He also said his firm's predictions about the timing of the next recession didn't change because of Trump's win—he sees it coming around 2019. “I hope we have a recession in two years because the opposite leads to economic stagnation. Recession is a market-clearing event; recession is bad, but not having a recession is worse”

Levy pointed out that globalization is actually slowing down—it decreased in 2015 for the first time, due to automation. During a “lightning round” in which he asked for quick reactions from attendees, he said that globalization is a great thing for us, “but you have to adapt to it with higher-skilled jobs.” The recent rise of protectionist sentiment in the UK, Italy and other markets has cooled enthusiasm for globalism.

He said the key to creating jobs for the long term in the US is services, not goods. “Services is the future.” In fact, in answer to a question about how to prepare for a recession—which he strongly recommends—Levy said, “Position your business to have a unique service offering, not a unique goods offering. Goods are not unique; services are. Don't stop doing business, renting space or building, and don't be the low-cost competitor.”

Regarding foreign investors, Levy said negative interest rates overseas is a major driver of capital to the US. “More money coming to our markets from overseas is a good thing; it will benefit biotech here in San Diego. But it's hard to find a productive investment. It must be invested in a way that either creates jobs or creates innovation.”

In speaking of regulations, he echoed former undersecretary for international affairs Larry Summers' sentiment that local market regulations—not federal ones—are choking our economy.

Levy told the story of having Trump as a client as a young executive and how Trump taught him a lesson about forgiveness and moving on. He said he believes from working with him that there is an “internal Trump”—so long as he brings in good leaders, he will give them the ability to do their jobs.

With regard to interest rates, Levy said his firm predicts interest rates will be at 3% by the end of 2017, “but we have been wrong on this for the past eight years.” He added that the rise in interest rates is a good thing because it indicates global optimism, “so we hope they continue to go up as long as growth continues.” He also said that the inversion yield curve, an interest-rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the same credit quality, is one of his concerns and a predictor of economic recession.
He asked another lightning-round “victim” when she believes the next recession will hit. Her answer of 2020 was reasonable, he said, adding, “Don't fear the recession; prepare for it.” New growth will push out the recession a year or more, he concluded.

On the supply issue in the face of a recession, Levy said there are two views on this: the “false hope” view that since the Fed tapped the breaks on construction lending, we won't have oversupply; and the “harsh reality” view that we may need less space because of densification in office, Airbnb in hotels and e-commerce in retail, which could cause a glut of space during the next recession.

Levy mentioned reading a book by Alec Ross, The Industries of the Future, in which the author's solution to a displacement of workers is education and welfare—two solutions he didn't like, but the only answers to the problem. Levy touched more on the topic of education, answering a question about whether Trump's choice of Betsy DeVos for education secretary was a smart one. He said she is an advocate of charter schools, which is a good thing, but the truth is that all of our children should be in public schools because they should be that good. “Political reconciliation” is the solution to the education problem in this country, he said.

When CREW's director of education and programs Bre'an Fox asked Levy if a productivity slowdown is due to the work/life balance that has become a trend in business, Levy answered, “Not necessarily. Happy, well people tend to be more productive, not less.”

Addressing generational issues, Levy joked that Baby Boomers were the dominant populational cohort for 25 years, and Millennials are expected to dominate for 25 years, but Gen-Xers (of which he is one) dominated for something like six months. He did say that the myths about Millennials are overblown because their traits and choices will change as they mature.

Levy concluded by saying that optimism is the most important factor of all in the economy, and we have more economic optimism now than ever before.

SAN DIEGO—If President-elect Trump succeeds in implementing all of his trade policies, people won't be happy because their expectations for satisfaction may be too high, CBRE's America's head of research Spencer Levy told attendees at Tuesday's CREW San Diego lunch event. Spencer gave an, as-usual, lively presentation on his economic insights for 2017 to the packed room at the Sheraton La Jolla.

Levy said after the November 2016 election, the stock market went from fear to business as usual to optimism within a 48-hour period. “The ability for the world to recover from shock is happening in a shorter time frame.” He added that because Trump is pro-business, people think there will be a more favorable tax and business climate, which is raising optimism and improving consumer sentiment.

However, such optimism might be overblown, Levy pointed out, because people aren't taking into account the negatives that inevitably go along with any policy changes. Nevertheless, sentiment is one of the most important predictors of economic success or failure and could be more important than facts in leading to either a recessed or growing economy.

“Our growth expectations are up, and we believe we are better off because of Trump—but we are less optimistic about job growth,” Levy commented, adding that we need immigration to keep business flowing smoothly. In response to a later question about the labor-force participation rate still being a problem, Levy answered, “Yes, it continues to drop. It's flat now, although we saw the fastest wage-rate growth last week that we've seen in seven years,” which is an indication of how low the participation rate has become.

He also said his firm's predictions about the timing of the next recession didn't change because of Trump's win—he sees it coming around 2019. “I hope we have a recession in two years because the opposite leads to economic stagnation. Recession is a market-clearing event; recession is bad, but not having a recession is worse”

Levy pointed out that globalization is actually slowing down—it decreased in 2015 for the first time, due to automation. During a “lightning round” in which he asked for quick reactions from attendees, he said that globalization is a great thing for us, “but you have to adapt to it with higher-skilled jobs.” The recent rise of protectionist sentiment in the UK, Italy and other markets has cooled enthusiasm for globalism.

He said the key to creating jobs for the long term in the US is services, not goods. “Services is the future.” In fact, in answer to a question about how to prepare for a recession—which he strongly recommends—Levy said, “Position your business to have a unique service offering, not a unique goods offering. Goods are not unique; services are. Don't stop doing business, renting space or building, and don't be the low-cost competitor.”

Regarding foreign investors, Levy said negative interest rates overseas is a major driver of capital to the US. “More money coming to our markets from overseas is a good thing; it will benefit biotech here in San Diego. But it's hard to find a productive investment. It must be invested in a way that either creates jobs or creates innovation.”

In speaking of regulations, he echoed former undersecretary for international affairs Larry Summers' sentiment that local market regulations—not federal ones—are choking our economy.

Levy told the story of having Trump as a client as a young executive and how Trump taught him a lesson about forgiveness and moving on. He said he believes from working with him that there is an “internal Trump”—so long as he brings in good leaders, he will give them the ability to do their jobs.

With regard to interest rates, Levy said his firm predicts interest rates will be at 3% by the end of 2017, “but we have been wrong on this for the past eight years.” He added that the rise in interest rates is a good thing because it indicates global optimism, “so we hope they continue to go up as long as growth continues.” He also said that the inversion yield curve, an interest-rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the same credit quality, is one of his concerns and a predictor of economic recession.
He asked another lightning-round “victim” when she believes the next recession will hit. Her answer of 2020 was reasonable, he said, adding, “Don't fear the recession; prepare for it.” New growth will push out the recession a year or more, he concluded.

On the supply issue in the face of a recession, Levy said there are two views on this: the “false hope” view that since the Fed tapped the breaks on construction lending, we won't have oversupply; and the “harsh reality” view that we may need less space because of densification in office, Airbnb in hotels and e-commerce in retail, which could cause a glut of space during the next recession.

Levy mentioned reading a book by Alec Ross, The Industries of the Future, in which the author's solution to a displacement of workers is education and welfare—two solutions he didn't like, but the only answers to the problem. Levy touched more on the topic of education, answering a question about whether Trump's choice of Betsy DeVos for education secretary was a smart one. He said she is an advocate of charter schools, which is a good thing, but the truth is that all of our children should be in public schools because they should be that good. “Political reconciliation” is the solution to the education problem in this country, he said.

When CREW's director of education and programs Bre'an Fox asked Levy if a productivity slowdown is due to the work/life balance that has become a trend in business, Levy answered, “Not necessarily. Happy, well people tend to be more productive, not less.”

Addressing generational issues, Levy joked that Baby Boomers were the dominant populational cohort for 25 years, and Millennials are expected to dominate for 25 years, but Gen-Xers (of which he is one) dominated for something like six months. He did say that the myths about Millennials are overblown because their traits and choices will change as they mature.

Levy concluded by saying that optimism is the most important factor of all in the economy, and we have more economic optimism now than ever before.