We’ve all seen the headlines about the economy taking off post pandemic and based on my personal life experience I’m inclined to agree.
Both my wife and daughter have conditions that gave them great concern about Covid and like many other families we have been in “lock down” mode for the past year. During this time, our spending has been reduced by approximately 25% – – fortunately, our income was not.
So why am I so confident that the economy will come roaring back over the next 18 months?
Throughout my 25+ year career, my personal finances have largely reflected the national economy. When you work in the commercial real estate business, you live on the “margin” of the economy. Unlike those employed in education, public safety, medicine and similar occupations who help our world function every day regardless of economic conditions, those of us in commercial real estate operate more on the margin. In other words we benefit financially MORE when the economy is thriving whereas we are typically harmed more when the economy isn’t faring well.
During the recession of the early 90’s, I got started in the brokerage business primarily because there were few other opportunities in the market. In hindsight I feel fortunate that the lack of other opportunities led me to a career in a field that I truly enjoy. In time I bought a home and started spending just as the economy expanded in the 1990’s and spent most of the decade leasing up all the spec space that had been built in the late 1980’s and earned enough income to be a strong economic contributor.
Then the Y2K and 9/11 recession followed and caused the investment sales business to “pause” and my income dropped which meant my spending did as well. As the nation recovered and business picked up, so did my income and spending. During the early 2000’s, I sold and bought a house and watched my equity grow which gave us the confidence to take some nice family vacations and comfortably spend—all in all the Umansky family did well during that period of time.
Then the Great Recession hit in 2007. Fortunately, I’m financially conservative and entered this era with cash in the bank otherwise we most certainly would have endured hardship. I had just recently left the brokerage business to start syndicating deals. Regardless of whether I had done this or stayed in brokerage, my income would have dropped significantly. The investment sales business in the 2008 to 2010 period was terrible BUT so was trying to be a syndicator. So for three years our family of five lived off of savings. Needless to say there were no vacations, very little eating out, and certainly as few home improvements as possible.
I started Progressive Real Estate Partners in 2009 because I realized the vast need to lease all of that vacant space resulting from the recession. Paul Galmarini, who was very early in his career, was the first to join the team and together we started taking on listings and leasing and selling retail real estate in SoCal’s Inland Empire which entirely changed both our financial situations for the better.
The PREP team grew to include 15 people and everyone benefitted from a steady economic expansion over the next decade. My family certainly did its part to contribute to the economy during this time frame including seeing three young adults through college.
Then the Pandemic struck and, although our income did not change, our expenses went down substantially resulting in further savings. Whether by choice or mandate, we have deferred vacations, dining out, and all forms of entertainment (we especially miss live theater and movie theaters). After being home bound this past year, we have realized numerous items that need repair or that we want to change.
We just received our first vaccines and expect to get our second doses shortly so by the end of April, our comfort level with interacting with society will certainly go up. Therefore, the economy is about to boom in the Umansky household because soon we will return to a more normal life. We will start to eat out again. We plan to purchase a new heating and air conditioning system. We will go back to the dentist, the optometrist, and other medical services we have been deferring. We will fix a bunch of small electrical and plumbing issues. We will hire painters to paint some rooms, purchase new window coverings, and more. We eventually will get comfortable enough to get back on an airplane, stay in a hotel, go to the movie theater, attend live theater, and go back to Santa Anita Racetrack (one of my favorite places), and so much more.
Hence, I find that once again my family is the marginal economic indicator. And, as we like many others come out of hibernation, and deploy our pent-up demand I expect the economy will strongly recover. Our spending will multiply as every time we make a purchase, those with whom we spend money will spend, and so on. I truly look forward to seeing all the retail related businesses that have suffered grow and prosper in this upcoming expansion.
In closing, let me say how incredibly grateful I am to the Progressive Real Estate Partners team for allowing me to lead through computer meetings and email over this past year. The team has been amazing and if not for the fact that they all took calculated risks, my circumstances would have been much different. I’m also grateful to our many clients that have continued to trust us with their business during this trying time which goes to the heart of what this business is all about at the end of the day – – building strong relationships.
And, for those who have endured hardship due to the pandemic, I’m sorry and hope that you benefit greatly from the strong economy I predict we are all about to enjoy.
I look forward to meeting up in person in the very near future and in the meantime, you can always connect with me by email, text or phone at firstname.lastname@example.org or 909.816.4884! Stay well friends.