Ross Moore has changed his outlook for the better in these last few weeks of 2010.
As national chief economist for commercial real estate services company Colliers International, Moore follows about 100 economic indicators that keep his finger on the pulse of the economy and the commercial real estate industry. And since the beginning of the fourth quarter, that pulse has quickened.
“With the exception of housing and unemployment, most of the signals I’m seeing are positive, which does suggest pretty good growth next year,” says Moore.
In particular, the 10-year Treasury yield reversed a year-long decline. It climbed to 3.5% on Dec. 15, up more than a percentage point from the 16-month low of 2.4% on Oct. 8. The critical benchmark for commercial real estate lending has since come down slightly and stood at 3.3% on Dec. 21, but is still well up from the recent low.
To Moore, that change signals that investors are expecting stronger performance from the economy than they were just a few months ago. “I look at that rise in 10-year rates as a barometer of future economic growth,” he says. “That may lead to inflation, but I don’t see it as a direct response to investors’ read on future inflation – I’m very much in the glass-that’s-half-full camp.”
The jobs dilemma
What could be giving investors the notion of better days ahead? Probably not November’s employment growth. With only 50,000 new jobs in the private sector, hiring failed to prevent an increase in the unemployment rate to 9.8%.
Then again, employment is on an upward track despite the disappointingly slow pace of recovery. The Bureau of Labor Statistics revised September’s job losses from 41,000 to a less-daunting 24,000, and revised the October numbers to a gain of 172,000, up from the previously reported 151,000 jobs. Employment has grown by an average of 86,000 jobs per month Since December 2009.
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