What Will Indicate Economic Improvement?

By Bob • November 20th, 2009

I recently read this article in USA Today (10/15/09) that gave the top indicators of economic heath.
These are the indicators according to HSBC Consumer Survey of 1,000 households.

42% stated: People around me get jobs again
39% stated: Unemployment rate declines
22% stated: Home sales improve
16% stated: Retail sales increase
15% stated: Fewer empty store fronts.

Nelsonian Theory would state:

Watch new job growth – there must be jobs to generate income that will allow and support consumer spending.
Consumer spending leads to the spending cycle that generates consumer confidence and a return to the free flow of money. Nothing works unless people have money and borrowing capacity.
Watch for the stable return of the commercial mortgage market – The “continual bad news” being emitted by the commercial lending sources is by itself squelching the desire to borrow on a long term basis. If there is a fear of availability of financing, there will be an absolute slow down in construction.
Frankly, that can be an advantage, if you personally would purchase existing construction. The increase in user demand (tenants) will force a reduction in vacancy factor in the existing supply (apartment units to be rented to the folks that need safe and clean shelter).
It is a great time to corner good quality property – The competition is sitting on their hands, and sellers will consider reasonable offers.

Bob Nelson, CCIM

(541) 485-8100 bob@1031gur.com

Pacwest Real Estate Investments, LLC