Saturday, June 11, 2011

Economist Basu (Chief Economist of Associated Builders & Contractors) sees upturn for end of year

Story found on the Tampa Bay Business Journal web-site:

Economist Basu (Chief Economist of Associated Builders & Contractors) sees upturn for end of year

Tampa Bay Business Journal - by Mark Holan

Date: Wednesday, June 8, 2011, 12:22pm EDT

by Mark Holan, Staff Writer, Email:

I spoke the other day with Anirban Basu, chairman & CEO of Sage Policy Group Inc., an economic and policy consulting firm in Baltimore. He is also chief economist for Associated Builders and Contractors.

“The economy has begun to sputter,” he said. “It had achieved some stability and predictability, but that is beginning to erode.”

The main culprits are high energy, food and other commodity prices. Consumers are pulling back, production and inventory are declining and jobs aren’t being created fast enough.

Is it a soft patch caused by severe weather in the U.S. and political unrest in the Middle East? Or are we heading toward something worse?

“It is more likely the economy will regain some semblance of momentum,” Basu said.

But recovery in Florida will remain on a slow pace.

“No one expected Florida to come roaring back,” Basu said. “Florida’s economy is based on consumer and investor confidence. Florida is for the bold, people who buy second homes and build resorts. This is not an environment where the bold are particularly bold.”

Basu said he expects the Florida economy to regain momentum by the end of the year, with building and commercial real estate driven by the multifamily rental sector, including senior housing.

He said the wave of baby boomers continues rolling toward the shore, but its pace has been slowed by falling housing prices and the uncertain stock market. Many are being forced to postpone or delay retirement.

“The downtown of financial markets slows migration to Florida,” Basu said. “The best thing that could happen to Florida would be Dow 1600.

The Dow was hovering around 12,100 this morning after several days of declines.

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