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2007
●
The
economy is slowing down for the first time in
many years. Three reasons for the slow down:
1. The main culprit is the housing industry.
This affects many segments of the economy. Currently we
have a three to four year supply of homes.
● 2005 and
2006 were the best years with 1.9 million home
construction starts each year. 2007had
1.4 million, and 2008 will have 1.3 million. This
represents a net decline of 35% from 2005 and 2006.
●
Last year
Niemi predicted a possible 6 to 9 month slow
down but now believes it will be longer.
●
The downturn is costing jobs and it is the biggest drag
on the economy.
2. Sub-prime mortgage market issues have a major
impact.
●
Lending is decreasing in consumer spending and
mortgage rages are rising.
●
Retail spending is still in question; however,
it is still a
good time to buy real estate.
3. High energy costs
●
The
rise in oil prices is just starting. The
possible cost is
$180 to $200 per barrel. This could cause a
recession.
●
International factors for the slow down:
●
The
Middle East is a mess and it continues to be in
turmoil.
●
North
Korea is getting better.
●
Russia is doing okay.
●
China
will become our major trading partner within the
next 18 months.
The
dreaded “R” word – Recession:
● This is the first forecast in
which Dr. Neimi has used the “R” word
● Recession is possible in 2009,
not 2008. This would be the third recession that has
occurred in 25 years.
● Two million mortgages are
resetting upwards by February 2008.
● This will dampen consumer
spending.
● This will also weaken the dollar.
The investment focus is going to Europe.
● The increased price of oil ($180 to
$200 per barrel)
● The economy will slow down until
mid-2008. It will possibly be up in the third and
fourth quarters.
Reasons and outcome of a
possible 2009 Recession:
●
The primary cause would be the
2008 election, if it takes a left turn.
● The promise of an increase in
taxes is bad for economic growth.
● Increase in capital
gains, business, dividends and high income tax rates.
● This all leads to less
investment, both domestically and overseas.
● The financial “center” of the
world will move to London because of left turn.
● Europeans and international
investors will not invest in the U.S. as in the
past.
Global
Competition:
●
Currently 12% of population is in
manufacturing. It will decrease to 10% in 2008.
●
More jobs in service economy, but
these jobs will be going overseas.
●
There will be an outsourcing of
high wage service jobs, especially to India.
● There will be more job creation
at lower wage levels.
A look at
some of the “Numbers:”
● It was predicted that
there would be a 2.6% growth in 2007. It will be
closer to a 2% growth.
●
Since 2008 is an election year,
it is predicted that there will be a 3% growth.
●
Unemployment is predicted to be
4.8% in 2008. We are currently 4.6%.
●
Short term interest rates are
currently at 4.6%. It is predicted that it will be
down to 4.2% in 2008.
● Ten year Treasuries will be 4.8%
in 2008.
Georgia
●
The
Georgia economy will be growing faster than the U.S.
economy.
- Slow in the first two quarters at 2.4% and it will be
up
to 2.9% in the last two quarters of 2008.
●
Unemployment is 4.8%. The same as the Unites States.
●
Georgia
Housing Market:
- It is not as bad as Florida, Southern California and
Arizona (Florida is down 20% in four weeks.)
- Speculators are not an
issue in Georgia as they are
in Florida. They drive down the prices.
- North Georgia is a good market. There has not been
a real long term drop in prices.
- The best market is North Georgia, Dallas, Portland,
Seattle and Charlotte.
- The prices have stayed relatively flat in Atlanta.
1.) For the
last five years, prices have gone up
55%
nationally, up in Florida 107% and up in
Georgia
20%. Therefore, the housing in Georgia
is
relatively inexpensive.
2.) Good in
long term for Georgia.
●
Four Strengths for Georgia’s
Economy:
1.) Positive growth demographics
in Georgia. Good “quality”
retiree.
- Some are
purchasing second homes in North Georgia
- Georgia has the second fastest growth rate in the
Unites
States. Three
times faster than the national economy.
- Good housing, cars and retail.
2.) The cost of doing business is
lower in Atlanta than the rest of
the United States.
3.) Transportation:
-
Hartsfield Jackson Airport is the largest hub for air
freight.
- It is also the major hub for railroad
transportation/freight
movement.
4.) Georgia has a great sea port.
-
Savannah had taken over New
Orleans for freight
tonnage.
- Brunswick is one of the largest automobile import
locations.
Long Term Outlook (Year
2020):
●
Georgia will be the 6th
largest state by the year 2020.
● The population will be 13
million, an increase of 4 million.
● A
recommendation is to buy land in North
Georgia. Think long term.
● The Atlanta region is
currently 8th in the United
States, with a population of 5.5 million.
● By the year 2020, the
Atlanta region will be the 5th
largest with 8 million people.
● Only Dallas, Chicago, Las
Angeles and New York will be larger.
● Expect a rise in price in
North Georgia. Look at long term growth.
● Not just population, but
the “quality” of retirees with good income.
● The weather and the
affordable lifestyles in North Georgia are
very attractive.
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