Patience is a virtue, right? We've been waiting for the recovery to kick in and demand to pick up. But this spring has not been an upbeat time. What's happening is not subtle and should be particularly unsettling, especially on the international scene.
Let's start with Europe. Nothing good is going on there. Greece is headed down and possibly out of the euro zone, but the real worry is Spain—nearly 25% unemployment in the region's fourth-largest economy. The price tag is too high for a comfortable bailout and the country's banks have begun to teeter, with no way out from once-booming housing markets into an oblivion of unsustainable price run-ups and overbuilding (sound familiar?). France wants to do stimulus, but where is the money coming from? The Germans have no appetite to lend more—they understandably think any new infusions will go right down a sinkhole. And across the channel, the austerity-minded UK is already back in recession, essentially thanks to using too little stimulus.
Then let's cut across to the other side of the world and examine China. For all the hype, I've never been convinced that the Chinese could sustain their growth. The big construction binge in housing and infrastructure has now entered a hangover mode of excess capacity. And many of the workers on these projects have now been sidelined.
Manufacturing also slows down—China's big customers in Europe and the US have lost some of their appetites for consuming Asian imports in the economic drag. The experts had been expecting the growing Chinese middle class to pick up the buying slack if the export markets sagged. But if Chinese workers aren't making as much or not working at all, that may not happen. And the ordinary Chinese are becoming increasingly aware of how the capitalist deck has been stacked against them by the government and military elites. That results in more undercurrents of discontent.
Next door, nuclear Pakistan and India are always at each other's throats with Islamic fundamentalists just a step away from taking over Pakistan and Afghanistan (once we leave). Then look at Japan—in a population decline and shaken from nuclear calamity, the world's third-largest economy continues its two-decade-long slide, which will inevitably continue.
The Middle East remains a powder keg ready to blow with all sorts of matches lit—Syria is in chaos, Egypt is one step away, Iran and Israel are ready to rumble, Yemen has become Al Qaeda central and the Palestinian issue remains an enduring irritant. Gasoline prices, meanwhile, continue to yo-yo—no matter how much we frack, the US remains tied to this inhospitable region until we get off the oil drug. Last but not least, to our south, drug violence escalates to ugly proportions in Mexico and other parts of Central America.
It's a lot weighing down the world, and the US has very little influence over what will happen, whether we believe we do or not. In the meantime, we seem utterly incapable of dealing with our own problems. At this point, patience—and time—may be running out.
(A longer version of this column appeared on GlobeSt.com.)
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Jonathan D. Miller
A marketing communication strategist who turned to real estate analysis, Jonathan D. Miller is a foremost interpreter of 21st citistate futures – cities and suburbs alike – seen through the lens of lifestyles and market realities. For more than 20 years (1992-2013), Miller authored Emerging Trends in Real Estate, the leading commercial real estate industry outlook report, published annually by PricewaterhouseCoopers and the Urban Land Institute (ULI). He has lectures frequently on trends in real estate, including the future of America's major 24-hour urban centers and sprawling suburbs. He also has been author of ULI’s annual forecasts on infrastructure and its What’s Next? series of forecasts. On a weekly basis, he writes the Trendczar blog for GlobeStreet.com, the real estate news website. Outside his published forecasting work, Miller is a prominent communications/institutional investor-marketing strategist and partner in Miller Ryan LLC, helping corporate clients develop and execute branding and communications programs. He led the re-branding of GMAC Commercial Mortgage to Capmark Financial Group Inc. and he was part of the management team that helped build Equitable Real Estate Investment Management, Inc. (subsequently Lend Lease Real Estate Investments, Inc.) into the leading real estate advisor to pension funds and other real institutional investors. He joined the Equitable Life Assurance Society of the U.S. in 1981, moving to Equitable Real Estate in 1984 as head of Corporate/Marketing Communications. In the 1980's he managed relations for several of the country's most prominent real estate developments including New York's Trump Tower and the Equitable Center. Earlier in his career, Miller was a reporter for Gannett Newspapers. He is a member of the Citistates Group and a board member of NYC Outward Bound Schools and the Center for Employment Opportunities.
