Location Strategy Chartbook 012724

Welcome to our vibrant space of knowledge, curiosity, and diverse perspectives. Your voice is integral to our collective journey. Explore, share, and connect as we shape our community together!

Visit Our New Office: Connect with Us in Person!

We extend an open invitation for you to visit our new office at 710 North Post Oak Ste 315, Houston, TX 77024

Drop by anytime – we would love to show you around and discuss how we can continue to support your endeavors in the coming months

Location Strategy Chartbook

Navigating the Post-Election Landscape: Impact on Fiscal Policies

Whether we have Trump or Biden it is certain we will have an administration that will use expansionary monetary spending (massive deficit spending, tax cuts) as part of their economic program. Trump passed a $1T tax cut as the Fed cuts rates in 2019. One of the reasons inflation failed to respond to fed rate hikes is because of the roughly $1T deficit spending by the Biden White House.

What does this mean for the road ahead? Our prediction is the Fed will loose the fight against inflation and will lower rates before hitting its inflation target of 2%. And because of rising debt, I would be prepared for permanently higher inflation.

The Longer Term Problem Illustrated

I’ll be the first to admit I am not looking forward to figuring out how to write about the economy for the next ten months without talking about the election. But this is where we are. The chart below shows the longer term impacts of procyclical defecity spending: permenantly growing deficits and the debt. (Deficit is the amount we borrow every year to make up the shortfall between taxes and spending. Debt is the total amount we owe).

When you consider how a second Biden or Trump presidency will affect our business, certainly there are marginal differences that may even been signficant. But in the balance I think there will be very little difference because both will trend toward high deficits that crowd out spending and investment.

Rising Interest Expense: Navigating Federal Fiscal Challenges

The Federal Government finds itself in a fiscal conundrum as interest expenses steadily rise. This uptick in interest costs poses a significant challenge, adding pressure to an already complex economic landscape. The steady ascent of interest expenses demands a strategic approach to fiscal management. Policymakers are confronted with the task of navigating this fiscal challenge, seeking a delicate balance between meeting financial obligations and ensuring sustainable economic growth. The evolving scenario prompts a closer examination of fiscal policies to address the implications of growing interest expenses and their potential impact on broader economic health.

December Sees Dip in Consumer Confidence: Factors and Implications

In December, consumer confidence experienced a decline, signaling potential shifts in the economic landscape. Various factors, such as uncertainties in global markets, supply chain disruptions, and inflation concerns, may have contributed to this downturn. The impact of these elements on consumer sentiment could have broader implications for spending patterns, investment decisions, and overall economic trends.

Unprecedented: US Leading Index Experiences 21 Consecutive Months of Decline

The US leading index has recorded a decline for 21 consecutive months, marking an unusual trend for this economic indicator. The leading index, which typically serves as a predictor of future economic activity, reflects the challenges and uncertainties in the current economic landscape. Understanding the factors contributing to this prolonged decline can provide insights into the broader economic conditions, helping businesses and policymakers make informed decisions in response to the evolving situation.

Unprecedented 6-Month Decline in Index Sparks Economic Concerns
The US leading index has recorded a notable and unprecedented 21 consecutive months of decline, raising concerns among economists and experts. This trend, marked by a sustained decrease over such an extended period, is atypical for the index, prompting speculation about its implications for the broader economy. The unusual nature of this decline without an intervening recession has added an element of uncertainty, leading analysts to closely monitor economic indicators for potential shifts and impacts on various sectors.

Adapting to Change: Shifts in US Business Inventory Practices

In a dynamic business landscape, the United States is witnessing notable shifts in inventory practices among businesses. As markets evolve and consumer behavior undergoes transformations, companies are reevaluating their inventory management strategies. The traditional approach of maintaining large inventories is giving way to more agile and efficient models. Factors such as advancements in technology, the rise of e-commerce, and the need for cost-effectiveness are influencing this change. Businesses are now prioritizing leaner and smarter inventory practices, utilizing data analytics and automation to optimize stock levels, reduce holding costs, and enhance overall operational efficiency. This adaptation reflects a proactive response to the evolving market dynamics and sets the stage for a more resilient and competitive business environment.

Navigating Real Estate Trends: December Insights

In December, existing home sales maintained stability, holding at multi-year lows. This intriguing trend in the real estate market beckons a closer look at the factors influencing this equilibrium. While the figures suggest a degree of consistency, the underlying dynamics might unveil valuable insights. Whether it's evolving buyer preferences, market conditions, or broader economic factors, understanding the nuances can empower individuals to make informed decisions in the real estate landscape. Let's delve into the intricacies together, fostering a dialogue that unveils the narrative behind these numbers. Your perspectives on this intriguing trend are valued as we navigate the diverse currents of the real estate market.

Decoding Real Estate Trends: Unveiling the Lowest Annual Sales in Decades

n a notable development, the real estate market witnessed the lowest annual sales in decades, prompting a closer examination of the prevailing dynamics. The implications of such a trend are far-reaching, touching upon various aspects of the real estate landscape. Delving into the root causes and analyzing the broader context can provide valuable insights into the challenges and opportunities that lie ahead. As we embark on this exploration, your perspectives and experiences become crucial in unraveling the complexities of the current real estate environment. Let's engage in a meaningful conversation to decode the nuances of this unprecedented scenario and collectively navigate the evolving terrain of real estate.

Rents Go Down; BLS Survey Measure Diverges Broadly from Actual Transactions

Rents are going down across a broad series of indices that actually track transactions. The BLS’ survey measure of repeat tenant transactions also has gone down, but at an amount extremely divergent from the actual transaction indices.

If rents are in decline, that would be more of a relief to renters more than a move to make apartments more competitive than housing. About 50% of renters pay more than 1/3 of their income for rent.

Brightening Horizons: Small Business Sentiment on the Rise

Encouraging news has surfaced for the small business community as the latest data from the MetLife & US Chamber of Commerce Small Business Index indicates a continued improvement in sentiment during the last quarter. This positive shift underscores the resilience and adaptability of small businesses in the face of various challenges.

Exploring the Broader Trends: Decline in Birth Rates

We’ve heard all the complaints from Millennials and Gen Z: housing is simply too expensive for them to afford. Housing certainly is more expensive. Yet since 2015, 1 million Americans in the middle quantile of incomes have joined the ranks of homeownership.

Why aren’t more? High rates, arbitrary land use policies (well, they’re not arbitrary, they’re purposefully designed to maintain the value of exisitng homes) and economic uncertainty are all factors. Another factor: bad decision making. For instance 22% of “Buy Now Pay Later” spending last year was spent on alcohol.

US Declining Birth Rate Still Leads Most Industrial Nations

Birth rates are declining in most countrries around the world. The US is actually in relatively good condition compared to advanced economies. But we will populations peak even in fast growing states even with immigration by mid century and start to decline, unless some reversal factor takes place. Does that sound like a long way off? How many of you are building homes in communities that were active in 2000? That’s roughly the same distance to midcentury.