Article Number : 5067 |
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| Date | 11/18/2009 9:08:31 AM |
| Written By | LGM & Associates Technical Flooring Services |
| View this article at: | //floorbiz.com/BizResources/NPViewArticle.asp?ArticleID=5067 |
| Abstract | SURPRISE: According to the Department of Commerce, the economy grew in the third quarter for the first time in more than a year. It said government stimulus helped boost consumer spending and home building, fueling an unexpectedly... |
| Article | SURPRISE: According to the Department of Commerce, the economy grew in the third quarter for the first time in more than a year. It said government stimulus helped boost consumer spending and home building, fueling an unexpectedly strong advance. It hinted that we could be nearing the end of the worst recession in 70 years as the economy expanded 3.5% in the July-September period. That’s an optimistic forecast and more comforting than that of the glass-half- empty cynics. However, there are concerns that the growth will falter with the huge problems facing households. Consumer spending represents 70% of total economic activity and with unemployment at a 26-year high and rising, the worry is: Can they continue to spend? ANOTHER VIEW: Some economists believe the commercial real estate sector will continue to suffer, with office vacancy rates high and the difficulty developers are having getting new financing because of rising loan defaults on commercial mortgages. Several floor covering contractors concur with these economists and see no light at the end of the long and winding tunnel. I suggest they leave the underground passage and seek another route to recovery. Look at the more positive side of things. Housing is expected to keep rising, a prediction based in part on the expectation that Congress will extend and expand the home buyer tax credit, which is scheduled to expire Nov. 30. Standing on the shoulders of December, we’ll have a better look at the first quarter of the 2010 economy and beyond. CONFIDENCE: Shaw Industries seems to believe in the resiliency of the economy. The company, a subsidiary of Berkshire Hathaway, has completed the acquisition of Sportexe Construction Services, a leading synthetic turf company dedicated to sports surfacing. It has provided fields to the NFL’s Jets, 49ers, Ravens, Saints and Bills, to other professional sports leagues and prominent colleges and universities. Vance Bell, Shaw’s CEO, noted, “The turf market offers exciting opportunities for us. We intend to be a fully integrated producer from manufacturing through installation. With the combined strengths of Shaw and Sportexe, we look forward to accelerated growth in the synthetic turf market.” The acquisition will bring together Shaw’s TerraSport sports turf and TerraSoft recreational surfaces’ brands, sold under the Spectra Sports Surfaces division, with Sportexe’s current product offering. $34B BET: Berkshire Hathaway’s Warren Buffett is a firm believer that the economy will rebound and he proved it again last week. He made a $34 billion bet on the future when he agreed to buy Burlington Northern Santa Fe Corp., the country’s second largest railroad with a market capitalization of $25.9 billion. Buffett called the move “an all-in wager on the economic future of the United States,” and added, “I love these bets.” Berkshire already owns about 22% of Burlington Northern and will pay $100 a share in cash and stock for the rest of the company, a 31.5% premium on the Nov. 2 closing price. The deal was approved by both boards and is the biggest acquisition ever for Berkshire Hathaway. The Omaha Oracle is awesome. MORE HELP: The U.S. House of Representatives has voted to increase Federal loan programs to small businesses to ensure they can gain access to the financing necessary to grow. The House bill will boost the caps on a number of loan programs available through the Small Business Administration (SBA). The maximum size of 7(a) loans will rise to$3 million from $2 million currently, helping businesses to invest in machinery, equipment, land and buildings. The cap of the SBA’s 504 loans will rise to $25 million for some industries from $1.5 million to help businesses expand payrolls by supporting real estate purchases. Another step in the right direction. |