Being bullish about the economic future
As we’ve moved into April, the traditional start of our top retail quarter, dealership teams should be pumped by the economic indicators that continue to move in our direction, especially news that Fannie Mae just announced a healthy profit.
Remembering that a housing recovery is critical to the growth of boat sales, the latest news is just what we’re looking for. Home prices are up, foreclosures are down and new-home construction is rising.
Home prices rose 8 percent in January, recording the biggest increase since the housing bubble burst. Overall, housing prices have risen 9 percent since bottoming out in March 2012. Moreover, the number of foreclosures has reached its lowest level since September 2007.
But here’s the latest affirmation that the housing is in recovery: Fannie Mae has reported its biggest yearly profit ever.
The mortgage giant that crashed five years ago earned a reported $17.2 billion and predicted it will remain profitable “for the foreseeable future.” In the October-December period alone, it earned a quarterly-record $7.6 billion, reflecting the momentum in housing’s rebirth.
The importance of Fannie’s profitability can’t be overstated. Once the icon for the disastrous end to the days of wine and credit, Fannie and the smaller Freddie Mac are firms that don’t actually make loans. They buy mortgages from lenders, package them up as bonds and sell them to investors with a guarantee against default. And while they clearly joined the banks in the race to make risky loans without even checking applicant incomes and assets, the recovery of Fannie definitely helps make mortgage loans available and, therefore, exerts a strong positive influence in the housing recovery.
Now, if you’re going to tell me you read that new-home sales were actually down 4.6 percent in February, don’t bother. It doesn’t change the outlook. It was an anomaly due to rough weather and the fact that February is a slow month for home sales.
Moreover, don’t hang your hat on the Consumer Confidence Index. It bounces around like Jodi Arias’ memory on the witness stand. I choose to see that consumer spending is up, housing is up, lending is up and the fewest workers on record were furloughed in January, the least since 2001, according to the Labor Department.
The number of jobs waiting to be filled has increased by 81,000 to 3.69 million. It’s a good signal that employers are confident this recovery will continue. Perhaps those new employees will be buying cars and that’s why J.D. Power and Associates is forecasting new car sales will grow significantly in 2013, up 6.25 percent from 14.4 million units last year to 15.3 million units this year.
As a percentage, I’m betting that our retail boat sales growth this year will easily surpass the 6.5 percent expected for new cars. That’s because I don’t dismiss the positive empirical evidence we’re seeing, even when it might conflict with some of my own preconceptions.
To do otherwise is like naming your boat Titanic II — you’re just asking for it. Mark Wilkinson of Birmingham, England, proved it when he launched into a Dorset harbor his 16-footer with Titanic II neatly lettered on its side. The boat sank.