FINAL THOUGHT "It's the Economy..." N
By GHBA vice president & CEO TOY WOOD, JD, CAE
othing else much matters right now except financing, consumer confidence, jobs, and all of those related topics. For those of you who attended the
GHBA Mid-Year Forecast, you were enlightened and entertained by Dr. Mark Dotzour, economist extraordinaire from Texas A&M Real Estate Center (and the Aggies say “Whoop!” right on cue). The outlook was not so good for the rest of the year, and nothing much has changed, but see some quotes from Dr. Dotzour’s comments in the July 16, 2010, issue of “RECON” the Real Estate Center Online News.
REBOUND OR DOUBLE DIP? Dotzour's 2011 Forecast*
COLLEGE STATION (Mays Business School) – As much of the nation ponders whether the country is in rebound mode or headed for a “double-dip” recession, Real Estate Center Chief Economist Dr. Mark Dotzour sees definite signs of hope for the economy. “There are signals that the economy is trying to turn the corner," Dotzour said. "Consumer confidence has increased from a year ago, and consumer spending has resumed its relentless upward trajectory.”
He says the most important positive indicator is that corporate profits have rebounded. “In a free-market, capitalistic system like America, profit growth is the key indicator," he said. "When profits are growing, companies hire employees. When profits flatten, they stop hiring. When profits fall, they start to fire people, and they keep on firing people until profits start to increase again. Clearly, most businesses have right- sized their firms sufficiently to regain profitability.”
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So why aren’t they hiring people? “The answer is uncertainty: uncertainty of capital gains and income tax rates; uncertainty about the cost of health care and the possible increase in energy costs due to ‘cap and trade.’ The prospect of new and increased government regulation makes it hard for business to see clearly into the future,” he contends.
Dotzour points out that businesses can buy insurance against risk, but there is only one way to “insure” against uncertainty—and that is to hoard cash. “There is now nearly $3 trillion sitting in cash on business balance sheets,” he said. “They have much more capital than the Federal Reserve, the FDIC, Fannie Mae and Freddie Mac combined.”
To read more, visit the Mays Business School website at
http://maysbusiness.tamu.edu/index.php/rebound- or-double-dip.
Wow, $3 TRILLION in cash, and what is holding us back? UNCERTAINTY, largely, if not totally due to the government. If you never cared about or thought government affairs, public policy, or advocacy affected you and your business, surely you see how important it is. Now is the time to get on board. GHBA, TAB and NAHB’s primary responsibility is advocacy, or as we say at GHBA, “to protect and to serve.” Your association, your primary advocate, is only as strong as the membership, and the members who give their time and money to make a difference. Call Adam Aschmann at (281) 970-8970 extension 140 or 141 to get involved NOW.
*SOURCE: RECON Real Estate Center Online News, July 16, 2010 edition. Copyright 2010. All rights reserved.
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