Tag Archives: global economy

rsz_countryclubgreens

68-Unit Apartment Community in Mesa Sells for $4M

 

 

Cassidy Turley completed the sale of Country Club Greens, a 68-unit apartment community on 2.4 acres at 350 W. 13th Place in Mesa for $4M.

The buyer was Clear Sky Capital CCG L.P. of  Phoenix and the seller was California Bank & Trust. Executive Vice Presidents David Fogler and Steven Nicoluzakis with Cassidy Turley Arizona’s Multi-Family Group brokered the transaction.

Built in 1986, the property has nine one bed/one bath and 59 two bed/two bath fully remodeled rental units that include new energy efficient appliances and upgraded kitchen and bathroom cabinets.

The complex also has a swimming pool and spa and on-site leasing office. Country Club Greens is located one mile south of the Loop 202 on Country Club.

In other news, Cassidy Turley completed a 2,800 SF lease for Voxpop, the shopper marketing radio network, at 2141 E. Camelback Rd.. Justin Himelstein and Jason France with Cassidy Turley Arizona’s Office Tenant Representation group represented Voxpop.

The marketing company relocated from an office at University and 35th St. to the Camelback Corridor submarket. Judith Tucker with Camroad Properties represented the landlord, Two Corners Financial Group, LLC.

Voxpop began in 2003 in Mexico and is the largest in-store marketing radio network reaching more than 40M people in more than 1,800 stores. In 2009 the company expanded its operations in the U.S.

The company currently has partnerships with retailers in Arizona, Texas and California, including Arizona-based Bashas’, AJ’s Fine Foods and Food City locations. Voxpop is a strategic messaging company that started by providing background music for stores and grew into providing targeted advertising and marketing messages for grocery customers.

The client list includes national companies such as Nestle, Coca-Cola, Tyson, General Mills and Kraft.

Economic concepts

Understanding Economic Concepts, Applying In A Global Perspective

Within the past few decades we have become a global economy, which adds great opportunity but also risk. Our global economy is affected by many more factors today and is connected deeply with other countries. How does this affect the United Sates?

It can affect us in many ways. Before analyzing our global economy it’s important to understand the basics of economics and apply them today in a global perspective. Even though, government and other country’s policies differ, it is still important to understand the basic concepts.

Some of the key economic concepts to be familiar with are: supply and demand, fiscal policy, monetary policy, economic indicators, business cycles, inflation, deflation and stagflation.

Supply and demand

In regards to supply and demand, the supply is the amount available of a particular good or service, and the demand is what buyers are willing to pay for that particular good or service.

The price of the good or service is the primary element that can control the supply or demand of the good or service. Typically if a business lowers the price of a good or service the demand will increase. Whereas, by raising the price of a good or service, the demand will decrease.

Fiscal and monetary policy

Fiscal policy is another major influence in our economy. This is when the government, under the direction of congress, influences our economic activity by taxing, borrowing or spending. Monetary policy on the other hand, controlled by the Federal Reserve, can increase or decrease the U.S. money supply. The Federal Reserve has many tools to assist with monetary policy:

1) Reserve requirement for banks
2) Increase or decrease the discount rate
3) Open-Market Operation (the purchase and sale of U.S. Treasury securities)
4) Margin requirements

With these tools the FED can act immediately to tighten credit or encourage it. Many times both fiscal and monetary policy are used together to control inflation in the hopes of having real economic growth.

Economic indicators

Our economic activity can be measured by several factors and by using some leading indicators we can get a better feel on its activity. Some indicators that are important to track are: the average weekly hours of manufacturing production workers, average weekly new claims for unemployment, building permits for new housing, stock prices and our nation’s money supply. These allow us to see trends in our economic activity.

Business cycles

For many years economist have used business cycles to learn about trends in the market place. Typically, they can track expansion and contraction activity. Through research and historical market studies we have been able to provide an estimate on the time frame that our economy is in an expansion period or how long it has been in a contraction period. This may help investors to understand what stage we are at in the business cycle (Peak or Trough).

Inflation, deflation and stagflation

Next is understanding how our economy may react to an inflationary, deflationary or stagflation period. Each of these is very different and will cause our government, consumers and investors to treat their money differently.

During an inflationary period, we will experience a general increase of prices. This process will decrease the purchasing power of our U.S. dollar, hence, will slow spending. Whereas, in a deflationary period we will experience the opposite and see a decrease in the general level of prices. Usually consumers will spend more during these times. Stagnation is another concern and occurs when the production of a good has become stagnant and the price continues to rise. This can be very dangerous and cause an economic recession or even a depression. All of these must be in balance. If they get out of hand they can cause major shifts in our economy.

Having a general understanding of economic concepts can help investors learn about why our economy shifts and some of the important factors that need to be considered when investing in our evolving global economy.

For more information about the economic concepts discussed in this column, visit jacobgold.com.

Securities and investment advisory services offered through ING Financial Partners, Inc. Member SIPC. Jacob Gold & Associates, Inc. is not a subsidiary of nor controlled by ING Financial Partners, Inc.This information was prepared by Michael Cochell of Jacob Gold & Associates, Inc. and is for educational information only. The opinions/views expressed within are that of Michael Cochell of Jacob Gold & Associates Inc. and do not necessarily reflect those of ING Financial Partners or its representatives. In addition, they are not intended to provide specific advice or recommendations for any individual. Neither ING Financial Partners nor its representatives provide tax or legal advice. You should consult with your financial professional, attorney, accountant or tax advisor regarding your individual situation prior to making any investment decisions.
Photo from Wikimedia Commons.

Newly Formed Arizona Commerce Authority Convenes Its Inaugural Board Meeting

Vowing that “today the rubber hits the road,” Gov. Jan Brewer and Jerry Colangelo assembled and introduced 35 state leaders representing diverse backgrounds for the inaugural board meeting of the Arizona Commerce Authority.

The private-sector board will work to align diverse assets and opportunities within the state to compete economically in both domestic and international markets to create high-quality jobs for the Arizona residents.

“For the first time in our state’s history, we convene the Governor, the Speaker of the House and the Senate President, and more than 35 of our nation’s most acknowledged leaders within both the private sector and academia – all with one express purpose: to advance the global competitiveness of our state the economic prosperity we seek for each person, each family and, perhaps more importantly, each child – it’s about a vision for a strong, vibrant economic future for this great state,” Gov. Brewer said.

“When I became Governor, I promised to get Arizona back on track by creating quality jobs, attracting high-growth industries, and advancing our competitive position in the global economy. We are doing just that. With this board, I have now delivered a model to advance Arizona.”

Presentations to the board outlined the impacts of the global economic crisis on the state, the forecasts if Arizona does not address diversification and growth in base industries, the state’s overall global competitiveness, and a focused approach to four core areas on which the ACA will focus and develop a planned approach to advance the state.

The authority will focus on improving the state’s infrastructure and climate to retain, attract and grow high-tech and innovative companies. That focus will be on aerospace and defense, science and technology, solar and renewable energy, small business and entrepreneurship.

“During one of the most challenging economic conditions in our nation’s history, Arizona is competing for something that is even greater than Olympic Gold; we are fighting for the health and future of our families and this state,” said Colangelo, co-chair of the board. “Today, with the expertise and leadership of each board member, we begin to compete aggressively for what really matters.”

Don Cardon, current director of the Department of Commerce, will serve on a selection committee to recruit a president and CEO of the ACA. Other committee members are Gov. Brewer’s chief of staff Eileen Klein; Mo Stein, senior vice president of HKS; Jerry Fuentes, president, AT&T Arizona/New Mexico; and Michael Kennedy, co-founder and partner, Gallagher & Kennedy.

Other notable board members include Kirk Adams, speaker, Arizona House of Representatives; Benito Almanza, state president, Bank of America; Michael Bidwill, president, Arizona Cardinals; Dr. Michael Crow, president, Arizona State University; Linda Hunt, president, St. Joseph’s Hospital and Medical Center; Anne Mariucci, chairman, Arizona Board of Regents; Doug Pruitt, chairman and CEO, Sundt Construction; and Roy Vallee, chairman of the board and CEO, Avnet.

light reflecting off gold bars

Don’t Count On The Current Gold Rush Lasting

The recent economic recession forced society to relook at what we consider to be financial norms. What was considered reasonable several years ago is now unjustifiable based on today’s new standard.

The comfort of having money in an actual wallet is greater than having a pricey purse to carry it in.

It is possible that the same fear that shifted people’s spending habits is what has driven the price of gold to an all-time high.

In my book, “Financial Intelligence,” I show the historical volatility of the price of gold per ounce. Ten years ago this July, gold was trading at approximately $288 per ounce. Today, gold is now trading just shy of $1,200 per ounce. That is a near 15 percent compound rate of return per year over the last 10 years, while the stock market has gained no ground.

Now that the economy is slowly stabilizing, will gold continue to be a profitable investment? Only time will tell, but history suggests that there most likely will be a decline in price. Everything in this modern economic world is cyclical and vulnerable to corrections.

I am amazed about how many people assume that because gold is a tangible asset, it does not carry any risk. Despite what the late-night infomercials say, there is risk in gold and you should consider that risk before investing in it.

In my opinion, when you start to see repetitive get rich quick TV commercials, you should begin to doubt that “investment.” Remember in the late 1990s when TV commercials were touting that through day-trading stocks you could retire in your 4′s? Or the real estate gurus that told you that you could make millions in real estate if you attended their workshops? Today you can’t watch TV without seeing some type of commercial encouraging you to buy gold.

Given the economic environment that we just experienced, it makes sense that gold appreciated in value. Gold historically has increased in value during times of great uncertainty, but the tide is slowly changing. If the global economy can avoid a double-dip recession, we may see the price of gold revert back to its historical mean.

Apart from winning the lottery, there is no such thing as a get rich quick strategy. It always takes longer that you originally hoped and there are always setbacks.

It is always a wise move to invest in an asset that you feel meets your long-term investment objective and that enhances your diversification. Don’t try to time the market or try to get in on the next big thing; you could do more damage than good.

Bottom line, if you had a crystal ball, you should have invested in gold 10 years ago. Now it may be too late.

Barbara Lockwood, APS

Valley Forward: Barbara Lockwood

Barbara Lockwood
Director of Renewable Energy
Arizona Public Service
www.aps.com

Barbara Lockwood is a chemical engineer who doesn’t consider herself an environmentalist at heart, yet there she is — director of renewable energy for Arizona Public Service.

“It’s not something that’s innate in me,” Lockwood says about the environment. “I got into it from a business perspective. What makes sense to me is that we as a global economy are all tied together on one planet. What truly makes the world go around is our businesses and our connections. Accordingly, to sustain that and be viable long term we must do everything we can to protect and sustain the Earth. I truly believe our businesses run our society.”

At APS since 1999, Lockwood is responsible for renewable energy programs, including generation planning, customer programs and policy. Lockwood began her career in the chemical industry at E.I. DuPont de Nemours in various engineering and management roles on the East Coast. Later she moved into consulting and managed diverse projects for national clients throughout the country.

Lockwood, who joined Valley Forward in 1970 and now is a member of the executive committee, holds a bachelor of science in chemical engineering from Clemson University and a master of science in environmental engineering from the Georgia Institute of Technology.

“I’m a chemical engineer and I stepped into the environment right out of college,” Lockwood says. “It was a hazardous waste treatment operation.”

Although much has changed since Lockwood launched her professional journey, “renewable energy was a natural progression of my career.”

All sources of renewable energy, including solar, wind and biomass, should remain part of Arizona’s energy portfolio, she says. Lockwood mentions a biomass operation near Snowflake that generates electricity primarily by burning woody waste material from nearby national forests.

Lockwood calls Arizona “the best solar resource in the world,” and expects greater use of that renewable energy in the years ahead.

“We’re definitely working on that,” she says. “Solar is the resource of choice in the sunny Southwest.”

The main benefit of renewable energy is what you don’t see.

“It reduces polluting emissions because it is a clean source of fuel, and it offers a stable price,” Lockwood says. “What’s more, it can create jobs in Arizona.”

Lockwood touts APS’ Green Choice Programs as a way to improve the environment. Green Choice involves such things as converting to compact fluorescent light bulbs, renewable energy resources such as solar and wind, and high-efficiency air conditioning.

She also touts APS.

“The company is committed to renewable energy, and I came here because of that reputation,” Lockwood says.

money line

Stabilizing Asset Prices Is Key To An Economic Recovery

The declines in asset prices are sweeping around the globe like a giant tsunami tumbling everything in its wake. Equity prices are down 47 percent from their highs, commodities 53 percent and, of course, residential real estate 25 percent. Industrial production, retail sales and personal consumption expenditures are all showing losses year-over-year and do not appear to be decelerating in any meaningful way.

In the first quarter of 2009, the negative feedback loop — the lower prices go the lower they will go — is being exacerbated by the erosion of confidence and the availability of credit. If this weren’t enough, the lack of accountability and transparency in the system is further eroding investor confidence, thereby curtailing capital spending and stifling employment.

As the monetarists and fiscal policy makers rush to shore up the banking system, they have, for the most part, missed the mark. Long ago, the highly levered global economy transitioned from a banking-dominated regime to one that hides behind securitized lending. The off-bank balance sheet structures such as SIVs (structured investment vehicles), hedge funds, CDOs (collateralized debt obligations) and the like fueled the explosion in asset prices as they levered up the system exponentially. As we are finding out the hard way, no real underlying economic value was being created, other than prices would surely be higher tomorrow, which reinforced speculative non-productive behaviors.

The false promise that rising prices alone create wealth is being unmasked as the de-levering of credit and speculative excesses unwind. The plea from Congress that banks need to start lending fails to recognize that the highly leveraged off-balance sheet bank, the Shadow Bank, is dead. The credit creation in the Shadow Bank was 30- or 40-to-1, versus 10-to-1 for the banking system most of us are familiar with. It is not that the 10-to-1 folks don’t have problems; it is that they simply do not have the capital to restructure all the 30-to-1 junk that is choking the system.

It’s about the capital
Nouriel Roubini, a highly respected economist and chairman of RGE Monitor’s newsletter, has estimated that the charge-offs and write-downs may reach $3.6 trillion before this cycle bottoms out. Bloomberg Financial, which has been tracking these charge-offs, recently reported that the number has reached $1 trillion, or about one third of Roubini’s best-guess number. In October 2008, the Federal Reserve reported that the U.S. banking system had about $1.4 trillion of capital, hardly enough to deal with the massive write-downs Roubini, Goldman Sachs Group and others see on the horizon.

The obvious simple solution is to figure out how to stop asset prices from declining further. Although this has been attempted over the past many months, the seemingly uncoordinated efforts have failed. The TARP (Troubled Asset Relief Program), which explicitly gave the U.S. Treasury the authority and money to purchase assets with the intent of stabilizing prices, instead saw those monies going into the checking accounts of banks. However well-intentioned the program was, it did little to stem the tide in the deflationary spiral, leaving us deeper in debt and virtually in the same position as when the legislation was enacted.

Price stability
In order to encourage investment and spending, we must first have price stability. Asset prices do not need to rise to get the economy moving, nor should we expect that they must. The value of the enterprise over time will be clear and will be priced accordingly. The benefits of price stability encourage investors to take on risk and give lenders the confidence to lend. Rapidly rising or falling prices merely confound and confuse even the biggest risk takers among us and that, in large measure, is why we see return of principal trumping return on principal.

All is not lost, however, as interest rates are down, mortgage re-financings are up and the stock market has attempted to battle back from some very bad economic news. The first half of 2009 is proving tough going. But we are guardedly optimistic that the second half will show signs of stabilizing, laying an important foundation for recovery in 2010. The stock market has its own twisted personality, but if it can move above the October lows the more optimistic we are that better times are ahead.

Dark Days: Recession in Arizona

The Recession In Arizona And The Nation Could Drag On For Another Year

Winters in Arizona may be sunnier than other places, but the economy in the Grand Canyon State has cooled faster than almost every state. Analysts expect 2009 to bring even more bad economic news, and it is likely that the monthly reports on job growth and unemployment will be downright chilling for some time to come.

As in all downturns in the past 50 years, Arizona’s economy will track the national business cycle. There are no forces inherent in the makeup of the state’s economy that would propel Arizona into an independent turnaround. Arizona will recover at approximately the same time as the country as a whole.

And, entering 2009, a rebound for the national economy is nowhere in sight. The National Bureau of Economic Research recently decreed that we have been in recession since the end of 2007. Now that a start date has been identified, it is only natural to wonder how long recessions typically last. The answer is that the average post-World War II recession has been 10 months from peak to trough. This information is perhaps useful for trivia buffs, but in the current environment, the 10-month average is not much of a guideline. This recession has already persisted past 10 months, and may be well on its way to setting a post-war record for length. The recession will certainly be 18 months at a minimum, and could persist for as long as 24 months. Or more.

The list of economic problems facing the country and Arizona continues to grow. Until recently, exports and non-residential building were actually expanding at a double-digit pace, keeping the Gross Domestic Product growth figures in the positive region. As the global economy slows, exports will decrease, probably early in 2009. Arizona has important manufacturing exports, especially in high technology, that will be affected.

Non-residential building (commercial, office, and warehousing) will grind to a halt in 2009 as current projects are completed. When the economy is losing jobs and sales are falling, there is no need for additional offices, retail space or warehouses.

During the first half of 2008, consumers in Arizona and the nation continued to spend, and that bolstered growth. New unemployment claims were mounting during this period, but conditions would have been worse if consumers were not contributing to the economy. The credit crunch hit in the second half of 2008. Combined with a chaotic stock market and continually falling home values, consumer willingness — and ability — to spend hit the breaking point. Arizona retail sales were down sharply in 2008, with auto sales and restaurant and bar sales both off by 25 percent. Consumer spending is expected to fall more during the early months of 2009.

Compared to other states, Arizona’s labor markets are in the deep freeze. Employment in the state is down by more than 75,000 jobs compared to last year at this time. Arizona is just one of 37 states now losing jobs, but conditions are worse here. Arizona ranks 49th among all states in job growth. Only Rhode Island is losing jobs more rapidly. Unemployment rates nationally and in Arizona are destined to increase into the 7 percent or possibly 8 percent range before recovery begins.

And recovery will come, as it always does in business cycles, although this one will be deeper and longer than has been seen since the 1930s. Housing inventory will eventually be worked off, and foreclosures will begin to slow. Home prices will stabilize. The nation adds three million new residents per year, and the pent-up demand created by family formation and population growth will start to translate into new sales.

Arizona benefits from high levels of domestic migration. Even if migration slows temporarily in the down period, the basic attractions of Arizona remain powerful in the longer term.

One of these attractions for many decades has been affordable housing. During the housing boom, home prices in Phoenix increased faster than in many peer metropolitan areas, and Phoenix became less competitive to relocators. Although falling values have caused dismay to Arizona home owners, the resulting new lower prices actually create an environment for ultimate growth.

The table shows housing affordability as measured by the National Association of Homebuilders. Higher numbers indicate housing is more affordable. At the end of the previous recession (third quarter of 2001) Phoenix had an affordability value of 70, which means 70 percent of homes were affordable to families at the median Phoenix income. Phoenix housing was more affordable than the nation and the peer metro areas shown. Two years later, at the peak of the boom, Phoenix was less affordable than Denver, Riverside, Calif., and the nation as a whole. But the most recent values, for third quarter 2008, show Phoenix affordability up by 75 percent over the 2005 figure, and more affordable than the other metro areasandthe nation. The Phoenix housing advantage has been restored.

There is one final optimistic observation to be made, one which is familiar to Arizona economy-watchers. When recovery does begin, Arizona invariably rebounds much stronger than the nation, and more vigorously than most other states. What analysts are still debating is whether this rebound will come in 2009 or is delayed until early in 2010.