A global view of the U.S. economy

I just returned from the spring meeting of the Counselors of Real Estate in Montreal. The weather was unseasonably warm and I did manage to get in a couple of long walks in such a wonderful, cosmopolitan city that seamlessly mixes old and new. Alas, with committee sessions, then the programs — even the meals are meetings — there is very little down time.

But to keep current in the 21st century, it is essential that we all leave our daily routine, even for a few days, and soak up the energies from other quarters.

In one session, the topic was public-private partnerships. Those of us from the Northeast were struck by the positive and welcoming public-sector actions and initiatives offered to developers seeking to do mixed-use and transportation-oriented development, not to mention brownfields and infill projects. Charleston, Jacksonville, Tampa, Houston, Dallas, Phoenix, to name a few, all are proactively recruiting and encouraging new design and planning concepts. It is true that they are not so reliant on the property tax and they have more resources and economic development tools, but what comes through loud and clear, is the positive, cooperative “can do” attitude these communities exude. When you couple that dynamic with a strong demand (demographics of growth and job creation) it is a very powerful combination. Of course a warmer climate is a bonus too!

Speaking of job growth, there were many ongoing discussions about where the jobs are and will be. I was highly attuned to these discussions as I was reading Kevin Phillips’ “American Theocracy.” The subtitle, “The Peril and Politics of Radical Religion, Oil and Borrowed Money in the 21st Century,” is a continuation of several themes that the prolific Mr. Phillips has put into print over the past 30 years. 

What was of most interest to me was his discussion of debt, both public and private. For the United States, these figures are staggering, and it is clear we have passed a peak (as we have in oil production, which is a discussion for another column) where many nations no longer look at us as the best economy to invest in and hold the currency. Talk of pricing oil in euros instead of dollars is increasing and that is a likely outcome.

The debt discussion rang loud and clear in Montreal, where several Canadian presenters discussed the reduction of debt and the surplus budgets of Canada. This is not universal. The western energy-rich provinces are flush with cash, while the eastern provinces are much less so. As Phillips discusses in detail (in excruciating detail, in some instances), some day Canada’s energy abundance will run out, just as it has in the U.S., and as it did for coal in the United Kingdom between the World Wars. 

Nonetheless, Canada does offer multiple strong examples of energy efficiencies, green infrastructure, sustainability efforts and a general positive attitude about looking at energy and oil consumption from the long view. There is so much we could be doing to lighten our footprint in the U.S. In fact, a serious focus on these themes could be a great job generator. 

We need to get serious about identifying real jobs with value added and global demand that the U.S. can create and maintain leadership. 

Yes, China is the charging economic tiger/dragon, but its current rate of growth comes with significant costs (environmental, energy usage, political). What strikes me is not the potential for China to become the world’s largest economy but that it may do so by decimating national and natural resources. It may be that China’s economic pre-eminence will be short-lived.

So while the U.S. may be peaking, our resilience and persistence may be more sustainable than in other countries, which are trying to achieve our standard of living in a generation or two. This is all the more reason we need to identify what our role in the global economy will be and how we can compete for the next 100 years.

It is not by allowing consumer spending to remain at 60-70 percent of our GDP! We need to get more of our 152 million workers creating real value and quickly move closer to a balanced budget and controlled deficits. It is a demanding task, but one that needs to be addressed soon.

Bill Norton, president of Norton Asset Management, is a Counselor of Real Estate (CRE), a Fellow of the Royal Institution of Chartered Surveyors (FRICS) and a member of the board of The Initiative for a 2020 Vision for Concord. He can be reached at wbn@nortonnewengland.com.

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