What Will The 2013 Economy Be?

Note: This is part 2 of a 2 part series looking back at the economics of 2012 and projecting the economics of 2013. Part 1 can be found here.  Also, look forward to the Triangle predictions coming up on Thursday.

With the year ending and all the talk about the “fiscal cliff”, there has been a lot of talk of what will happen during the next 12 months.  I feel like everyone can agree that the economy has seen better days and there seems to be indications that things are getting better.  Here is what I think the economy will be doing over the next 12 months.  Now as I stated last year, I am not by any mean the Oracle at Delphi, but this is my opinion based on a lot of reading and research by experts in their areas of expertise. Here are some areas of interest, including some not specifically discussed in Part 1 of this blog.

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What Was The 2012 Economy?

Happy New Year 2012

Note: This is part 1 of a 2 part series looking back at the economics of 2012 and looking projecting the economics of 2013. Part 2 will be released on Monday.

Last year I wrote two blogs about what happened in 2011 and provided some projections for 2012.  I got a fair amount of feedback from those post so I figured I do it again this year.  I started last year’s blog with Sir Winston Churchill’s quoted of  “Those who fail to learn from history are doomed to repeat it.”  I continue to believe that this is true in every facet of life, including business.  This information is based on factual information.  There are no politics, no opinions.  It is what it is.  The purpose is to understand what happen in 2012 to set the stage for 2013. Read more of this post

Homebuilding In The News

House Under ConstructionIt’s been a while since I wrote a blog about the home building and residential real estate. It has been three months since I even mentioned the industry in this blog and over seven months since I talked about the economic conditions of the market, locally or nationally.

Although it has been some time, I have not been ignoring the market. I have recently had discussion with those employed by builders, big and small, as well as a investor interested in a local large project. Also, over the past 10 days, I have seen a number of articles and news stories about the industry. So, I figured I let you all know about some of the news and provide an overview.

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Which Is America’s Best City? Raleigh (Again)

Downtown RaleighThe Raleigh-Cary area is consistently getting top rankings in it seems every ranking by every newspaper, magazine, or study. Again, this week is no different. In a Bloomberg-BusinessWeek article, the Raleigh area ranked #1 for the Best City In America. The article goes into detail in why Raleigh got the top ranking.

For the past 20 months, the Raleigh area has been at or near the top of over 114 list, including more than 10 so far this year. The types of lists ranges from quality of life to residential market quality to various employment clusters to being one of the top funniest cities.

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A Big Week for (Current & Wannabe) Entrepreneurs And Startups In The Triangle

Downtown RaleighIt has been a big week in the Triangle area for those in and around startups, or those thinking about a new entrepreneurial venture.

In any given week, there are always good events to network and get re-acquainted with those you may not have seen around. This is true for the Triangle area too. However, this week we saw three different great events to not only network, but learn and understand hoe innovative and entrepreneurial the area really is. Read more of this post

The State of Downtown Raleigh

Downtown RaleighWant to get nearly 300 business people, executives, and politicians in one place on a Wednesday morning?  Do an official “State of the Union” type forum and invite a Senior Director from a tech savvy company,an Executive VP, for a large hospitality group, and a newly appointed Economic Development Manager.

Well, that is exactly what happened yesterday at Downtown Raleigh 2012: An Economic Forum held by Downtown Raleigh Alliance. Read more of this post

Economic, Construction, and Real Estate News

We have had a lot of economic, construction and real estate related news in the past few days.  Instead of looking at just one of them in a vacuum, I am going to highlight many of them.

    • Nationally, consumer sentiment rose to 70.8 in February from 61.5 in January, achieving a sizable improvement. Consumers’ expectations rose to 88.0 from 76.7, while their views on current conditions increased to 45.0 from 38.8.  See the full story here.
    • Whouse constructionarren Buffett says along with equities, single-family homes are a very attractive investment right now, based on a CNBC interview.  He believes that the market is getting back into a situation that if the homes are held for a long period of time and purchased at low rates, the houses are even better than stocks.
    • An article in the Triangle Business Journal states that economic activity appears to be picking up across North Carolina, with fewer people filing first-time claims for state jobless benefits and forecasters predicting a bounce in new housing starts by 2013.

There have been a number of stories in the past several days about the local construction and real estate industries.  Some of it was good and some of it was not.

  • One of the negative stories was the report on the change of the Triangle’s construction industry employment figures.  I feel like we all logically knew this.  However, the numbers show that the Triangle peaked in December 2007 when payrolls were hitting 40,400. Then came the contraction.  By December 2011, according to Virginia-based Associated General Contractors of America, Triangle payrolls had dropped 30 percent to 35,300.  (Check out the full article here).
  • California-based commercial real estate firm Grubb & Ellis filed for bankruptcy.  Grubb & Ellis does have an affiliate in the Triangle.  It appears that Grubb & Ellis will be bought by New York-based BCG Partners Inc. as part of the Chapter 11 bankruptcy process.  There is no news of how this will affect the local affiliate.
  • The residential market update for 2011 from Birch Appraisal Group was released showing 2011 average prices and percent to assessed value by jurisdiction for Wake County.  Cary had the highest average price and Apex had the highest percentage.  Garner came in with the lowest in both categories.
  • Preston Development looking at 7,108 acres for Chatham Park, a masterplanned community that mixes the golf course and executive homes of Prestonwood and business hubs of Research Triangle Park.  The idea is to essentially develop a RTP 2.0.

–J. Nolfo helps companies understand their market and customers though a variety of market research strategies. He has over ten years of experience of market research for strategic planning purposes. He is the Director of Research at Rhino Market Research. He shares his thoughts about market research and business concepts with his blog “Pensare…Understanding Market Research in Business“. If you would like to discuss this blog or how J. can help you understand your market and customer needs, email him at jnolfo@rhinomarketresearch.com.

What Will The 2012 Economy Be?

2012 Economy

Note: This is part 2 of a 2 part series looking back at the economics of 2011 and looking projecting the economics of 2012.  Part 1 can be found here.

During the next 11 months, we will hear a lot about the economy from the various people running for public office, especially at the national level.  Regardless of your politics, I feel like everyone can agree that the economy has seen better days.  Here is what I think the economy will be doing over the next 12 months.  I am not by any mean the Oracle at Delphi, but this is my opinion based on a lot of reading and research by experts in their areas of expertise.  Here are some areas of interest, including some not specifically discussed in Part 1.

Economic Growth

Many are predicting a growth rate of about 2% to 3%, consistent with 2011.  Goldman Sachs is actually forecasting quarterly growth at anywhere from  near 0% to less than 2% due to fiscal tightening and stress in European markets.  However, they believe that household income and cyclical sectors, like housing, coming back.

According to  600 executives at U.S. companies who were surveyed in the latest Bank of America/Merrill Lynch CFO Outlook Survey and highlighted in a recent Triangle Business Journal article, only 38% expected the economy to expand in 2012, down from 56 percent in last year’s survey and 66 percent the previous year. 

Stock Market

I will have to admit full disclosure.  This is the area I am least educated about.  Even for a numbers guy, the market can be confusing if not followed constantly.  So based on that, it looks like, generally, the market will continue its volatility, even continuing the trend of 3% to 4% swings on any given day.  Many are expecting a drop during the first quarter, a spring gain that turns into a summer slump.  The year is projected to end on a rise, similar to 2011.  All of this hinges on the ongoing national debt issues and the European crisis.  According to the Wall Street professionals assembled by Barron’s, the market is going to increase by 11.5%.  However, that seems to be the same number over the past 2 years.

Employment & Unemployment

At any given local area, it is difficult to determine what will happen, but hopefully the national trends with provide some insight to what might happen as you couple it with what is specifically going on with new job announcements and layoffs. 

Based on the Blue Chip Consensus Survey, many are seeing an unemployment rate of less than 9%.  A recent Goldman Sachs is seeing this increase over the next year.  Others, including the White House, are saying anywhere from 8% to 9%, as seen in the video here.

Despite those concerns noted in the  Bank of America/Merrill Lynch CFO Outlook Survey, most CFOs don’t expect their companies to reduce work forces in 2012. Only 7 % predicted layoffs, as compared with 6% last year.  Meanwhile, 48% of executives surveyed expect their companies to stay the same size and another 46% said they expect to hire employees. These percentages are similar to last year’s survey.

A good sign is that much of the hiring seem to be from small businesses, which are historically the drivers of employment growth and market recovery.

Housing

“Housing has to come back at some point.”  I know many people, including myself, say this.  Unfortunately, we all have been saying it for a while, too.  There are some signs that housing might be coming back in 2012.  We have seen builder optimism increase for several months in a row and the US Census Bureau announced that November was the sixth consecutive month of gains in new single-family construction spending. 

Triangle Region & NC Economy

Generally, there is limited optimism in many of the 2012 economic forecast, according to research done by WRAL.  Recently, Appalachian State University economics professor Harry Davis predicted the economy would grow at 2.25 to 2.5 percent in 2012.  He also noted that residential housing growth is only around 6%, as compared to 26% in previous economic recoveries.  Also, Dr. John Silvia, chief economist at Wells Fargo noted that housing prices in Raleigh are near the bottom at the Raleigh Chamber of Commerce 2012 Economic Forecast. 

However, growth is a positive for the Triangle area.  Silvia noted that Raleigh is #1 in terms of growth and employment in the state of NC.  However, Anthony Wilson of ABC 11, WTVD noted that “Raleigh has persistent long-term unemployment, and companies can’t find trained workers.”  Davis believes that unemployment will drop from the current 10% to 9.3%, still well above the national figure.  However, some are very bullish on the 2012 NC employment situation.  NC State Economics Professor Mike Walden is “predicting we’ll see 40,000 to 50,000 jobs created in North Carolina in 2012,” said Walden. “Compared to the 20,000 created in 2011.”  This is a drop of the unemployment rate to less than 9% this year.

Overall

However, the issues that continues to worry people is the fact that the US debt will be greater than the US GDP.  If a business had more debt than it brings in, it would not be able to survive year after year.  Many are optimistic about an economic growth during 2012, but risks remain.  High unemployment, easing of imports, uncertainty of the housing market, the European economies and markets are all risk factors that could complicate 2012. 

Lastly, the Presidential Election is going to be a contributing risk.  Regardless of your political ideology, conservative or liberal, Democrat or Republican, there is a lot at stake beyond which Party is in the Oval Office come January 2013.  The entire House is up and 1/3 of the Senate.  Whoever controls these will be able to affect business and the economy for the next 4 years (if not longer).  I feel this will inhibit any major politically related economic issues.  No one wants to be on the wrong side and not win their election on November 6, 2012.

Just a note:  Everything above is a compilation of information I have researched and my own opinions.  I did resource other articles and websites not specifically mentioned above that I want to give credit.  Here are the additional resources for your reference.

What do you think the 2012 economy will be for the US as well as the NC areas?  Do you have contingency plans if it is better/worse than you expected?

–J. Nolfo helps companies understand their market and customers though a variety of market research strategies.  He has over ten years of experience of market research for strategic planning purposes.  He is the Director of Research at Rhino Market Research.  He shares his thoughts about market research and business concepts with his blog “Pensare…Understanding Market Research in Business“.  If you would like to discuss this blog or how J. can help you understand your market and customer needs, email him at jnolfo@rhinomarketresearch.com.

What Was The 2011 Economy?

2011 Economy

Note: This is part 1 of a 2 part series looking back at the economics of 2011 and looking projecting the economics of 2012.  Part 2 will be released on Thursday and can be found here.

Sir Winston Churchill is quoted as saying that “Those who fail to learn from history are doomed to repeat it.”  This is especially true in business.  This was a blog I thought about writing back nearly 2 months ago, but felt it would be better to write and post it now.  This information is based on factual information.  There are no politics, no opinions.  It is what it is.  The purpose is to understand what happen in 2011 to set the stage for 2012.

Stock Market:

  • 12/31/2010: DJIA closed at 11,577.51, NASDAQ closed at 2652.87,  S&P 500 closed at 1257.69
  • 12/31/2011: DJIA closed at 12,217.56, NASDAQ closed at 2605.15, S&P 500 closed at 1257.60
  • Change: DJIA  +640.05 (+5.5%), NASDAQ -47.72 (-1.8%), S&P 500 -0.09 (-0.00007%)

Labor Force (actual people wanting to work, Not Seasonally Adjusted, CPS based)

  • December 2010: 153,156,000
  • November 2011: 153,683,000 (December not reported yet)
  • Change: +527,000 (+0.34%)

Employment (actual people working,  Not Seasonally Adjusted, CPS based)

  • December 2010: 139,159,000
  • November 2011: 141,070,000 (December not reported yet)
  • Change: +1,911,000 (+1.37%)

Unemployment rates (Not Seasonally Adjusted, CPS based)

  • December 2010: 9.1%
  • November 2011: 8.2% (December not reported yet)
  • Change: -0.9%

US Economic Growth

  • Q4 2010 (Billion): $14,775.4
  • Q3 2011 (Billion): $15,176.1 (annualized)
  • Change (Billion): +$400.7 (+2.7%)

US Retail Sales

  • 2010 Top 100 retail store sales (,000): $1,559,183,000
  • 2011 Top 100 retail store sales (,000): $1,614,320,000
  • Change (,000): $55,137,000 (+3.5%)

US Building Permits

  • 2010
    • Total Permits (Thousands): 604.6
    • Single Family (Thousands): 447.3
    • Multifamily (Thousands): 157.3
  • 2011 (through November)
    • Total Permits (Thousands): 561.2
    • Single Family (Thousands): 384.3
    • Multifamily (Thousands): 177.0
  • Change (YTD through November)
    • Total Permits (Thousands): 4.2 (+0.8%)
    • Single Family (Thousands): -32.4 (-7.8%)
    • Multifamily (Thousands): +36.5 (+26.0%)

Was there something I missed?  Let em know what you think.

–J. Nolfo helps companies understand their market and customers though a variety of market research strategies.  He has over ten years of experience of market research for strategic planning purposes.  He is the Director of Research at Rhino Market Research.  He shares his thoughts about market research and business concepts with his blog “Pensare…Understanding Market Research in Business“.  If you would like to discuss this blog or how J. can help you understand your market and customer needs, email him at jnolfo@rhinomarketresearch.com.

Will N.C. see growth in 2012?

Gross Domestic ProductAccording to UNC Charlotte economist John Connaughton, he thinks so.

Connaughton believes North Carolina’s economy will grow 1.7% in 2012.  This is up 1.3% percent from this year.  The Article from the Charlotte Business Journal mentions the 11 of North Carolina’s 15 economic sectors are set for growth during 2012.  Business and professional services are projected to increase 5.4% and the finance, insurance and real estate is projected to increase 3.8%.  Connaughton also expects a job increase of 38,000 in 2012.  You can read the full article here.

The reference to growth in the upcoming year is a welcome one and one I hope is a true understatement for the upcoming year. 

As you finish up 2011 and put it behind us, I am sure you are making your 2012 plans and projections.  How is 2012 looking for you?

–J. Nolfo helps companies understand their customers though a variety of market research strategies. He has over ten years of experience of market research for strategic planning purposes. He is the Director of Research at Rhino Market Research. He shares his thoughts about market research and business concepts with his blog “Pensare…Understanding Market Research in Business“. If you would like to discuss this blog or how J. can help you understand your customers, email him at jnolfo@rhinomarketresearch.com.

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