No Double-Dip?

The emerging consensus seems to be that there will be no double-dip recession. Slow growth (very slow, apparently) will define the US economy for some time, so it's too early to break out the champagne. It will be a while before jobs are back, but things aren't going to be as bad as some folks thought not that long ago.

Some points in the consensus:

Colin Dyer, CEO, Jones Lange LaSalle
"We don't expect a double dip," CEO Colin Dyer told reporters in Asia on Friday. "Our sense is that the corporate clients that we deal with are liquid, they have amassed a lot of money, they are looking for ways to invest.”
http://www.realtor.org/RMODaily.nsf/pages/News2010091002?OpenDocument

Jean-Claude Trichet, President, European Central Bank
"I've already said on many occasions that I didn't foresee a double dip in Europe, and the latest results confirm it," Trichet told the French daily Le Figaro. http://www.automatedtrader.net/real-time-news/55575/ecb-trichet-strong-2q-confirms-no-double-dip-press

Guy Quaden ,Member of Governing Council, European Central Bank
"Euphoria is premature, but optimism about the economy is legitimate," De Tijd quoted the governor of the central bank saying. "We start from a positive, albeit weak, growth in the coming quarters. A double dip in Europe is unlikely. In any case, even less (likely) than in the United States," he continued. http://www.forexyard.com/en/news/UDPATE-1-ECBs-Quaden-sees-no-double-dip-in-Europe-2010-09-07T184152Z

Jeff Saut, Chief Investment Strategist, Raymond James & Associates
“You’re going to get slow economic growth, but no double dip,” Jeff Saut, who helps oversee about $235 billion as the chief investment strategist at Raymond James & Associates, speaking from St. Petersburg, told Bloomberg Television’s Susan Li. “There’s not a whole lot of downside” for stocks, he said. http://www.businessweek.com/news/2010-09-09/emerging-stocks-climb-for-first-time-in-3-days-on-economy-oil.html

Frank Nothaft, Chief Economist, Freddie Mac
Frank Nothaft, chief economist for mortgage investor Freddie Mac, sees what he calls "a very steady, quarter to quarter growth" pattern ahead, with no "double-dip" mini-recession hurting real estate, and only minor increases in interest rates.http://realtytimes.com/rtpages/20100322_realestateoutlook.htm

Legislation Proposes Federal Guarantees for Commercial Real Estate Loans

According to a report by Jessica Holzer of Dow Jones Newswires (as published here on NASDAQ.com), Rep. Walt Minnick (D., Idaho) expected to introduce a measure last Thursday with co-sponsors from both parties, while three senators were working on companion legislation in the upper chamber that would authorize the U.S. Treasury to provide as much as $15 billion to $25 billion in guarantees on new loans to the sector.

This would be welcome news for those who are anxious about the commercial real estate market.

Wasn't commercial real estate supposed to crash?

There seem to be two views on the economic horizon: 1) Things are going to get much worse; 2)Things are not going to get much worse.



New York Times Op-Ed Columnist Ross Douthat summarizes then dismisses the prevailing, former view well in a recent column (7/7/10 as published in Chattanooga Times Free Press.) Titled "The Pessimism Bubble and the Economy". His observation that " the Pew Research Center found that less than half of Americans expect that their children will enjoy a higher standard of living than their own" brings to the mind of anyone who lived through it similar comments during the last days of the Carter administration. Douthat observes this and other similarities between the current economic environment and that from the Carter era, and era punctuated by Carter's “malaise speech”, but followed by one of the longest periods of sustained growth in American history. Douthat concludes by labelling his column a "pep talk".

Financial News USA gives some credence to the latter view and more than a pep talk in an article Wasn't commercial real estate supposed to crash? - Financial News USA. The article cites voices that contradict the dire outlook from last spring's report from a Congressional Oversight Panel, which predicted -without qualification - that the commercial real estate market would crash in much the same way the residential market did, taking with it a number of small banks, the small-business credit markets, and indeed the entire US economy.

Markets have a way of absorbing dire long-term predictions, and the Financial News article analyzes how some of that absorbtion is taking place, and perhaps proving the Congressional Oversight Panel wrong.