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VOL. 36 | NO. 40 | Friday, October 5, 2012

Economy improving despite all its problems

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The Council of Multiple Listing Services met in Boston last week, and one of the speakers was Elliot Eisenberg, PhD., a highly regarded economist who made several observations on the status of the economy, as well as several predictions on where the US is heading.

Here is his top 10 list of why things should get better:

10. Energy and commodity prices have stopped rising.

9. Interest rates will stay low for a long, long time. Eisenberg feels that the Fed wants to end consumer saving and force them to invest in stocks and real estate forcing inflation which apparently is the only strategy to climb out of this hole.

8. House prices have stopped declining, and new construction is on the rise.

7. “Consumer sediment, ahem, I mean sentiment is climbing.”

6. “Europeans can’t get any dumber.” Things get better, then worse, and he says there will be quite a bit of zigging and zagging, but the Euro will be kept in the end.

5. The rich are doing well. He jokingly suggested those in attendance begin catering to them and forgetting the rest.

4. Banks cannot lend much less money than they do now. Despite the banks’ practices, the economy is trudging forward. He says there will be no agriculture crisis next year and that banks will start lending again. This, he predicts, could initiate a boom in the economy.

3. “Super Banker.” Eisenberg says that Q3 will prove successful and that the Feds “will take the punch bowl from the party.” He says that even as the economy improves, the Feds will continue to pump money into the economy.

2. Congress may cut spending, although he highly doubts it and acknowledges the existence of the “fiscal cliff.”

1. There are not many countries that can slow any more than they already have. So things are destined to improve in most countries.

Courtney elected
to Realtor post

Nashville Realtor Richard Courtney been elected as 2013-2014 division vice president of the Tennessee Association of Realtors, representing the middle region of the state. "Richard’s involvement in the Realtor organization – at every level – is exceptional," says Kendra Cooke, 2012 GNAR President. "When he is involved in something, he takes it very seriously. He knows that being effective means more than simply attending meetings; he will serve all Realtors well in this office."

A 25-year veteran of the real estate industry, Richard Courtney is a broker with Christianson, Patterson, Courtney and Associates in Nashville. He is a past president of the Greater Nashville Association of Realtors and a past Realtor of the Year.

Courtney has held many leadership and committee positions throughout his career at the local, state and national levels. Courtney holds the ABR, CRS, and CRB professional designations.

Courtney is a 2007 graduate of Leadership Nashville. He is also is the author of Come Together: The Business Wisdom of the Beatles and writes a weekly column for the Nashville Ledger.

Noting that per capita disposable income is flat, there is some, albeit small, growth. Eisenberg identified the need for the creation of 250,000 jobs per month for the next two years in order for the economy to rebound, adding his data shows personal income is at 1993 levels.

He noted income has declined for everyone except the elderly and suggested that the elderly join the rich as the Realtor target. Better yet, the rich and the elderly.

He did provide insight into worldwide recessions. The speaker compared this recession to “really, really, really, really” bad recessions such as those in Finland, Norway, Sweden, and Japan. In those countries it took eight to 10, sometimes 12, even 18 years to rebound, noting that Japan has 20 years under its belt and is still worse off than when it began.

For those who care to monitor the economy, Eisenberg directs them to the “Net new jobs” report that is posted the first Friday of each month. He says job creation is the key, and that today’s unemployment figures are as pointless as there have been because so many people that have simply given up.

Parents are moving in with their children, and children back in with their parents. At present, 14 percent of adult children live with their parents. In 2003, that number was 10 percent.

Eisenberg provided data showing that the average rejected FICO credit score is 730. In 2006, a score of 580 was acceptable. Yet, the housing market improves.

Delinquency rates and foreclosures are trending downward, as low as 1 percent in some states. He identified Vermont, New Hampshire, South Dakota and North Dakota as having sound economies. In short, he said in jest, if you choose to live in state where no else lives, you should do well.

As barriers to improvement, he listed a bifurcated middle class and noted that the country lost an entire generation of income. That has caused a rise in rentership.

The recurring theme in Eisenberg’s presentation is that, somehow, the economy is improving, even with no job creation, tight lending restrictions, a fear of the government and an inevitable increase in taxes. What if any one of those obstacles were eliminated?

Richard Courtney is a partner with Christianson, Patterson, Courtney and Associates and the co-author of Come together: The Business Wisdom of the Beatles. He can be reached at Richard@richardcourtney.com

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