Short Term Economic Trends and Forecasts

Excerpted from “The Shift Age Trend Report”

What can executives do to navigate the changing business climate and marketplace shifts? David Houle, futurist, consultant and keynote speaker on the future trends, offers compelling short-term and long-term trends and forecasts in his “Shift Age Trend Report.” Below is an excerpt of select short-term and economic trends from his report:

Global unemployment will rise. US unemployment with continue to rise to 11% and perhaps a bit higher moving into 2010 It was clear to me at the beginning of 2009 that the unemployment rate in the U.S. would reach double digits before the end of the year. This was at that time a much higher estimate that what the Fed was predicting. Unemployment will become a real drag on any recovery. In the US it will be difficult to get back under 9% before the end of 2010. There will be countries in the EU where the unemployment rate will be significantly higher than in the U.S. and will last longer. The definition of unemployment will begin to change.

The residential real estate market will bottom out and move toward normalcy. 2009 will be the bottom of the national residential real estate market. Foreclosures and bank sales will be largely over. The market will become a more normal market in Spring 2010, but there will be no strong upward pressure on prices. Extreme bottom fishing will be largely over.

Commercial and retail real estate continue to collapse, putting a big drag on the recovery. The combination of the over building of the last 10 years in commercial and retail real estate, combined with bankruptcies and contraction on the tenant side, combined with lack of credit to refinance large balloon payments will cause this sector to undergo a near depression. Vacancy rates will be well into double digits and will remain. This of course makes any refinancing difficult. It is a great time to become a tenant or to renegotiate leases.

Oil will largely trade within the $50 – $75 range. There will be occasional upward pressure beyond $75 due to some degree of speculation, but d emand has declined dramatically and leveled off in recent months. OPEC has limited supply more tightly than in the past. Oil futures are now considered an investment vehicle as a hedge against inflation. Do not expect lower oil prices.

The current ‘reorganizational recession’ continues to eviscerate media properties with many magazines, newspapers and even radio and TV stations closing their doors. I have spent a good part of my professional life in media. I have also been a student of media, the history of it from the book to the current version of the Internet with video and social media. The current media and advertising recession is different than any in my lifetime and is the most severe since the Great Depression. That one however was due to macro economic factors. The current one is due to several factors and dynamics that are coalescing at the same time.

“Thrift is the new cool, the new extravagance” will become more embedded in the American consumers’ behavior. Consumers have been scarred in the last nine months. They mostly played by the rules and yet lost significant net worth. This taught them/us that the only thing we can truly control economically is the decision to spend or save. The US savings rate is at the highest it has been since the early 1990s as consumers embrace thrift. The savings rate will remain high and will probably increase during the next several years. This scarring will affect consumer spending for years to come.

Smart leaders broaden their understanding of possibilities and narrow decisions by blending hard data with intuition and forecasts. You can find the future possibilities in the “Shift Age Trend Report.” Online subscription to this report is available now at the Vistage Knowledge Center.

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