Bernanke: A 'Rodney Dangerfield' Recovery

Marcus & Millichap’s Hessam Nadji is joined by former Federal Reserve Board chairman Ben Bernanke for a one-on-one during the kickoff of Marcus & Millichap’s 2016 Retail Trends report.

LAS VEGAS—Former Federal Reserve Board chairman Dr. Ben Bernanke was the featured speaker as Marcus & Millichap, suited out with its newly tapped president and CEO, unveiled the 2016 edition of its Retail Trends forecast. The platform for the event, as always, was the recent RECon conference here. (Marcus & Millichap is a GlobeSt.com Thought Leader.) Bernanke was much more upbeat about the current and future economic conditions than many other pundits, especially given the volatility we weathered in Q1. Pointing out that 15 million jobs have been added to the employment roster since 2009, he termed the current upcycle a “Rodney Dangerfield” recovery, one that gets no respect. Then what to make of the first-quarter hiccup? “January was an overreaction,” he told the packed house. But there are concerns, he noted in a one-on-one interview with newly installed Marcus & Millichap president and CEO Hessam Nadji . Chief among them was a productivity rate that he termed “tepid,” and a less-than-stellar GDP. Nevertheless, the US is far ahead “when compared to other industrial nations,” by as much as 10% when compared to Europe. And, of course, there remains the volatility of offshore markets, particularly China, exacerbated by the increasingly “financial interconnectivity of countries around the globe.” Given the worrisome tone of Q1 and the ongoing foreign fiscal concerns, Nadji asked if a 2008-style economic setback could occur in the next five years. Bernanke’s simple answer: “No.” Taken from a domestic standpoint, “the economic picture is fairly robust,” Bernanke said, and in large part driven by consumer demand, terrific news for two key commercial real estate sectors: Housing and Retail. It was an observation that served as a natural lead-in to the following panel discussion, where Bernanke and Nadji were joined by Bill Rose , VP and national director of the Marcus & Millichap National Retail Group; Conor Flynn , president and CEO of Kimco Realty Corp. ; Glenn Rufrano , CEO of VEREIT ; and Andrew Alexander , president and CEO of Weingarten Realty . Together, the panel brought the real estate conversation into sharper focus, still covering a broad range of issues. One of those seems to be the ongoing discussion/debate over bricks-vs.-clicks and the push pull between online and physical retail. Alexander stated frankly that, despite some retailers’ hesitation about online competition, “the internet makes good retailers better.” Bernanke added his own positive experience with omni-channel purchases, where he was in a store and using a computer to narrow his purchase, all the while guided by a store associate.  He indicated that such “retail experiences” are the direction of the entire industry segment. Rufrano provided context for certain recent store closings. “Retail will always lose space,” he said, not necessarily because of the market conditions, but because sometimes it’s a bad retailer. The point, he said, is not to make the same mistake twice but “to change and look forward,” implying that in some cases the internet-savvy stores will be the winners in that space race. Nadji indicated that the retail market was a highly complex and nuanced industry segment, as indicated by the above comments.  And yet, he said, as happened in Q1, retail is “often painted with too broad a brush.” Despite the state of transition the retail market is currently in, all of the panelists basically agreed with the positive outlook for the sector. Ultimately, regardless of how long the current upcycle has before running out of gas, Bernanke cited one universal truth: “No recovery dies of old age.”