As we look at the state of the economy in 2010 one has to wonder just who’s — if anyone’s — prediction is going prove out in the end. There are those who tout that the recovery is underway but when they supply their supporting data one tends to feel less secure about their pronouncement. However, one thing is common to all reports … whatever the economic growth winds up being it will be well below the long-term U.S. average of 3%.

The Fed has been pouring billions into the credit markets to hold lending rates down with very little impact on the market. The highly touted “stimulus” has resulted in remarkable little stimulus as it becomes clear that it primarily consisted of transfer payments. Tie this to the huge cutbacks in state and local budgets and spending as noted in the 2010 Swanepoel TRENDS Report and you have — with exceptions — a virtually stagnant economy.

So what does that portend?

With federal deficits potentially reaching 7% to 10% of GDP we are going to be severely challenged to finance those deficits at reasonable interest rates. Just how long the federal government can continue to juggle these issues remains to be seen. Will the end result be a restructuring of the federal budget that incorporates spending cuts and massive tax hikes? So far we are experiencing no spending cuts at the federal level so one wonders if the Taxman is standing at the door with his finger on the bell.

For more information on the economy and its impact on the real estate industry read the 2010 Swanepoel TRENDS Report available at www.RETrends.com.

About the Author

During the last fourteen years, nineteen-time author Stefan Swanepoel has widely become regarded as the leading researcher on the business and technology trends impacting the real estate industry. For more information on his annual Swanepoel TRENDS Report and the annual Swanepoel SOCIAL MEDIA Report visit www.RETrends.com.