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6th Annual CCIM Central Texas Symposium

March 5, 2012

Excerpts from Dr. Mark Dotzour’s presentation at the CCIM Symposium in Austin, TX Jan. 31st

To visualize the U.S. economy, picture a Jack-in-the-Box. Turn the crank, generate energy, and watch the crank pop up and release that energy. Watch how creating more energy produces job growth. People are still working and have a desire to do business. Natural gas and oil are creating wealth, while everyone is putting off decision making. People are postponing things. Their reluctance to decide is one big reason that the economy is not picking up quickly. People are postponing moving, they’re postponing retirement, they’re putting off their weddings, and they’re hoarding cash. Corporate profits are at epic highs. Apple has $90 billion on their corporate cash balance sheet right now. However, historically Americans don’t tolerate deferred gratification very long. There will be more job growth this year but we’re not expecting a big recovery. We’ll likely see a middle-of-the-road economic recovery. The playing field is so uncertain. And we can insure against risk, but not uncertainty. The clasp holding down our economic house’s Jack-in-the-Box is uncertainty.

What else will impact our economic recovery this year? There will be a significant decrease in unemployment benefits; when unemployment benefits stop, people go back to work. Therefore unemployment numbers will continue to fall. What we are seeing is the 1st pitch in the 1st inning of a renaissance of manufacturing in our economy. Recently the government devalued the US dollar, and when the value of the dollar goes down, the prices for manufacturing goods become cheaper. Toyota is beginning to produce Camrys in America to export to Korea, bringing back the car industry in America, creating jobs, etc. Nissan is going to do the same. We are now exporting energy, thereby making natural gas prices go down… what we are seeing is the typical chain of events in the economic cycle. Other economic indicators supporting these conclusions: retail sales are up, car sales are up, more trucks are being sold, and employment is going up.

We are only seeing a modest increase in hiring because people are afraid of what we saw in 2011. And remember uncertainty works as a brake on people’s actions. If you want to create average economic number indicators for Texas, look toward Austin. Why? Because so much of the economy is controlled by our government and government regulations. and those regulations, fees, and restrictions aren’t going to provide the energy to release the lid from the top of the Jack-in-the-Box.

So why isn’t our economy rebounding faster? Link to Read More…

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