From a small northwestern observatory…

Finance and economics generally focused on real estate

Posts Tagged ‘Dr. Bill Conerly

Conerly’s Businomics Newsletter

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I’ve mentioned before that one of my favorite economic writers, particularly for the Pacific Northwest, is Dr. Bill Conerly out of Lake Oswego, Oregon.  Even though Greenfield’s practice is national, we have to maintain a bit of a Northwest focus to our work.  Dr. Conerly helps us with the underlying economics driving the economy of this salmon habitat in which I live.

Dr. Conerly’s “charts” are wonderfully informal and informative at the same time.  In the ‘old days’ he would simply hand-write his thoughts on the charts then fax them to his subscribers (remember “faxing”?).  Today, of course, it’s all digitized and stored on his web site, with an emailed link.  Nonetheless, the succinct hand-written notes are still there, and the brevity is welcomed.  (I could learn from that.)

Rather than reproduce the charts here, I’ll simply give you a link (here) and you can go view them yourself.  If you’d like to contact Dr. Conerly — he’s a great speaker and consultant on economic issues — then the e-mail address is bill@conerlyconsulting.com.  A quick synopsis may whet your appetite:

  • Business equipment orders are still not back to the pre-2008 peak.
  • Consumer sentiment is up, but not back to 2007 levels
  • A January, 2012, Wall Street Journal survey pegged the risk of recession at 19%
  • Private non-residential construction has “turned the corner”, but is still significantly lower than 2007-2009 levels.
  • Unemployment:  great headlines, but we’re a very long way from feeling good.
  • Mortgage rates are at all-time lows, but only if you have great credit.
  • Stock market:  lots of up-side if Europe manages to muddle through
  • Oregon and Washington bankruptcy filings on the way down, but still over double the 2007 rates
  • Boeing orders may be tapering off, but still significantly exceed deliveries — no need to cut output
  • Wheat prices (an important economic component in our area) are downturning, due to the global slowdown.

Well, folks, that’s about it — great reading from a great analyst.

 

Written by johnkilpatrick

February 13, 2012 at 9:51 am

Global and Local Data

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Two important economic research pieces hit our desks this week — the RICS Global Commercial Property Survey, and the Dr. Bill Conerly’s Businomics Newsletter. The former, as its name implies, has a very global reach (the U.S. included), and gives a great basis for comparison of how the U.S. commercial real estate economy is doing relative to other economies. Naturally, this begs the question, “Are there OTHER economies?” From an investment perspective, all “economies” are integrated, and while each occupies a different place on the risk/reward graph, they are all viewed through the same lens by the equity and debt markets. Dr. Conerly’s work focuses narrowly on the Pacific Northwest, and gives us a great snapshot on how our local economy is doing. It’s a “must-do” resource piece for any work we do in our backyard.

RICS, of course, stands for Royal Institution of Chartered Surveyors. First charted by Queen Victoria in 1881, it is now the world’s oldest and largest property-focused organization, with 100,000 professional members and 50,000 students in 140 countries. Greenfield has been pleased to be affiliated with RICS here in the U.S. for quite a few years.

The headlines speak for themselves:

  • The strongest real estate markets are in Asia (except Japan) and Latin America
  • Emerging European Markets are seeing further improvements
  • Rental outlook turned positive in the U.S., deteriorated in the U.K, peripheral Europe, Japan, and the UAE
  • Capital market expectations are rising in China, Hong Kong, Poland, and India
  • from RICS Global Commericial Real Estate Survey 1Q2011

    For your own copy of the report, or one of the regional reports, visit the RICS web site by clicking <here>

    Dr. Bill Conerly, based out of the Portland, Oregon, area, is a great friend of ours here at Greenfield and one of the region’s top consulting economists. His newsletter presents key national economic trends (along with his pithy comments) and then focuses on how these play out in the Pacific Northwest. He calls national GDP growth since the start of the recovery “disappointing”, and notes that while consumers seem to be rebounding and business equipment capital spending is growing moderately, construction spending is still “weak”. Housing starts are still troubling (for more on this, see some of my prior blogs on the housing market) and despite gas prices, inflation still seems to be under control (actually near the lowest levels in the past 5 years.) The spread of junk-bond yields over treasuries hit a peak of nearly 2000 basis points in 1009, and is back down to between 500 and 1000, but still above the roughly 300 basis point level of 2007. Dr. Conerly suggests there is still some worry about risk, although I would posit that 700 or so basis points is probably a healthy level. Finally, on a national view, Dr. Conerly is looking for “decent but not dramatic gains” in the stock market.

    On the local front, Dr. Conerly notes that both Oregon and Washington bankruptcy filings have turned downward from their peak levels last year, although both are still well above levels pre-2009. Through the recession, both states have seen substantial net in-migration (Oregon at about half of Washington’s level), although Oregon’s in-migration had trended slightly downward and Washington’s slightly upward.

    For more information on Dr. Bill Conerly or copies of his charts, visit him here.

    Written by johnkilpatrick

    May 12, 2011 at 9:16 am

    Conerly Consulting

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    Dr. Bill Conerly of Portland, Oregon, produces a wonderful little economic report called the Businenomics Newsletter. You can check it out here. While it is heavily Pacific Northwest focused, he has some great insights into the “big picture” of the U.S. economy as a whole. I highly recommend his research, and (as long as I’m in the promotion game), he’s a great public speaker.

    He discusses two key elements of the “end of the recession” right up front — the current consensus forecasts of strong GDP growth for the next two years and the current “bounce-back” in consumer spending (which fell off significantly from mid-08 to mid-09). Unfortunately, capital goods orders are only sluggishly recovering, and state-and-local budget gaps continue to be a drag on the economy.

    As for construction, the decline is over, but the bounce-back is sluggish. Residential construction fell from an annual rate of about $550 Billion in the 2007 range to about $250B in 2009, and continues to flat-line there. Private non-residential peaked at about $400B in 2008/09, and has since declined to about $250B (where it’s been hovering for since early 2010). Public non-residential has been on a bit of an up-swing all through the recession, but is still barely above 2007 levels (about $300B). In short, these three sectors taken together have more-or-less flat-lined for the past year and a half or so, and appear to be staying there for the time being.

    Anyone who reads the paper or watches the news on TV knows we’re in the midst of a raw materials crisis, with aggregate materials prices (the “crude materials index) up about 25% from its recent mid-2009 low. However, the price index is still well-below early 2008. Conerly suggests that the rise is “hard on some, but will not trigger general inflation.”

    The money supply (M-2) continues to grow, and QE2 has apparently not had an inflationary impact, at least from reading the charts. Indeed, prior to QE2, the money supply chart looked like it was ready to flat-line. In total, as Conerly notes, the stock market appears to be happy that the economy is growing again.

    Written by johnkilpatrick

    March 10, 2011 at 11:43 am

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