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Apartment Finance TodayEditor's Letter
No Jobs, No RecoveryAPARTMENT FINANCE TODAY • January/February 2010 Look past the “signs,” and you’ll be hard-pressed to find fundamentals strong enough to support a true economic rebound. BY SHABNAM MOGHARABI I AM A MAGAZINE JUNKIE. I love going to the newsstand and spending hours trolling the racks for what’s new and exciting and unusual in the world of publishing. In fact, give me a cup of strong tea and a few glossy issues of just about anything, and I will sit and read until my fingers turn black and gray from the ink. Which is why I love the business I’m in. Creating magazines is a wonderful, sometimes stressful, yet greatly-rewarding process. Watching the reporting, photography, and design come together from start to finish to form the right balance of informative, compelling stories gets me riled up each month. But here’s the thing about the magazine business: While I believe great content will always be king—and firmly set you apart from your competition—you can’t offer that content to your readers without sustainable advertising support. Sure, the Web is challenging the relevance of print publishing today (I’m obviously a believer in print’s value), but the two most important pillars in determining publishing success are solid content and the support of advertisers for your editorial voice and mission. No ads, no publication. That’s one of the fundamentals that matters most in the media industry. And it’s also a fitting analogy for the economy as a whole. Consider the underlying fundamentals that economists and journalists analyze every month. Which one matters the most? Is it GDP growth? The value of the Dow Jones? Indications that consumer confidence is rising? Or, in the case of the multifamily industry, the “signs” that we’ve reached the bottom and are days from turning the corner on the downturn? Yes, in many ways, the year does seem off to a busy start. The industry is abuzz over the Treasury’s recent decision to suspend for three years the $400 billion cap on Fannie Mae and Freddie Mac’s bailout subsidy—news that could potentially give the behemoth backers of mortgage debt greater flexibility when it comes to modifying the terms of their loans and investments. What’s more, companies such as Behringer Harvard, Bell Partners, and Essex Property Trust are buying up assets, including the first REIT REO buy of 2010 by Essex. But the truth is, we’re in the middle of the Great Recession, and these announcements are just that—signs. They certainly don’t signal that there’s a true economic recovery ahead of us. I just don’t see it happening. After all, where are the jobs that would support such growth? U.S. unemployment is holding steady at 10 percent, according to the most recent labor statistics. And that does not include the underemployed. Bottom line: Where there’s no income, there’s no money to pay the rent—or shop, invest, or travel, for that matter. If you ask me, that’s what we really need to be worrying about. In media, the mantra is no ads, no publication. In the economy, it’s no jobs, no recovery. Seems harsh and somewhat over-simplified, I know. Yet I think it’s also about time we owned up to the truth. Let’s hear it for being realistic about where our country’s economy really lies. Shabnam Mogharabi, Editor |
