Opportunity Knocking + Caveat

30 03 2010

Austin’s City Council recently passed its federal lobbying plan, and we here at The Placemaking Institute are heartened that transportation projects top the list.

Surface Transportation Highway/Transit Reauthorization
The City of Austin calls on Congress to craft a successor to SAFETEA-LU (PL 109-59) that recognizes the key role that metropolitan areas and their center cities play in our nation’s economy. Funding allocation, project selection and program structure should reflect the fact that the vast majority of our nation’s economic output comes from metropolitan areas and that the vast majority of our nation’s population lives in metropolitan areas. Specifically, the City of Austin supports a SAFETEA-LU successor that:

  • Provides for an equitable distribution of highway and transit funds;
  • Maintains a guaranteed funding mechanism that ensures that all Highway Trust Fund revenues are spent on highway and transit programs;
  • Directly addresses metropolitan area and central city surface transportation needs, with a strong focus on metropolitan mobility;
  • Maintains a strong metropolitan planning process to ensure that local elected officials have the tools they need to support sustainable economic development and meet local needs;
  • Links surface transportation to environmental concerns such as clean air, clean water and climate change;
  • Channels funding directly to metropolitan areas, at a minimum maintaining the suballocation of Surface Transportation Program funds to metropolitan areas;
  • Builds on the past decade’s investment in transit by providing significantly increased resources for transit, including increased funding to meet the growing nationwide demand for rail transit;
  • Expands the Transportation Enhancements and Safe Routes to School Programs;
  • Does not increase the local share, currently 20%, for federally-assisted highway and transit projects, and
  • Further empowers local elected officials by requiring full state disclosure of how federal surface transportation funds are spent.

Intercity Passenger Rail
The City of Austin also supports increased federal investment in intercity and regional passenger rail. An important part of a balanced transportation system, intercity and regional passenger rail reduces highway and airport congestion, reduces energy consumption, helps cities improve air quality and, because most trips are downtown to downtown, promotes central city economic development. In particular, the City of Austin supports efforts to make the South Central High- Speed Rail Corridor a reality and to implement regional passenger rail service between Georgetown and San Antonio.

Urban Rail Transit Project
The City of Austin seeks authorization of its Urban Rail Project under the New Starts Program and also seeks language allowing money the City spends on Phase I of the Project to be used as the “super match” for future, federally-funded phases of the Project. In FY 2011, the City also requests $1 million for the project under the Alternatives Analysis Program. The City of Austin is currently completing environmental fatal flaw analyses for what might be a first investment phase of a larger Urban Rail system (a blend of streetcar/light rail type services). The Urban Rail system will serve the Mueller Neighborhood, University of Texas, Capital Complex, Downtown, Riverside Corridor, and ABIA. It will provide circulator services in central Austin and commuter-type services for close- in neighborhoods near central Austin.

City Council will make a determination of a locally preferred alternative as part of an updated Alternatives Analysis (AA). The AA was begun by Capital Metro and taken over by the City of Austin to update, extend and expand to meet the needs of the City as the implementing agency. The intent is to complete an environmental process under the National Environmental Policy Act (NEPA) on the entire Urban Rail System. The City of Austin will ask voters to fund an initial operable segment (initial investment segment) using local monies. We will pursue federal funding through the Federal Transit Administration (FTA) for the subsequent extensions of the initial investment segment once the NEPA process is complete. It is likely that the first investment segment will be delivered using innovative delivery methods (design-build or design-build-maintain- operate). NEPA would parallel the more extensive design process envisioned with these delivery methods. Austin would like to use the local cost of the initial investment segment as overmatch for the federal funding requests. The City anticipates that 20 percent or more of the subsequent extensions would still be funded locally and that we would be seeking the use of previous local investments as overmatch only.

High Priority Projects
The City of Austin submitted six projects for the High Priority Projects Program in legislation to reauthorize federal surface transportation programs and appreciates the delegation’s support of these priorities. As Congress continues to craft and debate that legislation, all six projects remain priorities:

  • Burnet Road
  • East 6th Street Reconstruction & Enhancement
  • Vehicle Detection Stations
  • Waller Creek Trail
  • Lady Bird Lake Trail Boardwalk
  • Guadalupe Street Reconstruction & Enhancement

And now for the caveat: An outsider’s view of the new Capital MetroRail Red Line

Yonah Freemark: “For a city that is noted for its progressivism, especially as compared to the state that surrounds it, Austin’s transit politics are notoriously backwards. Unlike Houston and especially Dallas, which have pushed forward with light rail systems at a rapid pace over the past few decades, the capital of Texas is getting modern rail service for the first time only today, despite its large and growing population. And with a cost of $105 million and with trains only running at peak times, the Capital MetroRail Red Line is a humble project that will attract few riders…It’s hard to see the system as a model for future major capital investment in transit in the Austin region…If this is what people in Austin are expected to experience as efficient rail, it’s hard to envision them pushing for more beneficial forms of transit, like frequent light rail operating in the city’s denser zones…Even if the line does become exceedingly popular — a very remote possibility — the corridor can only handle 3,800 daily boardings, maximum. That’s because only 11% of the line has two tracks, so the number of trains able to run back and forth is quite limited. Cost-cut stations are too short for trains made up of more than one car. Readying the Red Line for a capacity upgrade would cost hundreds of millions of dollars Capital Metro does not have…It’s too late to sound the alarm about this rail line’s problems; on the other hand, it’s been obvious that the line has been ill-fated from the start, victim to an attempt to get rail service at the lowest cost possible, no matter the limitations. Electoral support for future rail expansion in the Austin region will be difficult to assemble if the populace isn’t impressed by what it gets, and the Red Line just won’t provide many benefits to very many people. Starting too small is sometimes problematic: other cities should learn from Austin’s mistakes here.”

Commercial Property Value and Proximity to Light Rail: A Hedonic Price Application

Les Leopold: “The Wall Street-led crash has created the perfect climate for this crusade to eviscerate the public sector, especially at the state and local level. It’s ugly and getting uglier. With 29 million American unemployed or forced into part-time jobs, tax receipts have plummeted more steeply than any time since the Great Depression. State and local governments are slashing their services–at the very moment when people most desperately need them. This is the very definition of a fiscal crisis.”

How will this unprecedented downturn affect the shape of government in years to come?

Mark Jacobson: “Data suggest that domes of high CO2 levels form over cities. Despite our knowledge of these domes for over a decade, no study has contemplated their effects on air pollution or health. In fact, all air pollution regulations worldwide assume arbitrarily that such domes have no local health impact, and carbon policy proposals, such as ‘cap and trade,’ implicitly assume that CO2 impacts are the same regardless of where emissions occur. Here, it is found through data-evaluated numerical modeling with telescoping domains from the globe to the U.S., California, and Los Angeles, that local CO2 emissions in isolation may increase local ozone and particulate matter. Although health impacts of such changes are uncertain, they are of concern, and it is estimated that that local CO2 emissions may increase premature mortality by 50−100 and 300−1000/yr in California and the U.S., respectively. As such, reducing locally emitted CO2 may reduce local air pollution mortality even if CO2 in adjacent regions is not controlled. If correct, this result contradicts the basis for air pollution regulations worldwide, none of which considers controlling local CO2 based on its local health impacts. It also suggests that a ‘cap and trade’ policy should consider the location of CO2 emissions, as the underlying assumption of the policy is incorrect.”

Post hoc ergo propter hoc

24 03 2010

(with this, because of this) St. Paul Mayor Chris Coleman: “Study is delay, and delay is death [for the project]. And for St. Paul, the Central Corridor is not an option, it’s crucial for the future of our city.”

As we are all aware, Mayor Leffingwell and Austin’s City Council reversed their stance on having an urban rail bond election in November, news that was received by Our Most Senior Fellow with much frustration. Because in his opinion they’ve had more than enough time to get their acts together, and this lack of political wherewithal is going to cost the City of Austin literally hundreds of millions of dollars (examples a, b, c + according to TTI, each person dissuaded from driving will save the region $812/year $3.25/day in overall congestion costs) when all is said and done – In five to ten years there’s a very good chance that we’re going to be experiencing SXS(o)W(hat) gridlock every day of the week!

But now he’s ready to temper his remarks by saying “Yes, there may be wisdom in waiting one year (and one year only) for the following reasons:”

• With the national political climate being what it is, a large percentage of the folks who turn out for an election this November may be people who are road warriors rather than rail advocates;
• CapMetro’s continual missteps suggest that the City might have to go to such an extreme as forming another managing entity (one Spillar suggestion: Lone Star Rail), which could not be done by this November;
•It is probably prudent to get the CapMetro system up and running, work out kinks, build some ridership (a: although without adjoining rail systems ridership will most definitely not be maximized) and rebuild some confidence in rail (b: although the aforementioned artifically low ridership numbers will give anti-rail zealots that much more ammunition against expansion).

And so, with that now said, it’s time to move on…As of today the Mayor is still anticipating floating a $100 million November transportation bond proposal to pay for road, trail and sidewalk improvements throughout the city which, according to Austin Business Journal, “appears extremely likely as more than half of city council members said they support a bond election that size…Project opportunities are boundless. Already, a list of $500 million worth of projects has been prioritized, and there are many more needed, Austin Public Works Director Howard Lazarus said.” To give just one example, “$824 million (!) worth of sidewalks need to be fixed or created.” Thus would not now be a good time to start leveraging this opportunity and make ourselves some truly Great Streets?

William H. Whyte: “The street is the river of life of the city, the place where we come together, the pathway to the center.”

Great Streets Design Guiding Principles

1) Manage Congestion: Congestion is a fact of life in successful urban places. By definition, a place that supports a great concentration of economic and social activities within a pedestrian-scaled environment is going to be congested.

2) Balanced/Active Streets: Downtown streets must balance the needs of pedestrians, bicycles, transit and the automobile in creating an attractive and viable urban core. Downtown streets are for people first, commercial second, parking third and through traffic fourth.

3) Streets as Places: The Great Streets Program envisions downtown as a vital focus of city life, and as a primary destination. Our downtown streets are our most important and pervasive public space and common ground.

4) Interactive Streets: Urban Streets are the stages on which the public life of the community is acted out.

5) Pride of Place: Visible, caring and upkeep are critical to the vitality of urban street life.

6) Public Art: Art in the public environment can help to establish a stronger sense of place and a continuity between the past, present and future.

…Coming soon from The Placemaking Institute: Geometric Congestion Solutions!

Confederacy of Dunces

16 03 2010

In the wake of the City Council passing the East Riverside Corridor Master Plan and the impending opening of commuter rail, we here at The Placemaking Institute have been ebullient about the prospects for Austin’s future. Upon arriving to work this past Thursday, however, we found Our Most Senior Fellow slumped over listlessly disconsolate. We asked, “Is there something wrong?” He did not reply. So again, “What’s the matter?” we asked. He tried but could not reply.

And when he is struck speechless we know that something’s gone really wrong.

So very much concerned we endeavored to find out by cajoling, by prying, and finally by imploring – all to no avail; for several days he could only wince at the ceiling before again hanging his head, which he would sometimes pound. We grew quite alarmed, especially when he began shaking all over as if palsied with anger before tossing a wadded up newspaper ball at us: a Statesman article from March 10th headlined “Mayor, council reverse stance on November rail election.

In outright disbelief we proceeded to read that “Austin Mayor Lee Leffingwell, who during his 2009 campaign pledged to push for a bond election this year on an urban rail system, said Wednesday he no longer supports a November 2010 rail vote because too many important questions remain unanswered” including “the question of where a train would cross the lake — on South First Street or Congress Avenue or on a new bridge nearby,” who the rail operator might be, the impact of construction, and the questions remaining about possible funding sources. “The City Council’s six other members quickly took the same position, effectively ending the chance that voters this year will be asked to approve an electric light rail or streetcar system. Leffingwell and other council members, however, said they support the idea of urban passenger rail and left open the possibility that a rail bond election could occur in 2011.”

By now stalking back and forth at an alarming rate, “Bosh!” Our Most Senior Fellow exclaims, “Bosh I say! As Leffingwell himself once said we must stop thinking small! Because immediate action is needed! Such dire congestion straits as Austin’s make these concerns of theirs for all intents and purposes niggling! Much like the ERCMP the initial stage of any Urban Rail system should be construed as a vision of what must occur if Austin is to truly further itself along the path to Progress! Delays cost MONEY! And lead to production time issues! There comes a point at which you throw your hands up in exasperation and despair and ask are all the dunces in confederacy against Austin?”

We second his emotion. (On a more positive note, politicians usually break their campaign pledges well before this, no?)

The Ramones: “Third verse same as the first/But a whole lot louder and worse”

[source] “Steel railroad ties are generally unpopular with U.S. railroad operators and transit agencies because, among other problems, they contribute to signal failures. And they’re significantly more expensive than standard wooden ties. That didn’t deter Capital Metro from buying 65,000 steel ties for $4.5 million and installing 46,000 of them in recent years. Though that process started before the agency decided to build a passenger rail system that would rely on electronic signal equipment, installation of steel ties continued even afterward. The agency has removed some of the steel ties along its Llano-to-Giddings freight line, 32 miles of which will be shared by passenger rail, and sold others at a loss…Capital Metro said further removal of steel ties probably will be necessary, especially if the agency someday expands commuter rail east to Manor and Elgin.”

Next Recessionary Shoe to Drop?

4 03 2010

After being informed by several experts that oil has peaked on a global scale and thus us folks should begin conditioning ourselves for a rolling series of recessions that spike along faster and faster, we here at The Placemaking Institute endeavored to find what the next one may be. According to the Federal Reserve, “While the overall U.S. financial system is showing signs of stability, a rapidly rising tide of troubled loans for commercial real estate threatens the survival of hundreds of the nation’s small and medium-sized banks. Recent financial reports from federal regulators and industry analysts detail a new cycle of uncertainty that they fear could cripple the economic recovery. Billions of dollars in commercial debt will have to be paid back or refinanced at a time when property values have plummeted. About $500 billion will come due in 2010 alone and an equal amount every year through at least 2012.”

With that said, in its Commercial Real Estate: Exorcising the Shoe, UBS concludes that “The CRE market did not experience nearly the same increase in capacity over the past 20 years compared to the residential real estate market. While high unemployment continues to weigh on demand for commercial property, supply growth never materially outstripped demand…CRE-related credit losses are likely to remain high at regional and community banks, (but) a repeat of the 2008/09 severe credit crunch is highly unlikely…In terms of the direct economic impact, the drag from commercial construction on real GDP should moderate by mid-2010. However, we do not expect any positive growth contribution through 2011.”

During the dot-com boom and bust, Our Most Dismal Fellow was paid cash money by entities similar to UBS (such as Bloomberg and Thomson), who do and seek to do business with companies covered in their research reports. And subsequently he believes UBS’ analyses may very well indeed be too rosy because their analysts are thinking far too rationally while the Market behaves irrationally via, if you will, pagan consumerists. Money itself and thus Banks are backed by nothing but Faith. And when CRE loans begin defaulting mid-year at the rate the Federal Reserve expects, right about the time UBS predicts the Government will take off the economies “training wheels,” many small- to mid-sized community banks (which UBS thinks “are not systemically important”) will start going under. Folks, who have already lost much Faith, will panic and lose more Faith (a process that will be irrationally facilitated by Mass Media), forcing the Government to bail out those small- to mid-sized banks, sending our economy farther down that proverbial creek because it could be better invested elsewhere – Like by providing actual jobs. UBS is continuing to underweight this and the fact that (according to Leo Hindery, Jr.):

  • At least 50 million people are ill-fed — up from 37 million just a year ago — including 17 million children. Hunger in America is now at an all-time high.
  • 30% of the nation’s 50 million homeowners own a home whose value is below its mortgage balance, and this number could rise to an almost unbelievable 50% by year-end 2011. It would cost about $745 billion, more than the size of the original 2008 bank bailout, to restore these borrowers to the point where they were breaking even, which there is no obvious political will to find right now.
  • Despite the truly dismal ‘real unemployment’ figures with which most everyone now agrees — a staggering 30 million workers and 19% of the labor force — almost no one is acknowledging the sad reality that even the nation’s 130 million full-time workers have had an average economic loss of 15% just since December 2007 — an average effective work week of 34 hours rather than 40 — which means that the number of unemployed workers, measured economically, is actually as high as 50 million.
  • And 100 million people, fully one-third of the entire U.S. population, are at or below “200% of the federal poverty line of $21,834 for a family of four”, which is a needs-measure made lame by the fact that no family of four can actually comfortably live on such a low annual income.

But while we are amidst this socioeconomic situation as well as a job-less economic recovery, “The economy is improving!” UBS extols before going on to say that “the prospect for a strong CRE recovery is unlikely given the sector’s sensitivity to the labor market and our expectation for the unemployment rate to remain elevated (above 9.5%) through the end of 2011. We continue to underweight small-cap stocks and the REIT industry – two market segments that have significant CRE exposure and high relative valuations.” And Our Most Dismal Fellow won’t even mention how states and municipalities are increasingly laying-off teachers, police officers and firefighters because of budget crunches that have them verging upon Chapter 9! Which UBS assures us “will not develop” while some folks are predicting a reality wherein 911 calls will soon be outsourced to Bangalore!

Is the economy really improving? Or are we once again being soft-shoed about this country’s state of affairs as well as what’s looming just over the horizon? These are the predictions for 2010 that UBS is predicating their analyses upon; if any don’t hold true then of course their opinions are subsequently devalued:

So which of these do or don’t or will or won’t hold any water?

Broadening Perspectives: The Housing Bubble Scheme

Choice excerpts from Commercial Real Estate – Exorcising the shoe

  • We conclude that while CRE-related credit losses are likely to remain high at regional and community banks, a repeat of the 2008/09 severe credit crunch is highly unlikely. This is consistent with the view that we first outlined one year ago in February 2009. We discuss nine reasons why we believe that CRE is not the “next shoe to drop”.
  • In terms of the direct economic impact, the drag from commercial construction on real GDP should moderate by mid-2010. However, we do not expect any positive growth contribution through 2011.
  • The CRE market is much smaller than residential real estate. As Figure 1 illustrates, the residential mortgage market is over three times the size of the commercial and multi-family residential (condos, co-ops) markets combined. The sheer size of the loans outstanding means that the likelihood that losses would be so great that it would materially impact bank capital is small.
  • Banks have stronger capital positions than before the residential mortgage meltdown and are more adequately provisioned for further CRE losses (Figures 2 and 4).
  • However, the prospect for a strong CRE recovery is unlikely given the sector’s sensitivity to the labor market and our expectation for the unemployment rate to remain elevated (above 9.5%) through the end of 2011. We continue to underweight small-cap stocks and the REIT industry – two market segments that have significant CRE exposure and high relative valuations.
  • Two reasons form the basis of our view for further moderation in the contraction of CRE construction. First, the level of non-residential investment relative to GDP was not much higher than its long-term average before the bust (see Figure 7). Moreover, since then, this ratio has already clearly fallen below its long-term mean. While excess capacity in the CRE space is still high and rising, the fact that the investment-to-GDP ratio is historically low and falling suggests that the rate of construction retrenchment should further moderate. Second, the NAR Commercial Leading Indicator (CLI) edged up in 3Q09, after falling since 3Q07.
  • Surprisingly, income producing CRE exposure has grown modestly since 2008. In contrast, construction lending comprised only 7% of total loans and has contracted significantly during 2009 due to charge-offs, pay downs, and a combination of lack of demand by potential borrowers and unwillingness by banks to lend in this area.
  • Clearly, construction has been the biggest problem so far. While construction loans represented only 7% of all loans, they accounted for 14% of total net charge-offs. Through 3Q 2009, CRE and multi-family have not been a major problem. Going forward, we think CRE losses will increase. But two years into the cycle, CRE, construction and multi-family losses have tracked better than expectations, which we believe will continue.
  • The relative slowdown in construction problem loan formation is an encouraging sign. However, the level of problem formation remains high, suggesting to us that losses over the next five quarters (through the end of 2010) could approach the 10-12% range as outlined in the Federal Reserve’s baseline scenario, which would be consistent with lower losses in 2010.
  • Implicit in 2009’s conventional wisdom that CRE would be the next shoe to drop was the belief that the capital markets would remain closed. This implied REITs would be unable to refinance or issue debt and would be unwilling to raise equity at extremely depressed prices. In fact, 2009 proved to be anything but conventional – it was truly a tale of two markets. As can be seen in Figure 22, the MSCI US REIT index declined in excess of 40% between 1 January and 15 March 2009. However, between 16 March and 31 December 2009, the index registered a total return in excess of 110% (see Figure 23).

Choice excerpts from Investment Strategy Guide: 2010 Outlook

  • While there will be no shortage of opportunities or challenges in the year ahead, the sort of extreme directional moves that have characterized the past two years appear far less likely. Instead, we believe the normalization of financial markets and an unfolding economic recovery—albeit a tepid and shallow one—will prompt more moderate and less uniform performance across market sectors. After two years up on the high wire, 2010 will likely be the year of living less dangerously for most investors. (Quick note: What about those who are not investors?)
  • So where does this leave us for 2010? The acute dislocations that existed within most risk assets back in March have now largely been unwound as a result of the extraordinary actions taken by policymakers.
  • The economy is caught between two seemingly diametrically opposed forces—the tailwinds that typically accompany a post-recession recovery process and the headwinds generated from a structural deleveraging within the consumer and financial sectors. As our senior U.S. economist Thomas Berner points out, there is always a certain level of pent-up demand that accumulates at the end of any recession from consumers who have refrained from nonessential purchases, merchants who have pared down their inventories and businesses who have foregone capital investment spending. But as the recession draws to a close and business conditions begin to improve, these drivers start to reverse and contribute to both the breadth and depth of the recovery. The current recovery is no different. (Quick Note: Yes, these drivers may start to reverse. But for how long and to what degree?)
  • The U.S. consumer is now engaged in the process of deleveraging, following a massive build-up in household debt (see figure 8). While savings rates may have rebounded in the immediate aftermath of the crisis, consumer debt burdens remain near all-time highs. The ongoing repair of personal balance sheets is apt to take several years and will therefore limit the extent to which the consumer re-engages in spending. At the same time, financial institutions are undergoing their own purging process. Faced with hundreds of billions of dollars in bad loans and troubled assets, banks and other financial intermediaries are taking steps to shrink their own balance sheets, pare back lending activity and restore their capital base.
  • What this also means is that policymakers will likely opt to retain a decidedly supportive policy stance through at least the first half of 2010. Given the structural challenges that lie ahead, Fed officials will be reluctant to shift away from the near-zero rate policy that has been in place since the most acute phase of the crisis following the Lehman failure (see figure 10).
  • This will be a recovery with “training wheels” as government fills the void created by the continued retrenchment on the part of the private sector… While actual rate hikes are unlikely to materialize until June at the earliest, market participants will begin to discount some tightening moves before the Fed has ever actually lifted the target funds rate… The first of these measures—the program to provide support to the housing market through the purchase of mortgage-backed securities—is set to expire in the first quarter. In the absence of any additional stimulus measures, fiscal policy will also begin to be less supportive for growth by the fourth quarter (see figure 11). This does not even reflect the impact from any changes in the tax code resulting from either the expiration of the Bush-era tax cuts and/or any additional tax hikes planned by the Obama administration. So while policy will remain supportive during the first half of the year, things could get a bit more wobbly by year-end when the training wheels are gradually removed. (Quick note: And so right about when things are going to be getting wobbly in the second half of the year, the ramifications of defaulting CRE loans is also going to be felt…this does not portend well.)
  • Commercial real estate may reach crisis levels. The bursting of the bubble in residential real estate triggered massive losses at U.S. and global financial institutions and led to the credit crunch that essentially froze lending of all types. While early-cycle residential mortgage, home equity and consumer credit trends have shown signs of stabilization, late-cycle commercial real estate (CRE) credit trends continue to deteriorate. Considering that the size of the CRE market is far smaller than the residential market, even greater-than anticipated losses do not carry the same systemic implications. That said, unlike residential loans, commercial loan defaults are predominately recession-related—not the result of subprime lending or exotic lending products—and thus a weaker-than-expected economic recovery could have contagion effects and spark another “mini” credit crunch. (Quick note: Which, if based on past precedent, is probably going to be exacerbated into a more “maxi” one.)
  • Sustainable but sub-par recovery We have grown more optimistic on the sustainability of a near-potential growth rate in 2010. In October, we raised our 2010 real GDP forecast from 2.2%to 2.6%, with growth hovering around 2.75%q/q annualized each quarter of 2010. Thus, our prior fear of a visible growth moderation throughout 2010 has taken a back seat. First, we raised our consumption growth forecast to reflect a pretty flat instead of a rising savings rate. The recent gyrations of the savings rate suggest that U.S. households have probably done most of the adjustments needed regarding their savings behavior. If so, real consumption will likely rise in tandem with real disposable income, which we expect to grow moderately. Second, while we are acutely aware of the need for the government to put its fiscal house back in order, we doubt that government spending will turn negative at any point in 2010. Therefore, we now expect a moderation in government spending, rather than an outright drag. (Quick note: why are they equating sustainable with sub-par? The past sixty some odd years of greed-driven avaricious growth is exactly what has led us to where we are today.)
  • Housing construction is bottoming out, but inventory remains excessive
  •  House prices show tentative signs of bottoming

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