What started as an optimistic overview of the economy turned cloudy once the dark realities about global recessions, government debt, taxes and jobs were discussed.
Yes, America's and Tucson's economy is slowly making progress. But two years into the recovery, "there is still a lot of uncertainty. It's probably going to take 10 years to fully recover all the losses from the recession," said Wells Fargo Senior Economist Mark Vitner.
Vitner, a popular source for the New York Times and Wall Street Journal, shared his fiscal forecast as the keynote speaker at the Pima County Real Estate Research Council Feb. 2.
Financial concerns span the globe, from Washington's politics to the Euro-debt crisis. Although Italy may be a world away, what happens in Italy won't stay in Italy. Economic events there will trickle down and affect Tucson's regional economy.
"It's hard to see a solution coming out of Europe. The truth is, they are not one inch closer to solving their financial crisis today than they were in 2009, when this first came about," said Vitner, who is based in Charlotte, N.C.
Barring a total collapse of European banks, the consensus is that the crisis overseas will cut two-tenths of one percent off domestic economic growth this year. Vitner felt that estimate was a bit low, but overall, the euro crisis will not throw America back into recession.
"The big risk is Italy. It is one of the largest economies in the world. They have the third-largest amount of public debt of any country," he said. If Italy defaults, he characterized the financial damage as being "the magnitude of 1,000 Lehman Brothers."
Back in the U.S., the major concerns are government debt and taxes. Specifically, the pending expiration of various tax cuts, runaway deficit spending, and the hidden costs of health care reform.
"People don't realize how much taxes are slated to go up Jan. 1, 2013. We hear about it being the largest tax increase in history, but it's the largest tax increase in the history of the world. This is the law of the land unless something dramatically changes in Congress," he said.
Vitner also laid out the cold reality about jobs. Since March 2010, about 77 percent of employment growth has been in four areas: retail, leisure and hospitality, temporary staffing, and home health care.
"This is what you won't hear; these are poor-quality jobs. On average, they pay about 50 cents over minimum wage. Income growth is lagging," he said.
He also cast some cloudy data over the housing industry. Although recent signs have been promising, it won't take long for builders "to sober up. No, this is not the start of the next great housing boom."
The uptick is mostly from national home builders "who have a name to protect, a lot of assets like infrastructure, who have to stay in existence until housing turns around. They are largely building in partially completed subdivisions," he said, "and not many."
Plus, Fannie Mae and Freddie Mac plan to dump 100,000 distressed homes from their books. The process to sell to investors started this week.
In Vitner's view, this is a positive move because it will help real estate agents and analysts see exactly what is in the shadow inventory. A "normal" housing market is years away, which will be the time when the excesses in inventory, foreclosures and apartment vacancies are gone.
Due to the uncertainty of a presidential election, history shows that economic activity will begin to slow around Labor Day. From that point forward, Vitner chided any forecaster willing to make steadfast predictions.
Voters will have a clear choice between fundamentally different candidates, and the winning political party will wield its influence.
"On top of this tough economic environment, we have a presidential election. That's why 2013 is a bit of an economic mystery," he said.
In January, the number of residential foreclosure notices were both up and down. Compared with December 2011, trustee's sales notices were 69 higher.
Looking back 12 months, the positive news was that notices declined from 975 in January 2011 to 705 last month.
Actual foreclosure sales, however, fell in both categories, according to the Pima County Recorder's Office. In December, 508 homes were bought out of foreclosure. January 2011 was even higher at 599. Last month there were 468 sales.
A trustees' notice is the first step in the foreclosure process. It notifies owners that their property is in default and scheduled to be sold at public auction.
Sales and leases
• SBC Archway LLC purchased 2.47 acres at 4475 S. Coach Drive, Lot 12, for $660,000 from Wick Communications, represented by Russ Hall, Picor Commercial Real Estate Services. Nick Miner, Commercial Properties Inc., represented the buyer.
• Wesco Distribution Inc. leased 18,424 square feet at 1150 S. Plumer Ave. from Antonio, Francisco and Josefa Gonzalez, represented by Paul Hooker, Picor Commercial Real Estate Services. Bill Honsaker, Jones Lang LaSalle, represented the tenant.
• Huddleston Trucking Service leased 13,000 square feet at 2810 E. Airport Drive from Aergo-Tuc LLC, represented by Pat Welchert, Picor. Ron Zimmerman, Grubb & Ellis, represented the tenant.
• Omni Workspace Company LLC leased 9,265 square feet at 4585 S. Coach Drive, Suite 105 from JVK Holdings & Borges Investment Holdings LLC. Rob Glaser, Picor, handled the transaction.
• Meridian Engineering Company leased 8,471 square feet at 3845 and 3855 N. Business Center Drive from NTBC Trust Partners LLC. Rob Glaser and Paul Hooker of Picor handled the transaction.
• Surety Acceptance leased 3,672 square feet at 4400 E. Broadway, Suite 114, from 4400 Tower LLC, represented by Michael Gross, Tucson Realty & Trust.
• Brock Design leased 3,744 square feet at 3690 S. Park Ave. from Gateway Industrial Park LLC. Jesse Blum and Ron Zimmerman, Grubb & Ellis, handled the transaction.
• Pan Pacific Petroleum leased 3,100 square feet and 1.65 acres at 4203 E. Tennessee St. from GRIT LP. Dave Gallaher, Tucson Industrial Realty, handled the transaction.
• Consultants in Gastroenterology leased a 2,490-square-foot medical building at 5190 E. Farness St. from TMC Holdings, represented by Rick Kleiner and Tom Knox of Picor. Gary Andros, Andros Commercial Properties, represented the tenant.
• HNM leased 1,600 square feet at 4500 E. Speedway, Suite 13 from Presson Midway LLC, represented by Rob Glaser and Paul Hooker of Picor.
• Salty Jon's LLC leased 1,100 square feet at 3959 E. Speedway from Central Point Business Plaza LP, represented by Diana Dessy of Anthem Equity Group.
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