The U.S. economy is in the midst of a “U-shaped” recovery that will continue to be sluggish in 2010 but pick up steam by 2011 and beyond.
That was the consensus outlook of a national panel of experts speaking at the BizTimes Commercial Real Estate & Development Conference this morning at Potawatomi Bingo Casino. More than 400 people attended the conference.
For the short term, the panelists expect a “jobless recovery.”
They are encouraged that the nation’s gross domestic product improved in the third quarter. Employment will be the next lagging indicator, followed by occupancy rates at properties.
The panelists are most bullish on the industrial space market, and they said that should bode well for the Milwaukee region, rather than the coasts.
“I think Milwaukee and the Midwest in general is the best-positioned region in the United States. I would be rather upbeat. It will be slow, but it will be steady,” said Rhyne Brown, executive vice president of client development at NAI Global.
Jack Durburg, executive managing director of the Chicago region for CB Richard Ellis, and Ross Moore, executive vice president and director of market and economic research at Colliers International, agreed that the industrial property market is better-positioned for recovery than office or retail.
As jobs are created, consumer spending will rise, followed by the need for additional manufacturing and distribution, which will benefit the Midwest, according to panelist Maria Sicola, executive managing director and head of research for the Americas at Cushman & Wakefield Inc. in San Francisco.
Robert Bach, senior vice president and chief economist of Grubb & Ellis Co., said the industrial market is challenged by a shortage of demand, rather than an “over-supply” problem.
The panelists said they are “doves” about worrying about the threat of inflation, and they said the credit markets are slowly loosening.
Banks are engaged in a practice of “extend and pretend” in addressing distressed real estate liabilities on their balance sheets.
Brown predicted a “managed tsunami” of bad commercial real estate debt coming due, and he said up to 200 more banks may need to be closed by the Federal Deposit Insurance Corp. (FDIC).
The seventh annual BizTimes Commercial Real Estate & Development Book will be published with Friday’s edition of BizTimes Milwaukee.

The economy is undergoing a “generational shift” toward saving and investing, and the shift is paving the way for economic recovery, according to Bruce Bittles, chief investment strategist for Robert W. Baird & Co. Inc., and Rod Smyth, chief investment strategist and founding partner for Riverfront Investment Group.
Bittles and Baird offered their 2010 outlook as part of a Baird Market and Economic Outlook event held today.
Unquestionably, the past 18 months have been one of the most dramatic periods in the history of the U.S. economy and financial markets, Bittles said. The good news, according to Bittles, is that it appears the economy has survived, and there are signs of economic improvement.
"Fundamentally, we're experiencing a generational shift from borrowing and spending toward a renewed focus on saving and investing, and a movement away from risk," Bittles said. "It's encouraging that consumers are beginning to pay down some of their debt. This increase in savings and investing will lay the foundation for a new secular bull market."
Smyth added, "It is the paradox of thrift. While it is undoubtedly right for individuals to save in this environment - and there will not be sustainable growth without it - if everyone saves, no one spends. Policymakers are facing a difficult choice.”

Kohl's Corp. today reported that its third quarter net income increased 20 percent to $193 million, or 63 cents per share, from $160 million, or 52 cents per share, a year ago.
The Menomonee Falls-based department store chain’s quarterly net sales were $4.1 billion, an increase of 6.5 percent over the same period a year earlier. Comparable store sales for the quarter increased 2.4 percent.
Kevin Mansell, Kohl's chairman, president and chief executive officer, said, "We were pleased with our sales performance in the third quarter as we achieved a positive comparable sales increase in a very difficult environment. In addition, we continue to experience improvement in inventory management and increased penetration in "Only at Kohl's" brands that have led to increased cash flow and consistently improved gross margins. Our expense performance allowed us to enjoy significant leverage on the increased sales. As we enter the fourth quarter, we will continue to focus on providing value for our customers as we expect them to continue to be conservative in their spending during this holiday season."
For the fourth quarter, the company expects total sales to increase between 3 and 6 percent; comparable store sales to range between negative 1 and positive 2 percent; and gross margin as a percent of sales to increase 50 to 60 basis points over last year. The company expects selling, general and administrative expenses to increase between 4 and 5 percent. This would result in earnings per diluted share of $1.14 to $1.24 for the fourth quarter and $2.98 to $3.08 for fiscal 2009.

In its continuing initiatives around “Doing What's Right,” S.C. Johnson & Son Inc. announced its first commitment as part of its involvement in the Clinton Global Initiative (CGI).
Founded by former President Bill Clinton in 2005, CGI brings world leaders from a variety of backgrounds together to create partnerships that result in innovative and measurable solutions to some of the world's most pressing challenges.
SC Johnson is rolling out a new anti-malaria information, education and communication (IEC) program, based on the success of the company's previous anti-malaria initiatives. In partnership with the Global Business Coalition (GBC), an organization focused on helping companies fight malaria on a global scale, a repository of malaria-related information will be created for non governmental organizations (NGOs), governments, businesses and community health groups to help them support their local populations in Africa and other parts of the world where families are at risk of contracting malaria. All of the information will be shared with these groups electronically either via the GBC website or via email. The program will provide valuable resources and best practices for organizations and people motivated to educate others on the risks of malaria, as well as its prevention and treatment. In essence, it will be a one-stop-shop for anti-malaria information.
"S.C. Johnson is honored to make this commitment to the Clinton Global Initiative. CGI has an outstanding record of doing what's right by creating partnerships that deliver results," said Jane Hutterly, S.C. Johnson executive vice president of worldwide corporate and environmental affairs. "Through our collaboration with the Global Business Coalition, we can make our goals a reality. Together we can make a difference by empowering people with education and tools to fight the ravages of malaria."

The stock market took a breather today, even though the U.S. Labor Department reported that the number of people filing initial claims for state unemployment benefits fell by 12,000 to a seasonally adjusted 502,000 in the week ended Nov. 7.
That's the fewest weekly initial claims since early January. Initial jobless claims have hovered above 500,000 for 52 straight weeks, as the unemployment rate has climbed to a 26-year high of 10.2 percent.
Local stocks in the BizTimes Stock Index also retreated this morning. The largest local decliners this morning were Joy Global Inc. (down $1.72 to $55.45) and Bucyrus International Inc. (down $1.23 to $52.14). The largest local advancers this morning were Koss Corp. (up 59 cents to $12.79) and Wisconsin Energy Corp. (up 12 cents to $45.28).
In Washington, D.C., today, President Barack Obama announced he will hold a job creation summit in December.
U.S. Sen. Russ Feingold, who recently announced he will introduce a job creation tax credit bill that is being applauded by Wisconsin businesses, said, “I welcome the president’s announced jobs summit and the administration’s commitment to helping unemployed Americans get back to work. While our nation faces serious challenges at home and abroad, creating jobs in this down economy must be a top priority. I very much hope the temporary jobs tax credit I am developing will be considered by those attending the jobs summit. While there’s no easy way to solve the unemployment problem, the jobs tax credit would be a targeted and responsible tool to help businesses hire workers and bring down unemployment. I am happy with the positive response it has received from some of my colleagues so far. I will continue to work with the administration and others to address this pressing need to create jobs and get Americans back to work.”

WPS Health Insurance will offer its Patient Choice health insurance option at a two-year fixed rate for Metropolitan Milwaukee Association of Commerce (MMAC) members. Read more about the offer in this week’s edition of the BizTimes Bubbler, which also includes a profile of Dale Muehl of Wipfli LLP.

A new Pew Center for the States report that predicts Wisconsin is one of nine states on the path to follow California into financial ruin is wrong, according to Michael Morgan, secretary of the Wisconsin Department of Administration and author of today’s Milwaukee Biz Blog.

The Madison City Council on Wednesday preserved up to $16 million in public assistance in the city’s 2010 capital budget for a proposed $93 million redevelopment by Brookfield-based Hammes Co. of The Edgewater hotel. In doing so, the council gave Mayor Dave Cieslewicz his second major capital budget victory. The council on Tuesday agreed to the mayor's financing plan for a $37 million central library at North Henry and West Washington Streets. The library is the largest city building project since Monona Terrace opened in 1997 and the $16 million in tax incremental financing for the Edgewater would be among the city's largest TIF investments. The library will move forward but the TIF "placeholder" for the Edgewater doesn't guarantee the council will later approve the Edgewater project or any TIF money for it. Read more in BizTimes Milwaukee's daily roundup of headlines from newspapers across the state at www.biztimes.com/#news.