Sunday, January 9, 2011
How You Can Stop The Downturn
Today I had one of my smallest US clients default on the payment. And he had the American recession and his house mortgage to blame. With a brand new year just beginning, it felt really terrible.
Recession just like Residential Prices, I am reliably informed by a friend who works for one of the United States’ largest realty advisory – depend on four crucial factors: general employment, household incomes, interest rates and consumer confidence.
Okay, so there’s nothing too startling here or that you didn’t already knew. But let’s take a look at the detail.
Clearly, the first three of these key factors can be quantified, even predicted. But the problem my pal and his colleagues have is that consumer confidence is intangible, it’s indefinable, unquantifiable and in total too slippery for its own good. Property ‘experts’ like him are always having the rug pulled from under their feet by that fickle-minded beast, shopper confidence. Sure, the realty market is still on the up in most areas of the country, but it’s slowing down or stabilizing.
It’s not just the real estate market that relies on consumer confidence, of course. The whole economy relies on confidence.
If one thing’s for sure, confidence is not simple to forecast. We rely on it, yet we can never be sure of where it’s heading. And we have only a very fuzzy understanding of what influences it, what makes it go up or go down. Something we think should be seen as hugely positive news might not have the desired effect on the population, and something else that’s apparently catastrophic might not be given much credence by the economy.
So here’s a practical thought for all of you.
Why do we all fall into the trap of running down the economy just because someone else tells us they've heard there is a downturn, that there are no more jobs or that the economy’s slowing down? Even if there is indeed a recession, why do we allow ourselves to be swayed by unnecessary despair? Nothing more than an insecure feeling that perhaps we should all avoid spending our money right now? Nothing more than a failure to take a little risk now and then!
For God’s sake, we all need to snap out of it! It’s precisely because people like you (and me) are choosing the ‘safe’ route and not spending our money that the whole economy is threatened with slowdown! If you don’t spend your money, the person who would have got it won’t spend his either, and so it goes on, down the food chain of the entire economy.
So…the solution has to be that the chap at the top of the food chain needs to spend his money, and that way it will trickle down to the guy at the bottom, with everyone becoming more and more confident as the flow of cash continues.
So come on all you big transnationals, all you large companies who ought to know better, get your cheque books out and get the economy going again.
And let’s stop talking so damningly about the economy, no matter which country you live in. It’s happening right now, in hotel lounges, bars and pubs, newspapers, magazines, blogs, up and down at all nations (or at least most of them) across the world. And it’s something we've all got to stop.
Or else, if the economy really does slow down to the point of shrinking, we've only got ourselves to blame, myself included. So, let’s change the lingo “The economy’s booming”. Pass it on!!!