Business is up, (but there’s always a but) …

Let’s begin with the economy. Cash for Clunkers was a great success — 700,000 units sold, millions of tons of new scrap metal. $3 billion spent. Did this make sense? And who is going to pay for it?

Keep in mind that $3 billion is $10 for every man, woman and child in the U.S. — not bad. Except only a relatively small portion of those folks actually pay taxes. Assuming the $3b came from the sale of 10-year Treasuries, the tab will not be paid off for quite a while. Not to scare you, but look up what the interest on the national debt is each and every day.

The home improvement guys are generally happy with the energy improvement tax credits. I know many folks who have ordered new windows. In fact, I am being heavily lobbied to install some at home. Alas, when I do the math it yields a payback longer than my current investment horizon. Speaking of which, the Dow at 9,500 — I don’t get it. Every company I work with is looking to cut costs, not spend more. This can lead to “productivity enhancements.” I was visiting a firm that cut eight workers (now 26 instead of 34). They were shipping as much or more product from the dock every night. So productivity is up, but folks are tired. No one wants to be number 9.

We have several people come by each week wondering if this is a good time to get into the commercial real estate business. It depends on the time frame. Transactions are smaller, slower, leaner, but things are happening. Does this mean there is a buildup of deals that will come in a deluge in the future? Well, “deluge” may not be the right word.

We did a 1,600-square-foot office sublease in August. We did a 4,000-square-foot water testing lab sublease in August. We are working on a 40,000-square-foot manufacturing lease to start later in the year. We are close to signing a 16,000-square-foot office lease this month. We are working on a 5,000-square-foot research lab sublease we hope to finish off in a week or two. None of this is going to result in my imminent retirement to the Riviera, but the bills are being paid, my son Tim’s fall tuition is paid, and the taxes are current.

The N.C. story

I am reading “The Paradox of Tar Heel Politics: The Personalities, Elections and Events That Shaped Modern North Carolina” by Rob Christensen. It’s about the state’s emergence from Reconstruction, the Dixiecrats, New Republicanism and having Jesse Helms and Jim Hunt in office at the same time.

North Carolina is an area of interest because we believe they will bounce out of this recession quicker then New Hampshire and the Northeast. “Bounce” may be little optimistic because this recovery is going to be gradual.

A recent Washington Post article, “Economists Expect Slow Turnaround” by Neil Irwin (Aug. 17) cited four economists. Growth spurts will emerge, the U.S. economy should grow solidly starting later this year, but (there’s usually a but) it is unclear what will come after that, given the ongoing restriction on credit.

The fact is that everybody in the world is experiencing the same constraints on credit and consumption. How are the car dealers going to sell cars without $4,500 cash-backs?

What held Japan back in the 1990s was that firms wanted to pay down debt (deleverage). Are we going through the same sort of adjustment on the consumer side? The answer is probably yes.

So keep your nose to the grindstone and your shoulder to wheel. This too will pass.

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<font size=1>Bill Norton, president of Norton Asset Management, is a Counselor of Real Estate (CRE) and a Fellow of the Royal Institution of Chartered Surveyors (FRICS). He can be reached at wbn@nortonnewengland.com.</font size>