Butterfly effect: A property of chaotic systems (such as the atmosphere) by which small changes in initial conditions can lead to large-scale and unpredictable variation in the future state of the system. - Merriam-Webster dictionary
Recently, vanilla bean prices have soared in the U.S, after a cyclone hit the tropical island off the south-east coast of Africa. “Seventy-nine percent of the world’s vanilla fields are in Madagascar. A shortage there has helped drive up the cost of vanilla beans from about $11 per pound in 2011 to $193 by the end of 2016”, according to CBS News.
In their March meeting, the Federal Reserve Bank voted to raise the target federal funds rate to 1.5-1.75%, with rates expected to climb to 2.9% by 2019 and 3.4% by 2020.1
All else being equal, an increase in interest rates could lead to a decrease in commercial property values. As interest rates climb, the return on alternate types of investments may increase, making real estate comparably less attractive and driving prices down. Additionally, since most real estate assets are financed, a rise in interest rates would increase the investor’s borrowing costs, driving investors to seek either an increase in operating income2 from the property or a decrease in the market value of the asset.
I’m relatively new to Connecticut, as I’ve discussed in previous blog posts, and I’m having fun exploring my new state.
One of the trends I’m noticing is a greater attention to Connecticut-made goods. Attention to domestic production is not a new thing (remember the “Made in the USA” symbol that became popular in the 1990s?), but it has taken on a more local aspect with initiatives such as Connecticut Made. This new effort identifies goods that our fellow state residents have contributed to producing. While this program just started (and is based on similar programs in other states and major cities), there are a lot of Connecticut-made goods already available for those interested in exploring the state.
The latest results from the InformCT Consumer Confidence Survey are out and what we’re seeing is a tale of two sentiments. Our respondents from the fourth quarter of 2017 are telling us that they are not feeling confident about overall business conditions. Only 20 percent of our respondents said that they think the state’s economy is improving.
I want to wish a happy new year to the growing global economy. Economic activity for the world as a whole is increasing, with global growth projected at almost 4% in 2018. Deflation fears are ebbing, central banks have been able to pull back without spooking markets, and many countries (in particular Europe, Brazil, China, Japan) are holding steady with some modest economic growth. There are international security threats, especially with North Korea, and the growing number of cybersecurity breaches have people and companies on edge, but all in all the expectations for the global economy are very positive.
‘Tis the season—for love, for sharing, and in some cases, for accumulating more “stuff.” As a mom of two young children, this accumulation seems to have grown in recent years. As boxes arrive in the mail, our once-spacious living room starts to feel tight as open space is gradually filled with books, stuffed animals, and monster trucks. While my husband wonders aloud if it’s time for a bigger house, the economist in me wondered how much all of this “stuff” really costs us.
I moved to Connecticut a little over two years ago to take my job at CERC. To be honest, I had never even considered Connecticut as a potential residence – I wasn’t interested in an insurance or finance job, and the most I knew about the state came from episodes of “30 Rock” and “Mad Men.” Moving up here, after 12+ years of urban living in Baltimore and DC, was an adjustment, of course, with my new state’s suburban and car-centric lifestyle.
“The Only Thing That Is Constant Is Change” ― Heraclitus
Even Heraclitus, the Greek philosopher who lived around 500 B.C., spoke of the always-changing world. And today’s economy is no exception.
Last week, I had the pleasure of talking with members of the Connecticut & Western Massachusetts Chapter of the Society of Industrial and Office Realtors® and presenting an economic outlook at their Fall Meeting. We had a lively discussion about global and national economic trends and how they are impacting Connecticut’s economy.
As one of the key industries in Connecticut and nationwide, aerospace plays a vital role in the local and national economy. A breakdown of its top suppliers shows the industry sources most of its inputs from within the state. There are outliers, more than half of its management services, electronic product and metal are purchased from outside of Connecticut.
The economic woes of retailers in recent years are no secret. CNN Money reports that at roughly the half-way point (through June 20), 2017 has seen more than 5,300 retail closings nationwide--more than any year except 2008, the heart of the recession.