It’s January 9 and the economy remains horrible. But doesn’t it feel like spring is in the air, and something is starting to happen?
Nationally, holiday sales figures were way up this season. The private sector added jobs in every month of 2010 (ok, at a slower rate than population growth). The financial and auto sectors have survived and even prospered to some degree, avoiding catastrophes that might have spread throughout our economy. In both residential and commercial real estate, for various reasons, there seem to be more deal-making and delaying and less foreclosing than was expected. Fundamentally, the US appears to have avoided a depression, and started to tick upward.
Locally, the return of apartment construction is great news, because each project is both a jobs machine and a tax revenue machine. It’s also related to population growth, which, along with business spending and jobs, is tied to filling up our glut of commercial space. It’ll take years to eat up our excess office space, but Seattle has more than its share of growing companies and organizations, and who knows, maybe things will recover more quickly than we’ve thought. And long before new buildings make sense, the moves of any down and recovery period are sure helping those of us who build renovations and tenant improvements.
The Seattle area’s public capital spending is interesting. Some is getting cut, perhaps necessary but certainly a damper on jobs. But light rail is going strong. The 99 tunnel will (knock on wood) be a huge stimulus, with money already being spent. Say what you want about your preferred 99 option, but the tunnel is starting at a time when the construction industry badly needs a big project, and the public is getting pricing it’ll never see again.
Optimism isn’t just about feeling good…it’s an ingredient to recovery. Optimism is probably a big reason why consumer spending has risen so quickly. It’s helping companies choose to lease more space. It’s why apartments are breaking ground. There might even be a trend toward buying homes again, as suggested by this article (as they say, not a clear trend yet), and anecdotally by what seems to be a declining condo glut as fire sales continue. Much of the down economy has been money sitting on the sideline, and now a lot of that money is jumping in again.
Of course there’s plenty of reason for pessimism too. Due to the the wild stock gains of the past 23 months, it now seems like a riskier, moderate-upside time to buy stocks. Declining public spending is cutting jobs and probably doing more immediate and long-term damage than it’s saving. Foreclosures might still keep home prices down. Commodity prices have risen dramatically and, with the sharp rises of other economies, perhaps permanently diminished the US “birthright” of cheap stuff. The latter is a problem for the economy not because plastic lawn chairs and 3,000-calorie restaurant meals might cost a couple dollars more, but because a lot of commodity consumption is less flexible, and higher prices will, particularly in the short term, deduct money from the rest of people’s budgets. Of course it’s all the worse if you’re poor and the issue is the price of 600-calorie meals for your kids.
Yet things are looking up. In 2008 and early 2009 the issue was stemming the decline, and now the issue is the pace of recovery, both for the general economy and the A/E/C/RE industry.
That, plus the Seahawks, is why I’m smiling today.