Posts Tagged ‘governemnt’

It’s the Uncertainty Holding Our Industry Back

You may be wondering what affect the recent double whammy of the debt ceiling apocalypse and U.S. credit rating downgrade will have on the real estate market. The real estate industry is a microcosm of the general U.S. economy. We can already see the affect in the overall private sector.

We entered 2011 coming off a relatively strong performance in 2010 considering the foreclosure devastation the industry was and still is experiencing. Investors were optimistic and it was reflected in the positive New Year predictions for 2011. What became reality is the optimism has been replaced with uncertainty three quarters of the way through the year.

When optimism was the private sector’s sediment, we saw slow but steady growth of the economy and most importantly, we saw the unemployment rate begin to drop. Later in 2011, as the sediment changed to uncertainty, we see the fall out in a stalling economy and up ticks in the unemployment rate.

It’s not that small and big businesses don’t think the U.S. will once again come out of the recession. It’s the uncertainty that positive action will not be taken in a timely manner. Reinforcing the uncertainty factor can be seen in U.S. Treasury Bill yields immediately following the U.S. credit downgrade. Yields actually decreased 38 basis points. The opposite of raising interest rates to offset the higher risk anticipated by the downgrade. More money actually flowed into U.S. Treasury notes seeking security from the uncertainty.