We are seeing the first signs that the US economy is showing growth. Though US gross domestic production remained flat in its August 2010 report, other economic gauges are showing that the US economy is increasing production. In it’s Beige Book report released on September the 8th the US Commerce Department said that tourism, agriculture, consumer spending, non-financial services and transportation numbers expanded while manufacturing eased. Most of these industries were in decline through the summer and now are showing signs of increased production.
The real estate industry numbers were not as optimistic. As a result of the expiration of the home buyer tax credit in June, the real estate industry continues to show weakness. Median home prices and sales dipped in July and August. Business contraction is also weighing in on the commercial real estate industry. Tenants’ shrinking business profits are overshadowing the sector. New pessimism is beginning to emerge as commercial real estate owners seek refinance and banks remain tight on underwriting guidelines. Increased vacancies and banks unwillingness to ease lending policies will increase commercial property foreclosures in 2011 driving the sector into further decline.
The good news in all of this is the Obama Administration latest economic proposals were received as one of the first long term solutions to a declining economy. The plan will stimulate small business growth through decreased payroll taxes and business investment tax credits. Though the plan is not enough stimulus to drive small business into the profit margin, it will provide the initial push the economy needs to increase business investment and hopefully job growth.