Long Term Economic Forecasting

Economic forecasting is most difficult. Business conditions are in constant flux. And it’s tough to know what is going to happen domestically because of politics that change, sometimes drastically, every two years in the House of Representatives and six years in the Senate.

You also have complex interrelationships across countries, some very volatile in their political makeups. Any one country, in any one region, can materially affect the forecast for what we expect for the U.S.

Short-term changes are certainly far more difficult. Entire global scenarios change overnight!

Nevertheless, much planning and budgeting that our government relies on, that affects business, is based on such economic forecasting. No wonder government deficit estimates are usually far off Particularly, when politicians fib to fit their promises to reality.

Commercial Real Estate Market

Commercial real estate booms and busts are generally affected by the construction of too much space. This cycle’s problems have arisen from the deep recession seeping into commercial property.

The financial lending crisis and not overbuilding as in the past, added to poor economic activity and a weak job market, are the problems.

The weak economy has been driving down rents. Many property owners are finding it difficult to refinance short-term financing when due. Property values consequently moved down, as in residential housing.

But many larger commercial owners, such as publicly owned real estate investment trusts (REITs), did better. Especially those with substantial equity and access to public funds. It was an opportunity for them to take advantage of marked-down, available assets at lower cost.

In what appears to be the turnaround, commercial rentals now are beginning to stabilize and move up.

Economies Grow with New Small Businesses

Net job gains over the past three decades have come from companies less than five years old. About two thirds of new jobs have come from this group.

This is not currently happening, despite the disastrous spending of the Obama Administration. Because nothing is being done to create the environment for small business to prosper.

On the contrary, everything that impedes the small business operator has been created in the past years. Higher minimum wages on unskilled labor, and looming higher income taxes.

Just as importantly, there are constant anti-business diatribes from Washington which scare would-be entrepreneurs.

MBA Program Shortcomings

In previous blogs I mentioned a number of ways how and why graduate schools are revamping their MBA courses.

Some may be doing it for sound critical needs, while others may have cynical reasons to simply attract students.

Education should not have to do with regulation. We are overly regulated. And the Administration wants even more of the same. We need MBA students who can learn more about regulation in practical terms.

I have said many times before, from my own graduate school and executive work experience: The public always has the false assumption that government bureaucrats, and that includes the Treasury Secretary and the Federal Reserve head, are really completely on top of it all. They know more than 99.9% of the public, but that does not mean they are aware of practical business that their job involves.

Global Warming Research

Much global warming research has actually been suspect for some time, because the mathematical models used are deficient. There is not sufficient computer capability, nor is there enough accurate data for necessary input.

Though warming proof is poor, those who believe in global warming theory insist that the information they have has to be considered in its entirety, no matter the cost of implementation of what data they have.

All of which can be economically devastating.

However, research is being done to see if some of the major legitimate climatic defects can be corrected quickly and at lower cost. Such as the use of an sulphur dioxide in-the-upper-atmosphere approach at minimal cost.

But the industry built around global warming pessimism does not want to hear of such smaller but valued corrective measures, if any are truly necessary. And much of the data has been found to have been falsified or “adapted.”

There is simply too much politics involved. Global warming controls translate into government controls, the chief handle being the use of the taxation tool.

The Ethanol Fiasco

Climate change enthusiasts have problems with data from different research sources, whether it be poor interpretation of science or scandal involving basic research.

The noted journal Science, in a study of biofuel emissions, found an error in the way climate-change studies are being made. It discovered that ethanol produces the same amount of greenhouse gas as fossil fuels. or more such gas per unit of energy. Yet ethanol was always considered to be better than oil or gas as a fuel, in this regard,

Also, ethanol displaces and raises the cost of a food product. That was always a negative. Along with the fact that it’s a relatively poor source of energy, compared to conventional fuels.

Pure politics has dressed up to appear an environmental bonanza.

The unintended consequence will be that land will be used for wrong purposes, and rain forests will be converted for the production of this poor energy substitute.

MBA Program Needed Tweaking

I have in the past pointed out how and why graduate schools are revamping their MBA courses. And that some may be doing so for critical needs, as well as cynical purposes.

And that some on the Left make ethics the sole instruction issue when ethics should be taught no matter the specific course. Capitalism, after all, is not the only economic system beset by occasional problems brought on by poor ethical standards.

There are valid areas where MBA courses should be tweaked. The use of mathematical models and their shortcomings; liquidity in pricing securities; global interdependence within the world economy; the problem of over-regulation by government’ and so on.