Posts Tagged ‘Pricewaterhousecoopers’

Keen for ’14

Wednesday, January 29th, 2014

The nation’s CEOs are bullish about their prospects for the new year, according to annual PricewaterhouseCoopers survey of more than 1,300 chief executives, which was released on Wednesday.  A full 39 percent were “very confident” that their company’s revenues would grow this year (up 3 percent from a year ago). More than 60% of the U.S. CEOs in the survey said they expect to hire more people this year–the highest in the past five years of the report. Sure they’re feeling good — businesses in the US are sitting on $1.4 trillion in cash; worldwide its $4.5 trillion,  73% more than the pre-recession level in 2006 (of course, you could argue that the reason it’s so high is that businesses hoard cash when they are uncertain about the market).

Add to this, the fact that the indicators have been good:  the IMF has upped its world economy growth prediction to 3.7 percent in 2014 and says the U.S. will grow 2.8 percent. Goldman Sachs and Credit Suisse First Boston (CSFB) are both expecting this to be the best year since 2011. The World Bank is slightly more tepid but still optimistic , predicting growth of 3.2%, less because of the US and more because Japan and Europe are slowly getting their acts together.

Going back to the CEOs, 44 percent said they believe the global economy will improve in the next 12 months. Last year, 18 percent said so. So where do they see growth? A full 86 percent say it’s in “advancing technologies” that are going to transform their businesses in the next first years. They cite how tech intersects with other industries, such as healthcare and retail, to create new hybrid industries, according to the survey. One of the biggest drivers will be replacing outdated equipment (the average piece of equipment is 17 years old in the US).

That’s the good news. But let’s remember that it still doesn’t feel like a recovery for a lot of people. Despite the unemployment rate falling to its lowest level since October of 2008 at 6.7 percent,  the labor participation rate is still a concern for many. 347,000 people dropped out of the labor force (that is, are no longer looking for work) according to the December report. However, even that number may have a bright side. a A recent study by Shigeru Fujita, a senior economist at the Federal Reserve Bank of Philadelphia says that “discouraged workers” only made up about a quarter of those leaving the labor force between 2007 and 2011, while “the decline in the participation rate since the first quarter of 2012 is entirely accounted for by increases in nonparticipation due to retirement.” If this is in fact the case, the current headline 6.7% unemployment rate may indeed reflect the true health of the labor market

Despite the dueling numbers, it is clear that partisans on both sides are correct: we have a lot of work still to do and we have a lot to be positive about.


Mortgage Delinquencies Show Slight Decline

Wednesday, March 10th, 2010

 Rate of mortgage delinquencies show slight decline for 4th quarter of 2009 – despite holiday expenses.  The rate of mortgage delinquencies – borrowers who are one payment late – fell slightly between the 3rd and 4th quarters of 2009 from 9.64 percent to 9.47 percent.  According to the Mortgage Bankers Association (MBA), a fourth quarter decline is unusual — even when there is no recession — because winter and the holidays typically mean that homeowners have extra expenses.

Jay Brinkmann, the MBA’s chief economist, offered this upbeat perspective.  “We are likely seeing the beginning of the end of the unprecedented wave of mortgage delinquencies and foreclosures that started with the subprime defaults in early 2007.  With fewer new loans going bad, the pool of seriously delinquent loans and foreclosures will eventually begin to shrink once the rate at which these problems are resolved exceeds the rate at which new problems come in.”

Despite the good news, delinquencies nationwide are still significantly higher than in the 4th quarter of 2008, when the rate was reported at 7.88 percent.  The pain is concentrated in two states.  In Florida, 26 percent of homeowners are one or more months late in making their payments; 24.7 percent of Nevadans are having trouble paying their mortgages.

Two New Studies: Commercial Real Estate Recovery Seen in 2011

Wednesday, February 24th, 2010

Two major new reports see recovery in 2011.  Commercial real estate will begin its long-awaited recovery in late 2011 or 2012, according to the fourth-quarter Korpacz Real Estate Investor Survey, which questioned more than 100 real estate investors, including REITs, pension funds, private equity firms and insurance and mortgage companies.  Confirmation is provided by a PricewaterhouseCoopers survey, which notes that Washington policymakers are increasingly tweaking the strings that impact pricing.

According to the Korpacz survey, “Rental rates will continue to decline until strong, consistent job growth resumes.  With $1.4 trillion of commercial real estate debt maturing by the end of 2012, some property owners will not be able to survive the downturn.  Problems related to refinancing that debt could further delay a recovery in the sector.”

Government and regulatory policy will have greater impact on pricing than occupancy levels or rents, according to Real Capital Analytics, Inc.  “Policymakers control what happens to commercial mortgages in default,” Robert White, the president of Real Capital Analytics, wrote in a report.  They “have encouraged loan modifications and extensions even in cases where loans are above a property’s current value.  Tax policy, meanwhile, has made it easier for special servicers to negotiate with borrowers, a move meant to prevent a wave of maturity defaults and property fire sales.  Keep rates low and easing restrictions on foreign capital will also influence industry prospects.”  Real Capital Analytics notes that commercial mortgage-backed securities (CMBS) hold 42 percent of distressed loans; American banks 31 percent; and foreign banks 13 percent.