Houston Texas Real Estate - Are We Included in the Recovery?

U.S.
- The March employment report reveals how the recovery will likely unfold, with manufacturing playing a larger role than the service sector and construction continuing to lag.
. Economic growth will be driven largely by underlying demand rather than by fiscal and monetary stimulus, but at a slower pace than the past.
- Consumer spending has begun to show signs of growth, as holiday retail sales were better than expected and spending has held up well during the first quarter.
. Real personal consumption expenditures are expected to rise at a 2.8 percent annual rate in the first quarter, with gains in nearly all categories.
. Discretionary spending has also shown signs of improvement, thanks in part to a rebound in the stock market and stability in home prices.
- Oil prices, which remain near $85 a barrel, are foreto continue rising, and gasoline prices appear destined to reach $3 a gallon this summer.
- Interest rate yields have also begun to rise, as the 10-year Treasury note briefly rose above 4 percent in early April.
. Mortgage rates are expected to reach 6 percent this spring, further hampering the already sluggish recovery in housing.

International
- The global recovery that began in mid-2009 has remained intact thus far, as measured by industrial production.
. Recovery is strongest in Asia, with China leading the pack, but other advanced economies such as Japan and Korea are showing signs of further growth.
. Western Europe has begun to recover as well, albeit at a slower pace than of other industrialized regions.
. In Latin America, signs of recovery have appeared, with growth in Brazil surpassing its previous peak.
- Our forecalls for a continued global upturn, with the risk of a renewed downturn in Europe.
. The biggest risk to economic growth in the euro zone this year is related to the debt crisis, which has been most readily apparent in Greece.