselves, and may our doing so cause us to be blessed with good health.

Have a good week.


David Rosenthal, MAI
President & CEO
Curtis-Rosenthal, Inc.
drosenthal@curtisrosenthal.com
www.curtisrosenthal.com






Return to the Archive page


 
 


 
 
 



Home | About Us | Newsletter | Contact Us | Executive Subscriber Membership | Executive Subscriber Home | Advertise
Southern California | Northern California | Pacific Northwest | Southwest | Retail | Multifamily | Financing | Property Management
Archives | Press Releases | Service Providers | JobWorks | Property Listings

Copyright © 2024 by RENTV, All Rights Reserved
Website designed by Regency Web Services, Inc. and powered by Lightning Media