Be patient: Better times are coming

With 2009 more than a third over, the economy seems to be “less worse,” which is to say unemployment numbers continue to grow, but at a less alarming rate. But the economic news is far from rosy. Chrysler and GM bankruptcies. Continuing rising unemployment. The stress test for the 19 biggest banks, which indicates that several need more capital. The banks intend to raise that capital privately. If they cannot, then the government will convert some of its preferred shares for common shares, thus converting debt to equity. This is a partial nationalization of these particular banks. The hope is that they will return to good health in a few years and then pay back the government.

Locally, it is important to acknowledge that our community banks are generally healthy. Local banks have capital and are lending. Of course, Bank of America is present in our markets too. While some banks are lending, the terms and conditions for that lending are in line with historical and traditional norms and not at the terms of a year or two ago, when the markets were awash with capital (too many dollars chasing too few sound credit deals). The hope is they will return to health in a few years and pay back the government and U.S. taxpayer.

It appears that the financial neutron bomb went off in December – of course, it had been ticking for at least six or seven months. For all of 2009’s first quarter, virtually everyone was more or less frozen in the headlights. We had a new president, a new administration, a new Congress with Democratic majorities. So there is definitely a new sheriff in town.

While the U.S. economy has not totally imploded, it has not soared either. However, the patient is still breathing on its own. So with 2009 one third over, we are not able to continue to be inert. Tenants are renewing leases. Landlords are making deals. Bankers are visiting their customers. The federal stimulus spending is beginning to work its way down from Washington through the states and onto Main Street.

But the issues are many and complex. It is apparent that it will take several more quarters to sort through all the moving pieces. This translates into a weak second-half forecast for the rest of 2009, a flat 2010 and measurable improvement/recovery in 2011. President Obama appears to have things reasonably in hand, and Americans are still very positive about his leadership. So a slowing of the decline followed by gradual improvements in the metrics is a satisfactory outcome.

This is not to say we are out of the woods yet. There are still two wars underway, pirates, nuclear wannabe states and shaky economies on every continent. Like it or not, we are a fully integrated global economy. This is our future, and while it will be more complex, it has lots of opportunities as well.

Locally, we need to get back to work making widgets and providing services. We need to watch costs, manage cash and receivables and tough it out until GDP begins to expand and a rising tide can float all boats. So patience is called for, for at least a year and maybe two. Hang in there, better times are coming.

Bill Norton, president of Norton Asset Management, is a Counselor of Real Estate (CRE) and a Fellow of the Royal Institution of CharteredSurveyors (FRICS). He can be reached at