Think Out of the Box

by Enrique (Henry) Saldana (Feb. 2012)

I do not intend to give an overview of our present economy, but the constant responses from some local condo owners and the direction they are taking have prompted me to write this article. The owners initially intended their condo units to pay for themselves while they would earn on the appreciation factor, and are now being faced with low rentals and occupancy, and with having to pay their mortgage with out-of-pocket funds.

As with the USA, the consumer confidence of potential buyers in our area is at its lowest point, especially among Americans.

Perhaps they have not sat back and looked at other rental income options, such as long-term rentals, instead of short-term rentals, etc.

But going back to consumer confidence, let's define it.
Consumer Confidence?
The definition of consumer confidence: Consumer confidence is a measure of the level of optimism consumers have about the performance of the economy. Generally consumer confidence is high when the unemployment rate is low and GDP growth is high. The Consumer Confidence Index measures people’s attitudes about current and future economic conditions.

How the Consumer Confidence Index Affects the Economy:
Consumer confidence is important to the economy because consumer spending drives 70% of economic growth, in the case of the USA. If consumers are uncertain about the economy, they will buy less, and the economy will slow further. If consumer confidence increases, then the economy will grow.

Now, so far we have had very negative reports with regards to the economy, which in turn affects consumer confidence. So here is a new report I just came across that appears to be a bit optimistic with regards to the direction of the economy.

Demand for Small Business Loans Highest Since 2005
The increased demand for loans suggests future expansion.
Domestic banks reported increased demand for small business loans over the last three months, bringing the demand to its highest level since 2005, according to an opinion survey of loan officers by the Federal Reserve Board.
That sounds like good news for the economy, say analysts. "If a firm wants to expand, they typically need to borrow money to do it," Drew Matus, senior economist at UBS Securities reported to Bloomberg. "So at a minimum this suggests we should still be looking for decent job growth over the next three to sixth months."
According to the survey, about 15 percent of domestic banks reported a demand increase for commercial and industrial (C&I) loans by small firms—defined as companies with less than $50 million in annual sales—even though banks reported little or no change in their lending standards for C&I loans.
And reports of stronger demand for small business loans outnumbered reports of a weaker demand, the survey found. That's in contrast with the net weakening demand reported in the October 2011 survey of loan officers released by the Fed. –Abby Tracy

Therefore, I personally think that the best way to improve consumer confidence is to have the general public to think out of the box, and look for alternative options to the economic situation we are presently being faced with.

There is an old saying, "Keep doing what you are doing, if you want to obtain the same results." Otherwise, I would say, begin to think out of the box.

This report courtesy of Enrique (Henry) Saldana
Mexico Realty Solutions
Tel: (984) 147-2388
Cel: (984) 111-8743


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