February 19, 2010

Advance and Rutgers Report - An Analysis of Economic, Business & Demographic Trends

Y2K+10: A New Decade Unfolds

By James W. Hughes and Joseph J. Seneca

America entered 2010 with a stabilizing economy, and the nation is now poised to experience economic recovery. However, 2010 will just be the start of a very long road back. Under optimistic assumptions, it could take at least four years to recover the more than 8.5 million private-sector jobs lost during the Great Recession, and then an additional four years to get back to pre-recession labor market conditions.4 A key question is whether accelerating off-shoring, automation, efficiency gains, and information technology and management advances have permanently changed U.S. labor-market and job creation “normalcy.”

Real estate development will probably hit its cyclical bottom in 2010. However, the industry will still continue to be constrained by a lack of demand in its many dimensions - tepid private-sector employment growth, corporate cost-cutting and efficiency efforts, small business stuck in survival mode, stifled household formation, and consumer retrenchment following an era of overconsumption.

In fact, slack or moribund demand will hinder a substantial real estate market rebound for the early
part of this decade. Still, it is a new decade, and even in distressed economic environments, new opportunities always emerge.

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