What You Should Know About the Rebounding Economy

Economies do well, then they do very poorly, that is just the nature of economies. Right now it appears that we are in a rebounding economy, which is of course great news. When an economic recovery starts happening, businesses spend more, unemployment goes down, and the under employed get back to working in their field. Furthermore, businesses and people come up with new technologies and ideas, including making already existing products more efficient. But, not everyone truly understands what a rebounding economy is and what it isn’t.

Sentiment is Key

Consumer sentiment is so important in a rebounding economy. The way people feel dictates how they act. When times are good, people are spending money, investing in new businesses, and businesses are hiring and producing new products. Sentiment has improved greatly in the last few months, as the recovery has started, people are starting to spend their extra income instead of stashing it. This helps get the economy going. To understand the recovering economy you must follow and understand consumer sentiment.

Investment

A lot of businesses in the United States have been sitting on a lot of money, or giving dividends. Though they have been afraid to invest in new products or ideas, this is slowly changing. Now businesses are starting to invest in new technologies, new ideas, and most importantly, people. This has a domino effect on the economy since money sitting in the bank does nobody any good. This is especially true for business; interest rates are so low, leaving money in the bank does nothing for their bottom line.

Stock Market

We have seen the stock market reach highs over the last months and weeks. This is a good sign people have faith in companies and in the integrity of the system. Capital gains taxes are good for state governments too as this can help fund badly needed projects that may have been neglected in the financial crisis. Not every large company has had their stock come back, but well run companies have largely come back stronger than ever.

Currency

In the United States, the dollar became a lot weaker, which in itself is not bad. But over time, during this recovery, the dollar has certainly strengthened against the Euro and other currencies. What needs to be watched out for is whether the dollar is gaining strength because we are fixing our problems or because Europe is getting worse.

Unemployment

The nation’s unemployment situation is slowly improving, which is great. It should be noted that, in a recovery, these things can take time. A hiring boom may be several months away; companies need to prepare for this. Many companies cut their staff to the bare minimum. Now with investment dollars flowing and the economy improving, they certainly will be hiring in great numbers. Employment is ever so important in any recovery.

Gas Prices

One way to notice the recovery is to notice gas is still not cheap. This is because consumers obviously can afford this. Although this is not good news, it is certainly the truth. If the economy were on more shaky ground, the price of oil would be much lower.

The economy is certainly improving at a rapid rate, and we are way better off than 2008. But this recovery could stall and lead us back to square one. Looking at most of the indicators, it does not appear this will happen. (Top image: Flickr | petesimon)

* Dawn Caruthers writes about economics, finance & mortgage quotes.

Let the Investment Come to You

CommercialInvestingCenter.comWith so many things in life, the harder you try, the harder it gets to find success. Such is the case with many self storage investors who took a headlong dive into the commercial real estate investment market a few years back, paying no attention to the terms of the loan, but rather plunging forward with a “damn the torpedoes” attitude to get into a self storage investment no matter the cost.

Well, it’s a few years later and a problem is becoming apparent to those investors who grabbed any deal they could while the industry was at an all time high. Self storage is still an amazing investment choice for those who only bought if the deal made financial sense the day they closed. For the rest, who strapped on their rubber band bungee boots and took a screaming dive into oblivion, victims of ignorance and fool’s hope, sorry ’bout that.

Every storage facility and location is not created equal. One might be an overflowing ATM machine while another just manages to positive cash flow nicely. Both can be a great investment if the terms of the financing are right. But if they’re not – ouch.

This was a convoluted way to say let the market come to you. It’s the idea of waiting for a good buying opportunity rather than diving in at the top of the market and hoping it stays that way forever. While it is, for all practical purposes, impossible to pick an absolute market high, you should be aware that it runs in cycles, and any price wave that hits an all time high is going to be followed by a correction. You don’t have to be able to perfectly pick tops and bottoms, but need the wherewithal to know, relatively speaking, where the market stands at any particular time.

When prices have broken through a top and are running, it’s time to wait for a correction. No matter how enticingly priced a facility is, no matter how great the deal seems, if the timing isn’t right – well, the timing isn’t right. There is always another deal waiting around the corner. Part of deciding whether it is, in fact, a good deal or not, is to look at the broader local market. If it doesn’t line up, not much else matters. Play it calm. Play it cool. Wait for the deal to come to you.

The Commercial Investing Center Team

Commercial Investing Show

Flickr / tinyfroglet