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TRC Blog

February 27 , 2012

Danger, Will Robinson

Danger, Will Robinson

How many of you remember a television series back in the 1960’s called “Lost in Space”? For those of you old enough to remember, in the series there was a young boy named Will Robinson. And there was a robot who acted as a guardian or protector of young Will, who would regularly come across dangers or threats to himself. The robot would yell out “Danger Will Robinson” as Will approached these threats. Why do I raise this? Because as we enter 2012, the same warning is well advised as it pertains to our business. Granted, our economy has gotten better with positive growth now for each of the last 10 quarters. Interest rates are at historic lows and will remain so for a while, maybe even through 2014. There appears to be plenty of capital available for investment and the real estate markets are rebounding with opportunities filling the pipeline. Yet, there are still multiple threats to the completion of our economic rebound. As I see it, there are three obstacles to a sustainable and long term recovery: jobs, housing and consumer spending. On the job front, the unemployment rate is at 8.3%, down from 10% and at its lowest level in 3 years. However, scratch beneath the surface and you have not only the unemployed (people looking for jobs currently) but also the under-employed (people who need full time employment but have settled for part time work) and discouraged workers (people who have been unemployed for so long they have given up looking). These numbers total over 16% of all Americans. Labor experts believe it will take until 2018 or so before we get back to acceptable unemployment rates and there is no fast fix. The housing market is also far from stable. The amount of wealth lost in the housing bubble was over seven trillion dollars and there is strong evidence that home prices have not yet hit bottom. It appears that finding stability in the housing market will remain a challenge for a while to come. Finally, consumer spending, which usually accounts for 70% of all economic activity, remains stagnant. The average household during the recession of 2007-2009 lost 23% of its net worth, totaling fourteen trillion dollars. While retail sales have recently been up, it will take some time to get the consumer’s mind back on spending at the same rate as pre-recession. So, what does this mean to us? First of all, be thankful that we live in Texas because of our healthy business environment, strong job creation, low taxes and very favorable cost of living. Texas remains the strongest of all states as it pertains to our economic recovery. Dallas and Houston are the top two markets in the country in new job creation. Dallas, Houston, San Antonio and Austin are among the top markets nationally in favorable business environment and economic health. And whether you live in Texas or not, we need to be cognizant of the dangers that are still out there. Not everyone has a robot to protect them.
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