From a small northwestern observatory…

Finance and economics generally focused on real estate

Posts Tagged ‘Trump Administration

WordPress v. Facebook

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Loyal readers will note that I’m frequently on Facebook and less frequently here.  You may have also noted (or not….) the very different tone of my two sets of writings.  My pure FB posts are generally either my (fairly strident) political views or mental meanderings about family, travel, restaurants, and bars.  In other words, normal stuff.  My blog posts lean to business, finance, and the economy, with a bent toward real estate.  By construct, the “voice” on this blog is different than the “voice” on FB.

Here’s where life gets interesting.  I had the honor last week to speak to a small audience at a luncheon at Seattle’s historic Rainier Club about the economy.  It’s quite impossible now-a-days to separate “economy” from “politics”, much as I might like to.  Calvin Coolidge, I believe, said that the “business of America is business”, and the current government in D.C. has adopted that mantra.  Sadly, the current government in D.C. appears to know quite little about mainstream business.  they know a bit about a few things, and almost nothing about most things.  That said, they’ve sold a bill-of-goods to many mainstream business folks.  I saw a truck heading into Seattle today with InfoWars and “Arrest Hillary” bumper stickers.  The driver was a bearded young man who appeared to be a hard working fellow.  He’s been sold on the notion that the government in D.C. is on his side now, and they’re going to make everything a lot better.  I’m waiting to see that.  I haven’t seen anything yet out of D.C. that suggests this government is representing anyone other than Russian bankers and the Koch brothers.

At my Rainier Club talk, a questioner — clearly a Trump supporter — commented that the benefit of the new administration was that they were dismantling onerous regulations which affect small business.  I reminded the questioner that I’m Chair of the Board of a business headquartered in Seattle, and that nearly all of our regulations are imposed by the City of Seattle and the State of Washington.  I further reminded him that these regulations make Seattle the sort of place where creative people wanted to live, and since my bread and butter is hiring creative people, I’m happy to put up with these regulations in order to hire creative folks.  I noted that Amazon, Starbucks, Nordstrom, Weyerhaeuser, Expeditors International, Expedia, Alaska Air, Microsoft, Boeing, Costco, the Russell Group, Symetra, F5 Networks, Paccar (who make Peterbilt and Kenworth trucks) and a host of other global companies were also willing to put up with these Washington State regulations in order to be able to tap into the brain trust that wants to live here.  Intriguingly, the most “regulated” cities and states in the nation tend to be homes to the most forward-thinking and growing businesses.  Indeed, New York and California have over 20% of the Fortune 500 headquarters, and the states which are generally the least regulated have no Fortune 500 or even Fortune 1000 companies (Montana, Maine, South Dakota, Wyoming, West Virginia, New Mexico, and Alaska).  You go figure….

Well THAT’S interesting…

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Most of the conversations I’ve had about real estate and The Donald focus on housing, and particularly the storm clouds forming over low-income housing.  However, while The Donald is one of the luckiest income presidents in history in terms of inheriting a great economy, his Achilles heel may be the commercial real estate sector.


CBRE was kind enough to tweet the accompanying chart this morning, which is pretty self explanatory.  (Of course, I’ll go ahead and explain it anyway.)  After the real estate storm that Obama inherited, commercial transactions have regained lost ground in the past several years.  Note that we peaked in 2015 with total commercial transactions of nearly $1 Trillion for the year.  However, the market backed-off considerably, with the first three quarters of 2016 coming in a bit lower than the previous year, and then the 4th quarter coming in nearly $50 billion lower than the same period in 2015.

Did we just see a trend line break?  One wonders.  Commercial real estate feeds a lot of other sectors of the economy.  For example, new construction employs lots of the sorts of jobs The Donald is promising.  We need to keep our finger on this particular pulse.


Written by johnkilpatrick

February 14, 2017 at 9:41 am

Economic Baseline

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I just returned from a hectic several days in NYC.  I have to tell you, the vibrancy of the Big Apple never ceases to amaze me.  Then again, I was in Lexington, KY, week-before-last, and the core of downtown is alive with new construction.  (My darling wife speaks fondly of the Kilpatrick Index of Economic Activity, which is the number of high-rise cranes I can see from my office window.)  I was in Atlanta a week ago, and saw much the same, particularly in the tony suburbs of Cobb County.  My own main base of Seattle is awash with new construction.

Bottom line — America is actually working pretty well right now.  Unemployment is well under 5%, which is an amazing level for a developed economy.  Goldman Sachs tells me that global GDP growth should be in the 3% to 3.5% range in the coming year (where it’s been for the last 5 years) driven in no small part by a healthy U.S. economy.  According to,  U.S. GDP growth was 3.5% in the 3rd quarter of 2016, and is expected to come in at 1.9% in the 4th quarter.   Again, for a developed economy, these are not bad numbers.

One great measure of the health of the job market is the Gallup Job Creation Index, which is a weekly survey of 4,000 working adults.  It takes into account both job growth (at the respondents workplace) as well as anticipated job shrinkage.  The index bottomed below zero in 2008-09, but has steadily increased since then, and now stands as high as it has since the index was started in early 2008.  Inflation has been nearly non-existent for the entire century.

I point all this out, because this is the economic baseline that the Trump Administration takes over.  This is what they argue they will improve upon.  I don’t doubt that there are corners of the U.S. that aren’t on the same economic plane, and I would concur that we, as a nation, should direct attention in those directions.  That said, for the nation as a whole, things are going quite well.  Most of us in business have seen the flow chart that starts with the question, “Was it broken?” and asks, “yes” or “no”.  If no, then it asks, “did you mess with it?”  So, here we are, with an economy that, by and large, works pretty well for most people.  Let’s see how this works out……  I’ll keep you posted.

Written by johnkilpatrick

February 4, 2017 at 1:34 pm

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