Beyond the Build

Customer Relationships

Optimism on the Upswing: Forecasts Call for Less Gloom, Doom and Despair

I never get through all of the newspapers I wish to read each day. I bring them home and they stack up on my kitchen counter waiting to share their knowledge with me. At the first of last year, not seeing all the news and forecasts might have been good for my morale.

With so much anxiety in the market and many speculating that we were headed toward another Great Depression, I suggested my 84-year-old mother and her friends turn their televisions off. I thought that instead of listening to the negativity, they’d be better served talking with each other and being thankful to live in a U.S. where we aren’t on the brink of fighting a world war.

If you’ve ever known someone who, like my mother, was a child in the 20s and 30s, you are talking to a person whose life was forever changed and shaped by the economic climate. The Depression will always be a part of them. I tell our young people around here that while times are really tough (approaching Depression era unemployment rates in construction) we should be thankful. We didn’t go through a Depression. The first beach we saw was not Omaha Beach.

Over the holidays, I finally got to catch up on my newspapers and was pleased to notice a more positive trend. I read through eight publications and thought I would share my takeaways here:

-Christmas tree sales had their needles pointing up. To translate, it was a great year for tree sales, which is a good gauge of the strength of the holiday shopping season as well as people’s outlook and confidence.

-Federal Express, UPS and DHL all reported up ticks in their shipping—both here and globally—and they continue to be upbeat. A good sign.

-October retail sales were so-so. Momentum picked up through November and December. Internet sales are going well.

-Retailers are doing a better job of managing inventory this year. They’re walking with little more zip in their step.

-Corporate earnings are strong, but I’m wondering how long can we push down cost to earn a profit? At some point the top end needs to grow as well.

-The annualized GDP growth rate is somewhere around 3% plus for now. That’s positive.

-The Feds plan to keep the rates low for a while yet.

-Housing inventory declined in November. Annualized new home construction is around 600,000 units. We still have a ways to go, but these numbers are certainly better than the end of 2008.

-Mortgage companies are beginning to ease down payment standards, moving toward to 95% LTV. Let’s hope they never again forget to do the paperwork, including real documentation and real credit reports.

-Confidence in the housing market values is increasing market by market.

-Commercial Banks still have a ways to go with lending for commercial properties.

All things considered, it looks like we’re starting our climb out of this valley.

My New Year’s message to Mother: It is now ok to watch CNN and to read the news again. We’re not out of the woods but we’re certainly better than we were 12 months ago. Love, Your Son.

Merrill Stewart Jr.

Merrill Stewart is Founder and President of The Stewart/Perry Company, a commercial building contractor based in Birmingham.