Contact Us
News

4 LESSONS FROM THE RECESSION

Atlanta
4 LESSONS FROM  THE RECESSION
There may be a recovery. But it sure doesn't feel like one. And Mercer University's prophetic economist Dr. Roger Tutterow predicts we won't likely even see jobs return to  pre-Great Recession levels for another two years. ?When you drop as much as we did (8 million jobs), it takes not months, not quarters, but years to get back where we were,? he says.
 
Dr. roger tutterow mercer university 3rd annual atlanta real estate summit ritz-carlton keynote buckhead
Roger was the  keynote at our 3rd Annual Atlanta Real Estate Summit at the Ritz-Carlton last week. (Thanks to sponsors Arnall Golden Gregory and Reznick Group.) He notes that manufacturing has improved and consumers are spending again, but many manufacturing jobs won't ever come back due to technological advances and consumer confidence is very ?fragile.? He also outlined four lessons we learned from the Great Recession:
 
1. OIL PRICE HIKE = TAX
 
oil equals tax barrel roger tutterow dr. mercer university 3rd annual bisnow real estate atlanta summit ritz-carlton
With oil shooting up to $80/barrel in 2008 (and only rising from there), energy's inflation acts ?like a tax on the economy,? Roger says. While oil now hovers around $100/barrel, he says that in and of itself does not pose a threat to the economy. And in fact, there's probably a $10/barrel premium to the costs because of Iran. But if costs go up more, that  could hurt GDP.
 
2. FED BOND BUYING BUFFERS TAX HIKES
 
david rubenstein fed chairman ben bernanke
Roger says the idea that the Fed keeping short-term borrowing ?effectively at zero? as a way to boost the economy ?didn't pass the smell test? for him. Instead he suspects the Federal Reserve is attempting to lock in  long-term bonds  at low costs to buffer us eventually when rates will rise to pay our  national debt service. He sees the Feds beginning to consider rate hikes next year. ?The Fed has gotten lured into feeling it has to solve every problem in the world with monetary policy.? We snapped this pic of David Rubenstein  and Fed Chairman Ben Bernanke  back in 2009.
3. ATL RE VALUES HIT WORSE THAN US
 
north american properties mark toro 3rd annual bisnow atlanta real estate summit ritz-carlton buckhead echo boomers 22-year-olds housing multifamily
We all know that  home and CRE values took a hit during the Great Recession. But, Roger says, it was  even worse than people could imagine. Residential alone took a 94% valuation nosedive in the metro area during the bust. ?It is hard to overstate what that did to the Atlanta economy,? he says. But he says the housing sector does have a bright spot, especially multifamily. The Echo Boomer generation are ?perfect candidates? to feed both the apartment and eventually home ownership markets here, a sentiment echoed by North American Properties' Mark Toro (also a panelist, above), who says there are going to be more 22-year-olds on Planet Earth  than in any time in  human history. (Which must mean get into the denim and ironic sunglasses industry.)
4. TIME TO GET "FISCAL HOUSE" IN ORDER
 
treasury default capitol government shut down
?We cannot do again what we did last summer,? Roger says, referring to the government's threat to  shut down the government and floating fears the US would default on some of its Treasury securities. Nonetheless, the national debt  is a huge burden that must be solved, Rogers says. ?Where we stand now is we have to get our arms around our fiscal house? to add confidence back into the private sector, he says.