Mid Year Economic ForecastJune 26, 2011
In reviewing our mid year U.S. Macro Forecast Report, several factors stood out describing where we are in the economic recovery and what industry sector may provide significant contributions to our economic engine. This post will highlight the forecast but look for more regarding driving industry sectors in my next blog post on venture capital.
QE2. The world waited to see what would happen following the latest round of qualitative easing back in November 2010 when the Federal Reserve decided to print money to buy U.S. government securities. According to our report this action stregthened the economy but the overhang of real estate debt and distressed assets remains a formidable challenge.
Social Media Technology is providing tangible signs that a major economic engine might be forming with office rates in Silicon Valley and San Francisco, California soaring.
The latest labor market data shows a major decrease in job creation from an average of 160,000 jobs per month to only 54,000 in May 2011.
Businesses are proving to be impressively profitable and efficient with fewer people on the payroll but worker output per hour is declining suggesting the need for job creation in the future.
Overall U.S. rents will remain flat at least through 2012; however investment sales are on the rise and at prices that defy investment fundamentals, suggesting optimism among investors for rent increases in the future.