Greetings!
As we head into the fourth quarter of 2009, many of us are relieved that this tempestuous year is mostly behind us. But the lingering question is: will 2010 be any better? The New York Times posted an article on October 17 entitled “By some reliable measures, recession is over.” But is it really? Economists can have vastly different interpretations of the same indicators, depending on their point of view.
For those of us who’ve experienced a down cycle, we still see a lot to worry about. Unemployment hasn’t yet peaked, the U.S. government will soon stop buying mortgage-backed securities, and the deficit continues to grow. However, many indicators do point to economic improvement on the horizon, and as our population continues to expand, the need for goods and services will increase as well. But most importantly, people will always need shelter — and people will always have financial, personal, or emotional reasons to buy and sell homes.
Remember, the only way to know a market has hit bottom is when it goes up. Here’s to the continuing improvement of our local residential markets!
As always, I’m available to answer any questions you may have about buying, selling, or the market in general — give me a call any time!
Warmest regards,
By Some Reliable Measures,
Recession Is Over
FROM THE NEW YORK TIMES
The worldwide recession appears to have ended, with surveys showing manufacturing activity is on the rise nearly everywhere.
“It is the emerging markets that are leading, with the U.S. following and Europe lagging,” said Chris
Williamson, the chief economist of Markit, a company that surveys manufacturers in many countries.
The surveys, conducted in the United States by the Institute of Supply Management and in other countries by Markit, measure not the level of manufacturing output but the way it is changing. The surveys have a reputation for showing turns in the economy, often before other indicators do.
The September figures for manufacturing seemed to indicate that what had looked like a rapid recovery was slowing in the United States and Europe.
But similar surveys of service companies appear to show growth accelerating in most countries, although not in the three European economies that Mr. Williamson thinks are still in recession; Spain, Ireland and Italy.
The surveys ask companies if their business is doing better or worse than in the previous month, with the three most important questions relating to new orders, production and employment. The index is set so that 50 indicates business is unchanged from the previous month, while figures above that indicate growth and figures below show a decline. The higher the index, the more pervasive are reports of growth.
In the accompanying charts, the index figures have been converted to show the number of points over or
under 50 for each of 12 countries, from the end of 2007 through September. The September indexes for
new orders, production and employment are also shown.
While details vary, the slump was sharp in nearly every country, reflecting the sudden decline that came after Lehman Brothers collapsed in September 2008. That worsened a credit squeeze, which meant some companies had no choice but to cut back on everything they could, from inventories to marketing
expenditures to jobs. Others, fearing that the economic outlook could become much worse, cut back
voluntarily.
It now appears that companies cut too much, and the surveys of manufacturing show that companies are expanding in most countries.
Over all, the surveys indicate that the manufacturing sectors of China, Taiwan, South Korea and India had begun to grow by April, but that the United States did not follow suit until August.
In Europe, France is reporting growth, and Britain is hovering near the midpoint, indicating the deterioration has stopped but growth has not yet begun. Although the German government estimates that its gross domestic product rose in the second quarter, the manufacturing survey indicates continued weakness in that country.
New orders and production have turned positive everywhere but in the three European laggards, Spain,
Ireland and Italy. Spain and Ireland have been badly hurt by collapses in real estate markets, which had
boomed, in part, because of easy credit. Mr. Williamson attributed some of Italy’s problems to a lack of
confidence in its government’s ability to deal with problems.
But employment continues to lag in most countries outside of Asia. Mr. Williamson said he estimated that total job losses in the major developed countries – the United States, Britain, the euro zone and Japan – bottomed out at 1.9 million a month in March and are now about 500,000 a month. While many companies are still hesitant to hire, he says he thinks employment will begin to grow by the end of this year.
The Valerie Fitzgerald Group specializes in luxury residential real estate in Beverly Hills, Bel Air, Brentwood, Santa Monica and Malibu. Valerie has more than 20 years of real estate experience and is known for her solid reputation in the West Los Angeles brokerage community. She’s also the author of Heart and Sold: How to Survive and Build a Recession-Proof Business.
