Al's 2011 Financial Forecast: "Storm Clouds" Clearing?
As we end 2010 and head into a New Year, we still have a lot of questions on our mind: Will 2011 be any better for the U-S Economy and our Families than 2010?
Will Foreclosures slow down and what about Business expansion and New Hiring?
Will our local Real Estate Markets Improve and our homes start gaining value again?
Will it be any easier getting loans on Cars and Homes and other Consumer Goods?
Are our Banks any stronger and will we finally see the end of failed Banks being taken over by Uncle Sam?
What about Consumer Prices for Gas and Food, will we see prices rise again as Inflation heats up?
What about our Investments and Retirement Accounts, will we finally start seeing more improvements in the Markets and will they be enough to get us back "Where we used to be"?
Lots of Questions with few real answers.
"Will 2011 be any better?"
Yes, if we make it that way.
National Forecasters predict the Recovery will remain slow through at least the first half of 2011.
If you're an optimist, that means we should see more of the continuing slow improvements we first started seeing more clearly towards the 4th quarter of 2010.
Consumer Confidence improved, along with Consumer Spending and overal industrial output. The Balance of Trade is improving too, as U-S made goods represent better bargains on the World Market.
If consumers keep up their spending, hiring will improve as well.
But the hard, cold reality may be Unemployment is not expected to improve until possibly late 2011. Jobs will remain a hot issue Nationally and Locally as consumers struggle to pay their bills and stay in their homes.
Without new jobs, the U-S Economy will continue to see a very slow recovery that could potentially run out of steam as current Federal Stimulus Funds expire. Also potentially boosting Unemployment? As Property Tax Revenues continue to fall, State and Local Budget Pressures may require even more Public Sector Layoffs.
If that happens, thousands more workers including Teachers, Police and Firefighters across the country could find themselves without a job.
Businesses should see some improved end-of-the-year profits based on decreased operating costs after so many job cuts.
At some point, replacing fired employees/ hiring new ones may see a boost. Expect most companies to remain very cautious about expanding too much during the first half of 2011.
But I believe by the 3rd and 4th Quarters, 2011 Business Expansion should see a decent boost as companies prepare for another improved Holiday Shopping Season.
What about the Housing/Real Estate Markets?
Again, don't expect any major changes.
South Florida's Inventory of unsold Homes and Condos will continue to sell well, based on close-out pricing that may still be bottoming out through the first-half of 2011.
But Prime Waterfront Condos and Single Family Homes should start seeing more stable pricing.
And the days of "60% Off Pricing" should be coming to an end.
BUT...if Foreclosures continue, and the so-called "Shadow Inventory" of Bank-Owned Properties are dumped on the market through the year, 2011 may not see much improvement as far as pricing goes.
On the flip-side though, it may mean "Buying Opportunities" for anyone in the market for a South Florida Property.
Expect continued Foreign Investment here, which is not a bad thing at all.
What about New Construction/New Development?
With a glut of commercial and residential properties still on the marrket, and banks remaining reluctant to lend, don't be surprised to see very little new construction around South Florida for most of the year.
What about getting a loan and will the Banks finally see some stability?
The Big Banks are seeing record profits, and that should continue through 2011.
But they are also holding huge portfolios of Mortgage-Based Investments and that could weaken their stability even more through 2011 if the Housing/ Employment markets don't improve substantially.
Bank failures could appoach record record levels in 2010.
Hopefully 2011 will be better for getting Small Business Loans, Mortgages and Car Financing, which may still be a problem for anyone with less than very good credit.
How about Wall Street and our Investements?
2011 will present even more opportunities and risks.
Commodity prices could see more gains as nervous investers consider Gold and Diamonds as a hedge against more possible Stock Market Volatility.
Wall Street will see more ups and downs, but they should less dramatic than the will swings we saw earlier in 2010.
Smart investors will contiune to rebalance their "Winners and Losers", and re-adjust Stock Holdings with Bond Funds and Cash.
Overall, I believe well-blended investments should continue to see slow short-term gains with continued long-term growth. But don't expect to see the Dow at 14,000 anytime soon.
What's it all mean to South Florida?
2011 will see decent gains in Tourism/ Hospitality sectors.
Foreign Trade through the S. Florida Customs' District should see solid, near-record growth.
The "Trickle-Down" effect of both sectors should help improve the local economy throughout the year.
Bottom Line:
Consumer spending will contiune to be a major driver accelerating a Recovery that continues to face long-term problems that still haven;t been solved.
But it will remain dependent on the ability of consumers to keep their jobs and see improvements in hours and wages which have remained stalled for the past few years.
New Jobs have to be "Grown" Nationwide or the same problems hitting us in 2010 will remain through 2011.
