Now there’s a mouthful.  Reading my Wells Fargo report from Friday, I thought it beared repeating, so here goes:

“Since World War II, the pace and character of consumer spending has defined the U.S. economy.  Going forward, will this all change and what are the implications?  What about housing?  Finally, has the era of California/Florida dreaming coming to an end?

If the American consumer has truly changed her spots and become a greater saving, less credit-using, more bargain hunting species, then what will be the character of this recovery and the longer-run pace of economic growth?  With consumer spending approximately 70 percent of the economy, this issue is in the forefront of corporate strategy discussions as the annual review of corporate directions begins this time each year…

Despite improvement in home sales and new construction, the question of the pace of housing construction if/when the Federal programs are removed remains.  Historically, housing has helped lead the economy out of recession as sharply lower interest rates attracted buyers.  Moreover, if household expectations for home price appreciation are permanently downshifted, and with the rise in sales and income taxes reducing disposable personal income, then the demand for both housing and remodeling will likely be permanently downshifted.

Dreams of endless summers in California and luxurious retirement in Florida now appear to be under a cloud of home price depreciation and wealth losses on retirement funds.  In addition, the limits of congestion, water supply and high baseline housing costs are likely to change the patterns of in-migration.  For corporate strategy making, the straight-line prosperity forecasts for both states are likely a relic of the past.”

 

In another part of the report, there were these questions that I thought also beared repeating:

U.S. REVIEW  Economics as Framework for Corporate Strategy in 2010. 

  • Despite all the news we receive, there are four economic issues that must be addressed before a corporate strategy can be rationally formulated.  For the real economy, the challenge is the post-recovery pace of consumer spending and housing.
  • From the regional perspective, has the end of California/Florida dreaming come to an end?
  • Finally, what are the Federal Reserve’s and the Obama Administration’s exit strategies for monetary and fiscal policy?

Report from Wells Fargo Securities Weekly Report of 9.18.09.

 

These questions and their subsequent answers will all play a part in the real estate environment here in Alexandria.   All of us get to answer these questions and make our decisions on the information and the desires that we have.   But nonetheless, I have said it in earlier blogs that there won’t be a “recovery”, just a different economy.    So if you can answer those questions correctly, then there are some very powerful corporations that would like to hire you.  For me, having a view of the future is very beneficial to the business of real estate here in little old Alexandria.  That’s why I keep such a close eye on all the numbers here.  Try to spot trends, if I can.  What are folks doing at the moment?   Usually, though I fall back on the best advice I ever got back in 1982…Don’t Wait to Buy Real Estate, Buy Real Estate and Wait!