Economic Leading Indicator

As some of you may know, I am the author of the newsletter, the Hawaii Leading Indicator.  Economizing my energy, this blog will serve as the outlet to which my opinions about the economy shall be published.  I won't focus entirely on economy, but also on other trends that impact our decisions to do business and consume.

Why listen to an architect?

Here's why.  My clients bring news.  These clients are planners, developers, and very wealthy individuals who's main focus in life is to keep a pulse on economic indicators.  

When fear is out of the picture, these clients call me and begin early stage planning of their new ventures.  My practice has strict confidentiality rules to protect clients, but I do write about trends.

Trends forecast future events.


Current trends:  

Lots of movement on the high end residential side as interest rates are kept low.  High-end clients are lining up at the door.

Commercial is slow as investors and developers wait for the ARM's that flooded the market 2 & 3 years ago become due.  Short term rates will stay low as we go through this process.  It will give relief to commercial and ARM holders.  The Fed knows this and cannot raise interest rates until this wave passes in late 2011 and early 2012.    This wave of low interest rates will continue until most of the ARMS have converted to longer terms or we have at least spread out this tsunami's volume.  The world economy cannot take another credit crunch, so interest rates will be kept low.  Hyperinflation will only result as a major catastrophe unfolds that the Fed cannot control.  The intent is to keep interest rates low for several years.   STAGNATION is a good word for this.   Currently, my clients still see all of this as uncertain, and will not move on commercial projects unitl the public shows more confidence.

War
War with Iran is on the horizon.  Predictions of this have come about 2 years ago as US defense contractors were filling very large orders of purchasing of ships and planes by Israel.  Now mavens who follow the politics of the Israel/Iran conflict are predicting an Israeli attack on Iranian nuclear sites.  The US needs to secure Afghanistan in order to sandwich Iran geographically.  The chess match is almost played out, and checkmate is being set up.  If you look at a map surrounding Iran, which countries are friendly toward the US, or are under US control?  War is a lucrative business, and it keeps empires profitable.   Particularly when the economy is not healthy.  


How does all of this affect the world market for luxury items?  Including architecture?
The world will stratify even further into have's and have not's.  The class system will no longer be by national class, but by global class.  The US will stratify into the super wealthy and the poor.  The American middle class is already losing ground, while China's middle class is exploding.  So on a global scale, our middle class is growing, just not in the United States.  


Different architects cater to different tastes.  Those who work for the people design for the people.  Those who design for the wealthy, will continue to design for the wealthy, but on a scale of service that is much different than the recent past.  The rich will expect services as well tailored as the Ritz Carleton does for hotel services.


That's all I have for now on trends!