George F. Will once wrote that he preferred to be a pessimist, since it allowed him to always be correct or pleasantly surprised. Our current employment numbers, if you’re an optimist--or unemployment numbers, if you’re a pessimist--are not looking great.
54,000 new jobs is not a dynamite number when unemployment ticks up to 9.1%. Sure, sure, we are told that the increase in unemployment figures is sometimes a good thing. This means that more and more people are out looking for jobs, which is what the unemployment figures really represent. It means that people are becoming more positive.
Well color me skeptical. I hear a lot of good news rumbling around on the street. There are buyers out there hunting properties. Bidding wars are pushing private capital investors to dig deeper and engage in complex tranche strategies to get into properties at a more favorable cap rate. These are ways that the economy is booming.
But these are all indicators of indicators, aren’t they? They are the moments of confidence from the bold and the optimistic with money to spend. In spite of a few gateway markets which are leading the rebound, construction is still down, which is a major source of employment for the middle-class. Companies that survived by tightening their belt through the downturn are reluctant to expand their waistlines just yet. Where is the job creation?
In short, where are we going the next year? A lot of CMBS will hit the market this year and a lot of money will come out of the pockets to grab it. But will this lead to more jobs in the private sector? If not, the purchases made this year and next will speculate another series of defaults as inflation rises and miniscule cap rates don’t withstand the pressures.
Or maybe not, I’m told. Maybe it’s the clouds today. Maybe I’m thinking it’ll rain. But the wind could blow the clouds away. I might be pleasantly surprised.
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