Spring forward, fall back... or is it the other way around?

f, s we Nrnn the end of spring, I have been reasonably positive about the industry -la,results so far and the prospects for all of 20 13. But. there are several lingering questions regarding the economy as a whole that give me pause and hopefully don't trigger a reset button. Then again, I just read an article advising me to "stop apologizing," so even if I'm wrong, I will probably shut up and hope nobody remembers a few months down the turnpike. Isn't that what all economists do when they are wrong?

By all accounts, the housing numbers look good and every economist I see and hear predicts much the same: just under I million starts this year and l.l+ million next year. To me, about l.l to 1.2 million starts is where I see the market at a sustainable level, although forecasts for 2015 shows upwards of 1.4 million.

The interesting stat-and perhaps the disconcerting one-is that growth is greater in multi-family vs. single-family. Reports suggest that homeownership in the U.S. is at its lowest since 1995, reflecting rising demand for rentals and investors buying single-family homes to rent. Homeownership is at 657o,while rental vacancies fell from 8.8Vo to 8.67o. A year ago, I expressed concern that as the younger generation become more mobile, especially in a tight job market, the allure of owning a home as a long-term investment may not be quite so prevalent (also reflecting that many children do not leave the nest until their late 20s and even 30s).

Equally troubling, I heard a leading bank official say that there is no reason why home prices should be rising, with all the potential inventory of homes out there. Indeed, in some areas, prices have started to recede again.

Talking with industry friends over the last couple of weeks, I also hear mixed signals, although mostly optimistic. Yet even those who sound positive still have doubts.

In the overall economy, the new job creation engine stalled in March at 88,000, although a few weeks later, the government realized its couldn't count and revised the figure up to 138,000. April came in at 165O00-a better number, but still suggesting a slowing. Indeed, many of the new jobs are lower-paying jobs in restaurants and bars (go figure). Unemployment fell to 7.5Vo,but the rate remains questionable, as more and more leave the work force.

All of the above creates what I heard described as an economy hamster wheel, where we are trapped and cannot find our way out. As you listen to the daily financial reports there does appear to be a spring slowdown, with retail sales and manufacturing output down. It appears that after a good first quarter, the spring doldrums is becoming an annual event, like in 201l. and2012.

The Sequester and this year's higher taxes-including stealth ones that many are just realizing have kicked in-are likely responsible. You take money out of pockets and it cannot be spent in the economy. After 2%o growth in the first quarter, it is expected to fall to 1 .5Vo in the second quarter. On the bright side, growth could be 2.4Vo+ for the rest of the year. This may follow the pattern we saw in 2012, with a stronger second half.

As opposed to the events outside of our control, such as the euro crisis, we have understood much of this was going to happen. It is no surprise. It won't cause shock waves that might stall the entire economy. With the good housing numbers, strong auto sales, lower energy prices, and some easing on consumer credit, the negatives are outweighed by the positives. So, althoueh we are immediatelv feelins the tax increases and spending cuts, I expect around 4Eo growth in lhe economv next vear.

So back to the "don't apologize" article I was reading. The whole point was that if you have a habit of apologizing too much for every little thing, it begins to have no value and becomes ever easier to say. Oftentimes, no one but you recognized your mistake and you should only make apologize when you make a big one. Unfortunately, I have too much of a public forum for my mistakes, so keep watching this space!

Have a sreat summer.

Alan Oakes, Publisher ajoakes@aol.com