“Lord give me caffeine to change the things I can and wine to accept the things I can’t.”
Eight years after the financial crisis, the world is still coming to grips with an unpleasant realization: serious weakness still plagues the global economy, the stock market and even our local economy. However, before we get to settled in on the “Woe is me economy.” I thought I would share this chart of just how big our economy is compared to the world and why we are the greatest nation.
You have heard the quote “If the U.S. economy sneezes the rest of the world catches a cold.” Well there was concern that our economy was getting the sniffles and was slowing to a crawl in Late 2015. However, consumer spending returned in January and is hopefully a sign of good things to come.
Closer to home, San Diego’s unemployment rate was 4.7% in December with 37,500 jobs gained in 2015. A quarter of those were in health services and education. We would affirm this given an increase in deals ourselves within those sectors. Vacancy in industrial real estate has hit historic lows, dropping to 5% countywide. San Diego home prices rose 7.2% in 2015 according to the Case-Shiller Index. So with this kind of good news locally should we be worried about the “Global Rout,” the whip sawing stock market or that the bond king, Bill Gross says that we have already entered a recession? What we have are dueling indicators: the economy vs. markets. Market based recession indicators such as stock prices and junk bond spreads are raising alarms, but so-called macroeconomic indicators such as inflation-adjusted incomes, energy prices and loan delinquency rates point to a more reassuring picture. I liken it to what we are experiencing and many of the tenants we work with; they are busier and making more money but to scared to hire more help.
I also continually question the “low inflation” environment that is reported. I get that oil has dropped (but California gas hasn’t dropped proportionately) and that technology has pushed down pricing. But if you go to the grocery store, look how things have skyrocketed from 2002 to 2012;
| Eggs: 73% | Coffee: 90% | Peanut Butter: 40% |
| Milk: 26% | A Loaf of White Bread: 39% | Spaghetti and Macaroni: 44% |
| Orange Juice: 46% | Red Delicious Apples: 43% | Beer: 25% |
| Wine: 60% | Electricity: 42% | Margarine: 143% |
| Tomatoes: 22% | Turkey: 56% | Ground Beef: 61% |
| Chocolate Chip Cookies: 39% |
(Divide any of those by 10 to see the real inflation rate.)
As I mentioned, technology has put downward pressure on prices and wages. Watch for the next step that is coming faster than you might think. It’s the “uberization” of everything. If you are not familiar, Uber is the private driver that you can summon from your phone. It is not a taxi in that it is a private party with their car providing you a ride. I have recently read of doctors going to this system. You want a doctor now, you can “Uber” an appointment and find an available opening or find the nearest “mobile doctor or nurse.” The 9 to 5 job has been out of popularity for several years with workers wanting flexibility. Well as an “Uber worker” you can opt in and opt out as you wish. Flex-time meant working 40 hours a week but when you choose. “Uber hours” means you can opt in for 20 hours this week and 80 hours next week. Lastly, what about the uberization of money? You will soon have a financial profile that includes everything from your balance sheet, payment history, credit score future earnings potential and Facebook habits and with a few key strokes you are connected with a range of lenders from banks to pools of individuals who negotiate a rate and duration that you agree on. You can shop around or combine different financing sources. You think this is futuristic? Well each of these components are happening now in their own niche’s and it won’t be long until they combine up (maybe even as CDC Capital Markets!).
As many of you remember, we would produce our annual report along with data and forecasts. As mentioned above, things have changed with technology. Now it is easier for me to give you a link to a couple of the best reports generated – happy reading!
CO-STAR SAN DIEGO RETAIL REPORT
EMERGING TRENDS IN REAL ESTATE REPORT
If there is one thing that is constant, it is change. I wonder what they’ll be saying about us in 100 years….
Regards,
The year is 1915 “One hundred years ago” what a difference a Century makes!
- Life expectancy for men was 47 years.
- Fuel for cars was sold in drug stores only.
- Only 14 percent of the homes had a bathtub.
- Only 8 percent of the homes had a telephone.
- The maximum speed limit in most cities was 10 mph.
- The tallest structure in the world was the Eiffel Tower.
- The average US wage in 1910 was 22 cents per hour.
- The average US worker made between $200 and $400 per year.
- A competent accountant could expect to earn $2000 per year.
- A dentist $2,500 per year.
- A veterinarian between $1,500 and $4,000 per year.
- And, a mechanical engineer about $5,000 per year.
- More than 95 percent of all births took place at home.
- Ninety percent of all Doctors had NO COLLEGE EDUCATION!
- Instead, they attended so-called medical schools, many of which were condemned in the press AND
- the government as “substandard.”
- Sugar cost four cents a pound.
- Eggs were fourteen cents a dozen.
- Coffee was fifteen cents a pound.
- Most women only washed their hair once a month, and used Borax or egg yolks for shampoo.
- Canada passed a law that prohibited poor people from entering into their country for any reason.
- Pneumonia and influenza
- Tuberculosis
- Diarrhea
- Heart disease
- Stroke
- The American flag had 45 stars.
- The population of Las Vegas, Nevada was only 30.
- Crossword puzzles, canned beer, and iced tea hadn’t been invented yet.
- There was neither a Mother’s Day nor a Father’s Day.
- Two out of every 10 adults couldn’t read or write.
- And, only 6 percent of all Americans had graduated from high school.
- Marijuana, heroin, and morphine were all available over the counter at local corner drugstores.
- Back then pharmacists said, “Heroin clears the complexion, gives buoyancy to the mind, regulates the stomach, bowels, and is, in fact, a perfect guardian of health!” (Shocking?)
- Eighteen percent of households had at least one full-time servant or domestic help …
- There were about 230 reported murders in the ENTIRE U.S.A.!
