November is a slow month as the winter approaches; the economy starts to slow down in all areas and prepares for a major holiday boom for the retail industry. This month we discuss three main factors that will impact our economy. We will discuss three basis elements that impact our overall growth out of this recession. The first will be the retail sales indicator, followed by the housing and unemployment markets.
Retail sales for 2009 will be harsh, as I am not expecting much growth here. We would be very lucky to see 1-3% growth over last year. The retail market indicator is directly linked to consumer spending, which is driven by unemployment. In simple terms, the more people work, the more they buy stuff. Despite the recession being over, the real improvements around unemployment won’t be felt till late 2010 or early 2011. I am expecting this year to be a steady recovery year for the retail segment and for those that have survived so far to continue on their survival path till more moderate growth in 2010.
The housing market on the other hand is supposed to be taking a hit in 2010, which seems highly odd seeing the slight growth we have experienced in select areas. The real problem lies within the data, which may seem scarier than the reality. Data is harder to trust because of the vast differences between all the states. Media predicts a 3-8% drop through 2010 across the board. I say that the market will likely recover 3-5% this year, as I am confident that consumer demand and investor demand coupled with the unrestricting of many lending markets will lead to growth. In simple terms, people believe that the bottom of the home market is here and that now is the time to buy, investors have nowhere else to invest to attain growth of over 15% without major risk. The combination of these two forces of demand for real estate and the empowerment from banks making home loans more attainable should help boos the system. Do not be alarmed by the homes sales number from November to March, as the home market is known to take a dive during the winter regardless of the economy.
Where are the Jobs? Many will argue that there are no jobs out there, and that unemployment will continue to get worse. There are two sides to every story, so lets be realistic in how we look at this. In 2003-2007, people were making much more than they should have, because of the economic boom we were in. People were loan officers and worked for industries that were not their field but yet generated more money than they’ve ever made. The real problem today is not that there are no jobs out there, the real problem is that people will not settle for anything less than they use to make despite the fact that they shouldn’t have made that to begin with. Those folks remain unemployed and create this high number of unemployed folks in the country where in reality; the number should be 3-4% lighter. If people were technicians before the boom and became loan officers that made more money because business was pouring in and are now unemployed, then they need to go back to their original field as this was they were doing and are good at. This is their real profession. In other words, just cause you win $50,000 playing the lotto doesn’t mean that your new job is now a professional lotto player. You are who you are, and you get opportunities from time to time, but they don’t last forever. Milk your opportunities and come back to reality.
This has been our economic outlook for November, we would love to hear your thoughts on the matter and get your feedback on what is most important to you. Feel free to leave a comment or start a discussion.
Till next time…
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