Whenever I go on holiday for a couple of weeks or more, I think it’s worth sharing a few anecdotal insights. So, after shaking off the jetlag and the waking up at 3am, here are some thoughts on my recent US trip
I must caveat these views are formed on a very small, limited sample, based on my own experiences in the state of New York, split between Long Island, upstate New York and Manhattan. However, I still think they provide a useful snapshot since my last visit about two years ago.
Retail
While retail businesses seem to be still solvent and trading – a substantial improvement from 2010 and 2011 – it was hard to observe that many were booming or even what could be termed busy. The local shops seemed to be trading quite well although that could have been due to the unseasonably warm weather bringing a few more off comed 'uns (tourists) into the picturesque seaside town; restaurants and ice cream shops had plenty of customers, including our family on several occasions.
The shopping malls that I attended – this time I actually did some shopping myself, rather than reluctantly getting dragged through – were sparsely populated with shoppers. The majority of retail stores seemed to be enticing consumers with liberal applications of sale signs; 40% off seemed to be a popular spruiking discount point. I’m convinced second quarter results for some clothing retailers will be bad, as the unseasonable warm weather would have not allowed them to shift as much winter stock as they would have liked.
Real Estate
In terms of real estate, the residential market appears to have found some balance on the north eastern seaboard. Just coming into summer, there were properties on the market but there didn’t appear to be a glut. Turnover of the housing stock in upstate NY seems slow but that appears to be normal for that area.
Driving around, there was plenty of available commercial and retail property on the market, especially in second- and third-tier strip malls. There has been a distinct lack of improvement in these sectors since the GFC and it certainly seems to be lagging the recovery in more the premier locations; bankrupt retailers have been replaced by new stores.
The election
One thing that struck me and could quite simply not be ignored was the amount of media exposure that Donald Trump managed to generate. He is an absolute Godsend for the 24 hour news channels; every time he talks he gives them fresh material for the next news cycle. Unfortunately his pseudo-patriotic, nationalistic chest-beating is appealing to many and following the tragic incident in Orlando, he is likely to attract even more followers.
As an aside, politics globally is becoming more introverted, with populations and governments attempting to isolate themselves from outside influences in the belief that this will insulate them from the broader economic hardships. This is demonstrated by the closeness in the Brexit referendum and European politics, with the rise in popularity of various right-wing parties.
But back to the US, Clinton’s acceptance speech was excellent and there is widespread hope that the Democratic Party can unite behind her. However the US election is rapidly turning into a least ugly contest; neither candidate is overly popular.
I believe that the US election will be incredibly close – much tighter than many expect – and do not be surprised to see Donald Trump as the new President!
In summary, my anecdotal evidence supports the publicly available economic data that the US economy is continuing to heal slowly. However, given the uncertainty around the election, I’m not sure how long this can be expected to last; I certainly don’t see a huge boost to consumer spending or business investment in the next few months. In fact, the trip has re-affirmed my view of ‘lower for longer’ in growth, interest rates, inflation and investment returns. I won’t expect to see much change when I return in about 18 months’ time.