The Chatter Class: Only economic constants are yin and yang

Monday, December 10, 2007 at 1:15am

The economy is in the tank. The economy is not in the tank.

Or, it’s not as bad as some thought but it’s not as good as others want, so therefore it’s still bad. Got it? It all depends on one’s perspective.

Reading the headlines in the financial press or any media outlet can be a depressing schizophrenic exercise that would lead you to drink heavily, or checkout and move to a secluded mountain top.

Jobs up. Jobs down. Stock market rises on bad economic report. Stock market drops on good economic report. Sometimes it seems to have no rhyme or reason, with everyone’s mood fluctuating as much as gas prices.

Around Nashville business circles, people have wondered what all the fuss is about. Generally speaking, to them, the Nashville-area economy is still humming along just fine with kind of a Goldilocks attribute.

Economists, economic developers, real estate brokers and business leaders have long touted Nashville’s diverse economic ability to protect against large economic swings. It never blows the roof off like other cities but never falls through the floor like those cities.

Unemployment is under 4 percent and workers on average are earning more here. Job growth continues, though at a slower pace than year’s past.

Commercial real estate, a gauge of where the economy may be headed, is strong right now. Brokers say companies are expanding their space and new ones are looking for office space here.

That’s no hyperbole on their part. When no one is around kicking the tires, brokers will whine about it to high heaven and the weak brokers go away.

Industrial real estate, a leading indicator for office, is slower now but still posting good leasing numbers.

“Our prospect flow is as strong today as it was six months ago,” said Janet Miller, the Nashville chamber’s economic development chief.

Of course, it’s not all rosy. David Penn, director of Middle Tennessee State University’s Business and Economic Research Center, said growth slowed in the third quarter and thinks the figures will show slower growth in the fourth quarter.

Job growth for the year could be 9,000-10,000 jobs, Penn said.

“That job number is key,” said Tom Frye, managing director of CB Richard Ellis and a former banker. He said it could be a tough year if the figure drops below 10,000.

“We’re one good relocation away from having a good year,” Frye said.

Slackening housing construction is driving the slowdown. Housing sales aren’t at the blistering pace of the past few years. Bill Fox, director of University of Tennessee, Knoxville’s center for business and economic research, said non-residential construction is still strong across the state.

The sub prime mortgage mess nationally hasn’t had a tremendous impact here.

“It hasn’t really taken people out of the purchase market,” said Scott Ractliffe, a senior vice president and mortgage advisor with Pinnacle Financial Partners.

He said much of the sub prime lending involved refinancing existing loans, borrowing more to pay off other debt and that’s where they got into trouble.

National headlines about housing woes have prompted the pessimism in the local housing market.

Sellers are having a hard time selling at prices they want, meaning less profit. If anything, though, the housing malaise has put a damper on sellers seeking ridiculous prices only to go pay a ridiculous price for a new house with the proceeds.

Filed under: City Business
By: MJB on 12/31/69 at 6:00

Lots of houses on the market here right now, not selling all that quickly. Maybe Richard Lawson should look at some numbers & not just interview business people w/ vested interests in re-rouging the scenario. In addition, Nashville always lags behind the curve: We get the slowdown after others, and we get the recovery after, too.Where's William Williams??

By: vchester on 12/31/69 at 6:00

A family member who sells real estate just had her best month ever in November. She has to turn her phone off in the evenings just to have a little down time, even in December.Here's the thing about the economy. If it's personal it couldn't be better; if it's about someone you don't know, it's down. The article is spot on. It's a matter of perspective. And well, let's not rely on the media to give us a reliable pulse on anything. Remember, if it bleeds, it leads!

By: theplantsman on 12/31/69 at 6:00

MJB, in part I agree with you because historically speaking there is an abundance of unsold houses waiting for a new owner. However, I do not see that as a long-term problem. Of course, if I were the homeowner that “bought high” and paid too much for my house and/or fell for the con-game of the Adjustable Rate Mortgage and now with the market correction I cannot afford to lower my selling price and cannot afford the rising rate adjustment. Then it would be an awful economy and it would not be a rosy scenario in my perspective.

By: jasonweaver on 12/31/69 at 6:00

Yes where is is Williams with his overexhuberant optimistic viewpoints? The housing market needed to cool off. It's obviously a bad thing when houses sell in hours rather than weeks. I've seen places sell when the price is right. Instead of making a 150,000 they make 125,000 or 100,000 after a few years in a house. That doesn't sound like hurting.

By: NewYorker1 on 12/31/69 at 6:00

I'm in my second home ownership and my rule of thumb has always been to buy 25% less than what I was approved for. It's the responsible thing to do. Even though my father is a surgeon and my brother and I grew up financially better off than a lot of people we knew, we still learned the value of a dollar and how important it is to save for a rainy day and to think ahead in terms of our financial future. A lot of these people buy homes for the wrong reasons. They buy more than what they can afford just to impress their friends and relatives. I know a few people like that and it's really sad to see them about to foreclose on their homes.

By: mel377 on 12/31/69 at 6:00

I am a realtor .. mainly for the relocationof buyers. I do have 2 listings and one in Mt Juliet just sold. The other condo has beenlooked at recently with interest. I was slammed in Nov. and Dec hasn't been bad eitherso I think each realtor is different and themarket is good here still .. especially whenyou compare it to where people are moving here from! Thanks Mel