The Lion's Den

I have been reading some various economic indicator that indicate mixed signals. Officially, our economic output as measured by GDP grew, but we also experienced around a 4% decrease in new home sales as well. With all of these mixed economic indicators, it is very difficult to feel like celebrating that economist say that we are turning around from the recession.

What are the drivers of this growth? Why do I see news clips stating that Shells plans to cut 10% of its workforce, and the market took a beating after rallying quiet bit.  When the economy recovered from other recessions or dips, it was easy to see where money was flowing.  Housing is flat. Technology is flat. Banking has tight lending so well capitalized small business owners are not a reality in this day and age.

Without the clear indicator of these growth engines, it is very difficult to feel enthusiastic. Maybe the growth is from the health care industry, since more people probably got ill just looking at the job prospects. Also, if the health care spending is increasing, then is this not the issue that people point to is a cancer to the other industries in America? Why should anyone outside of healthcare people be happy that more money is pouring into that industry? I thought the whole point of health care reform is that health care consumes too many dollars of the US economy. Therefore, this is not the bandwagon to cheer about, while Congress is debating to reform many of the items leading to the explosive pouring of money.

At this point, I really do not feel comfortable that the growth is based off a sustainable model. The commercial industry is supposed to be the next wave of foreclosures due to all the empty office and commercial spaces. Where is the growth coming from?

If it the stimulus plan, then conservatives are going to blast that kind of growth as “Communist”.   Also, since this spending is based on deficit spending, this could be injurious to the long term health of our economy with inflationary risk.

I am not pundit on television or a pure economist, but I feel like I am a educated person trying to put my fingers around this data.  It just feels like we are standing still. Maybe with all the bad news that people get, then this is reason to celebrate?

(Jay Raman is a real estate investor and he is the owner of a full service real estate firm, Ashoka Lion www.AshokaLion.com. You can send emails to him through the “Contact Us” portion of the site)

This entry was posted on Thursday, October 29th, 2009 at 8:15 pm and is filed under Economy, Real Estate General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.