In 1913, 100 years ago, the Sixteenth Amendment was ratified, and the federal income tax was enacted. The original rate was a meager 7%. By 1918 the first expansion of the tax code occurred and by 2010 tax rates had been changed 34 of the 97 years of its existence.
Once again, I am pleased to say that we continue to see signs of recovery. However, I want to underline that our recovery is rooted in uncertainty. Warren Buffett once said, “You can hold a rock concert, or you can hold a ballet. Just don’t hold a rock concert and advertise it as a ballet.” I would like to reverse Mr. Buffett’s advice and tell you that Washington is trying to create and pay for a rock concert and we are getting a ballet.
You would think the end is near if you believe a recent article in The Economist; “America’s debt is rising, its population is aging in a budget-threatening way, its schools are mediocre by international standards, its infrastructure rickety, its regulations dense, its tax code byzantine, its immigration system have brained.” To all of this I think there is merit, but I retort that we are still the tallest midget in the room!
The economy added 236,000 jobs in February and unemployment fell to 7.7% the lowest since December 2008. Job growth is a big positive for commercial real estate and it appears that housing and construction have shifted into the growth mode. We have also noted stimulus spending is finally hitting our market (after 4 years) with many non profits expanding and seeking space. The Dow Jones Industrial Average is hitting all time highs, consumer spending has picked up and household wealth appears to have reached pre-recession levels again. Finally, most of the nation’s banks have passed the Federal Reserve stress testing. So, it would look like business and the consumer have finally learned to ignore the press and Washington.
A classic example of our economy is looking at FedEx stock. As I have said before, FedEx is a good barometer of our economy and market. I have said that above 92 is a good sign that we are in recovery. Well that has been the case since December, even getting to 108 in March but now back into the high 90’s. So . . . again, a Ballet not a Rock Concert.
In a recent listing presentation, a half glass of water was set in front of me. I was asked if I was an optimist or a pessimist… I drank the water and said, “I am paid to be a problem solver.”
As I mentioned earlier, non profits are moving around in the market, this includes a number of education uses – charter schools, for profit trade schools, and even universities. Small business formation (start ups) seem to be the slowest to be happening. I am in hopes that the housing recovery and construction for the tenants that are moving will flow through to new start ups in tech, health and finance. I have long said that the best stimulus to the economy is to give a dollar to a construction worker. They will build something, use raw materials, and with every penny (plus some) left they will buy something for themselves.
Other good news in our economy, San Diego’s Life Science Cluster has been ranked 2nd in the U.S. but perhaps more importantly San Diego County has been ranked the best place in the U.S. for locally brewed beer!
If you would like to help out in our community and make a direct impact on homelessness and hunger, I welcome you to visit and learn about Interfaith Community Services (where I have been involved for over 25 years and on the Board for over 5 years) www.interfaithservices.org. If you want to have a night on the town and make a difference then sign up to attend our Gala April 20th at Las Costa Resort. Or just make a donation or take a tour with me.
In the meantime, good luck paying your taxes…I hope you’re not down to your last nickel.
The Last Nickel
A father walks into a restaurant with his young son. He gives the young boy three nickels to play with to keep him occupied.
Suddenly, the boy starts choking, going blue in the face. The father realizes the boy has swallowed the nickels and starts slapping him on the back. The boy coughs up two of the nickels, but keeps choking. Looking at his son, the father is panicking, shouting for help.
A well dressed attractive and serious looking woman in a blue business suit is sitting at the coffee bar reading a newspaper and sipping a cup of coffee. At the sound of the commotion, she looks up, puts her coffee cup down, neatly folds the newspaper and places it on the counter, gets up from her seat and makes her way unhurried, across the restaurant.
Reaching the boy, the woman carefully drops his pants, takes hold of the boy’s testicles and starts to squeeze and twist, gently at first, then ever so firmly. After a
few seconds the boy convulses violently and coughs up the last nickel, which the woman deftly catches in her free hand. Releasing the boy’s testicles, the woman hands the nickel to the father and walks back to her seat at the coffee bar without saying a word.
As soon as he is sure that his son has suffered no ill effects, the father rushes over to the woman and starts thanking her saying “I’ve never seen anybody do anything like that before, it was fantastic. Are you a doctor?”
“No,” the woman replied, I’m with the Internal Revenue Service.”