On October 17, I had the opportunity to attend the annual Wisconsin Real Estate and Economic Outlook Conference hosted by the James A. Graaskamp Center for Real Estate. This year the theme was “The Shifting Landscape: What’s Driving Change?” While the five sessions covered a variety of topics, my favorite two sessions both concerned the U.S. economy.
The morning got off to a strong start with a panel of three expert economists discussing whether the U.S. economy is “approaching takeoff.” Julia Coronado, chief economist of North America for BNP Paribas and CNBC contributor, kicked things off by discussing what she calls the “Chicken and Egg Economy.” I thought Julia had compelling arguments concerning how this recovery has been different than those in the past due to the massive de-leveraging by consumers, businesses, and the government. She noted that businesses have been saving since the recession at an unprecedented level, which has prevented the economy from enjoying the benefits of the “catch up” investment that typically results from the pent-up demand cause by recessions.
Morris Davis, academic director for the James A. Graaskamp Center for Real Estate, took the floor next to discuss his view on housing in the U.S. Davis argued that housing is poised for normal-to-strong growth as the gap between housing prices and supply is unusually high. While he acknowledged that we could have house prices or that we could have entered a new economy, I thought he made a compelling argument for strong upcoming growth in the housing supply.
The last panelist of the morning session was David Shulman, senior economist for UCLA Anderson Forecast. Shulman focused on commercial real estate, and he made an argument that asset prices have likely peaked for the time being. With multi-family being a hot asset class, I was glad he spent some time sharing his thoughts on the matter, such as how planning department and financing policies have been encouraging the glut of multi-family development projects.
After the entertaining morning session, we heard more about the U.S. economy during the main event: the keynote address by Charles Evans, president of the Federal Reserve Bank of Chicago. Evans started by explaining the Fed’s strategy to use monetary policy to foster maximum employment and price stability. He followed by predicting 3% economic growth, unemployment dipping under 7%, and inflation approaching 2% in 2014; however, he did not make a prediction about when the Fed would pare back from the current monetary strategy. Nevertheless, it was still enjoyable to hear from a sitting Fed president.
While the sessions above were my highlights, there were other great sessions. The second keynote speaker, Greg Ingram, president and CEO of the Lincoln Institute of Land Policy, shared his perspective on a credit bubble in China. Abdullah Yavas, professor and chair of the Department of Real Estate and Urban Land Economics at the Wisconsin School of Business, moderated a panel that discussed how demographic trends shape the housing market, with a specific focus on Milwaukee. Last but not least, a panel of mortgage experts discussed the impact of new mortgage regulations. A big thanks to all the panelists and sponsors who made this a great event!