House-Hold Spending

April 4, 2014
Elliot Eisenberg, Ph.D.,  GraphsandLaughs, LLC

Elliot Eisenberg, Ph.D.,
GraphsandLaughs, LLC

Before the Great Recession, household wealth peaked at $68.8 trillion or $254,600 per person. If that seems like more money than you have, it’s because wealth isn’t evenly distributed. The rich have much more of it than the poor. As a result, back in 2007 the median family had wealth of just $126,000 while the average family had $584,000. Then the recession hit, house prices plunged, stock markets cratered and household wealth hit a low of $56.6 trillion in 2009. Since then stock markets around the world have staged a remarkable recovery and house prices have been steadily recovering. As a result, household wealth now stands at $80.7 trillion, almost $12 trillion more than before the recession. So things have more than recovered, right? Not quite.

Since 2007 there has been inflation and the US population has grown by 20 million people. As a result, inflation-adjusted per capita wealth is now $254,000, just a shade less than it was before the Great Recession. So we are at least back where we were before the recession hit, right? Not so fast. The problem is that the asset price recovery has been profoundly unequal and that has caused the distribution of wealth to change dramatically. And that has huge implications for the economy.

Homeowner equity hit $10 trillion last quarter, and while way up from a low of $6.3 trillion in 2011, it’s nowhere near the pre-recession high of $13.4 trillion. By contrast, equities have soared and are now worth almost $23 billion, way more than their pre-recession high of $18.3 trillion. The economic kicker is that equities are primarily owned by upper-income households, while home equity is the major source of wealth for everybody else. This means that while the rich are roughly $5 trillion wealthier than they were before the recession, all other households are about $3.5 trillion poorer. And while the upper classes spend more when their wealth increases, it’s nothing like the increase in spending that occurs when the rest of the population feels better off.

A huge chunk of middle class spending is the result of tapping into home equity via cash-out refinancing. Regrettably, despite rising home prices many households are still under water, credit remains harder to get than ever before, and many households now have mortgages with extremely low interest rates and are simply unwilling to tap into their home equity. As a result, mortgage equity withdrawal has nearly stopped. After peaking at $320 billion in 2006, it was just $32 billion last year, a decline of almost $300 billion, and that is the highest it’s been since 2010!

In addition to the rich, another group that has done well is older Americans. Families headed by someone under 40 have on average recovered only one-third of their lost wealth, but families headed by someone middle-aged or older have recouped all their losses as more of their wealth is in stock and less in housing. And regrettably the middle-aged and the elderly, like the wealthy, are less likely to spend their capital gains than younger middle class families.

As a result of the profoundly uneven wealth recovery, spending on luxury goods has done very well but firms that rely on middle class spending are not enjoying nearly as much of a renaissance. For that to change wages will have to start rising.

Elliot Eisenberg, Ph.D. is President of GraphsandLaughs, LLC and can be reached at His daily 70 word economics and policy blog can be seen at

Reservations About The Dollar

March 4, 2014
Elliot Eisenberg, Ph.D.,  GraphsandLaughs, LLC

Elliot Eisenberg, Ph.D.,
GraphsandLaughs, LLC

Since the start of the Great Recession of 2008 and the Fed’s decision to inject trillions of dollars into the banking system, there has been constant talk of the US dollar losing its position as the world’s reserve currency, the position it has held since the end of WWII.  After all, our debt is huge and growing, DC is thoroughly dysfunctional, our share of the world economy is shrinking and China is increasingly pushing for a post dollarcentric financial system.  Despite all the concerns above, the dollar’s position as the reserve currency of the world is safe for a long while.

First, which currency can realistically unseat it?  The British pound is simply too small to do the job as the British economy is about 1/7th the size of the US economy.  As for the euro, while it is large enough, there are too many structural problems including weak growth, over taxation, an inflexible central bank and the outside possibility of the collapse of the monetary union to entice many central banks to significantly increase their euro holdings.

As for the Yen, Swiss Franc or Chinese renminbi, you have got to be kidding!  With a debt to GDP ratio greater than that of Greece, Japan makes the US look downright fiscally responsible. Moreover, Japan and Switzerland are both pushing down the value of their respective currencies making them that much less appealing to hold.  Lastly, the renminbi does not freely float and there are significant foreign exchange controls in place.  As a result, it will take at least a decade before China has the necessary legal framework and deep and open financial markets that are a necessary prerequisite before the renminbi can become a credible reserve currency competitor.

Second, because of increased capital flows between nations due to increases in trade and investment, central banks have been repeatedly told by their respective governments to hold larger quantities of safe and easy-to-sell assets which can be easily liquidated in time of crisis.  As a result, total foreign reserves have nearly quadrupled in the past decade and this has dramatically increased the demand for dollars.  For example, when foreign capital suddenly flees a developing nation, it puts downward pressure on the local currency.  By selling some of its dollar holdings to purchase its own currency, a country can stabilize its currency and avoid large currency swings.  Moreover, simply holding a large supply of highly liquid foreign assets, like dollars, discourages speculation and demonstrates that a nation has the necessary reserves to pay foreign creditors for things like oil and wheat.

Lastly, with large holdings of dollars the last thing foreign nations want to do is harm the dollar as that would reduce the value of their holdings and that, in and of itself, reinforces the dominance of the dollar and thus improves its stability.  That is at least partly why for the past 15 years 60% of world foreign exchange reserves have consistently been in dollars.  Were that percentage to slowly fall to 50% over the next few decades, it would matter relatively little.

To sum up, despite lots of talk, there exists no strong competitor to the US dollar and one is unlikely to appear anytime soon.

Elliot Eisenberg, Ph.D. is President of GraphsandLaughs, LLC and can be reached at  His daily 70 word economics and policy blog can be seen at

The HBA Home & Garden Show presents the People’s Choice Award for Best Landscape Display to Hiner Landscapes

February 27, 2014

Home & Garden Show Logo 150pThe Housing & Building Association of Colorado Springs’ annual Home & Garden Show again proved to be a great community event. Nearly 7,000 people attended the Show on the weekend of February 21-23 at the Freedom Financial Services Expo Center.

The HBA Home & Garden Show is the largest, most unique Home & Garden Show in Colorado Springs; it showcases landscapes designed for Colorado living, as well as sun rooms, water features, fire pits, outdoor living areas and the long awaited spring colors.  This year, we asked attendees to vote for their favorite landscape display with a gold coin.  The competition was close, with Hiner Landscapes taking top honors.

During the show, a number of informational seminars were enjoyed by the public.  Seminars covered a wide range of diverse topics, including “Suitable Plants for Our Local Climate” by Harding Nursery and “Maximizing Your Remodeling $$$” by DreamMaker Bath & Kitchen.  Anglers Covey presented Introduction to Fly Fishing Classes and the Brew Brothers Brewing Club was on hand to introduce attendees to home brewing.

Sunday morning, Harding Nursery presented the first 200 attendees with a free flower and Janice Geerts of Fountain was the lucky winner of a 4-person hot tub, courtesy of Hanson HotSpring Spas.

Admission was free on opening day of the Home & Garden Show and donations were accepted for Care and Share Food Bank of Southern Colorado.  The generosity of the attendees was amazing – the Home & Garden Show donated 597 lbs of food along with $441 in cash.  Next year, we will collect donations throughout the weekend and pack the Mike Shaw truck with donations for Care and Share!!

The HBA would like to thank all of the vendors who participated in another special show for Colorado Springs.

The HBA would also like to thank our sponsors; Champion Windows, C & C Sand and Stone, Hanson HotSpring Spas, Harding Nursery and Mike Shaw Buick GMC.  Thank you to our media partners, The Gazette and Cumulus Media.

HBA Home & Garden Show opens on Friday!

February 19, 2014

Home & Garden Show Logo 150pBefore you know it Spring will be here, So…it’s time to plan that special project you’ve been thinking about. Gather ideas to renovate, redecorate and landscape your home. The HBA Home & Garden Show will feature the areas most innovative manufacturers and sellers of home and garden products.

Come visit the biggest Home & Garden show of the year presented by the Housing and Building Association of Colorado Springs (CSHBA).  The Show will be held Friday, February 21 through Sunday, February 23 at the Freedom Financial Services Expo Center in Colorado Springs.

The great event is celebrating its 56th year.  “Each year we try to make the Show a little better – giving the public something new and exciting to experience.  This year’s show will feature more than 6,500 square feet of amazing landscape displays that allow the public to see first-hand how they can transpire their home” said Matt Hiner, President of Hiner Landscapes and Chair of the Home & Garden Show.

For decades, HBA has hosted the most well known show in Colorado Springs which features everything from A – Z for homeowners – with displays showcasing spas, kitchens, windows, home accessories, siding, decks, carpet, remodeling and new home building, just to name a few.     But the biggest attraction is the over six thousand square feet of spectacular garden displays seen throughout the show!

Fri. 3 pm – 7 pm * Sat. 10 am – 6 pm * Sun. 11 am – 4 pm
$5 Adults * $4 Seniors & Military * Kids 16 and under FREE.  Everyone is free on Friday!

FREE FRIDAY – Free admission for all on Friday from 3-7pm; donations to Care and Share will be accepted.
FREE Seminars throughout the weekend.  Learn what you need to do to keep your yard and plants thriving during the pending water restrictions.

NEW THIS YEAR!  Learn the basics of Fly Fishing from local experts Anglers Covey at noon on both Saturday and Sunday!  And learn about home brewing from the Brew Brothers home brewing club!

FLOWER GIVEAWAY! – Sunday, February 23 * while supplies last, courtesy of Harding Nursery
One lucky attendee will win a $4,000 hot tub, courtesy of Hanson HotSpring Spas!

The Freedom Financial Services Expo Center is located at 3650 N Nevada Avenue.  Conveniently located between Austin Bluffs and Fillmore, just off I-25.  The Show is sponsored by C & C Sand and Stone Co., Champion of Colorado Springs, Hanson HotSpring Spas, Harding Nursery and Mike Shaw Buick GMC.

The HBA of Colorado Springs is a non-profit trade association comprised of member companies. The local association is affiliated with the Colorado Association of Home Builders and the National Association of Home Builders, which has more than 231,000 member companies nationwide.  The HBA of Colorado Springs is committed to promoting policies that allow for the production of safe, decent and affordable housing and to enhancing the environment for the housing and building industry in El Paso County.

The Housing & Building Association of Colorado Springs’ Parade of Homes Receives Best Of Houzz 2014 Award

February 13, 2014

Best of Houzz 2014Colorado Springs, CO February 13, 2014 – The Housing & Building Association of Colorado Springs’ Parade of Homes of Colorado Springs, CO has been awarded “Best Of Houzz” by Houzz, the leading platform for home remodeling and design. The Parade of Homes was chosen by the more than 16 million monthly users that comprise the Houzz community.

The Best Of Houzz award is given in two categories: Customer Satisfaction and Design. Customer Satisfaction honors are determined by a variety of factors, including the number and quality of client reviews a professional received in 2013. Design award winners’ work was the most popular among the more than 16 million monthly users on Houzz, known as “Houzzers,” who saved more than 230 million professional images of home interiors and exteriors to their personal ideabooks via the Houzz site, iPad/iPhoneapp and Androidapp. Winners will receive a “Best Of Houzz 2014” badge on their profiles, showing the Houzz community their commitment to excellence. These badges help homeowners identify popular and top-rated home professionals in every metro area on Houzz.

“Any one involved in the housing industry knows two things for sure with regards to reaching the home buying consumer – participate in the Parade of Homes and have a strong presence on HOUZZ!  The Colorado Springs Parade of Homes is excited to be voted Best of Houzz 2014.  The only thing better than the beautiful photos that showcase our participating home builders are the homes themselves!” stated Shelley La Judice, President of The Marketing Group and the Chair of the 2014 Parade of Homes.

“Houzz provides homeowners with the most comprehensive view of a home improvement professional on the Web, empowering them to find and hire the right professional to execute their vision,” said Liza Hausman, vice president of community for Houzz. “We’re delighted to recognize Colorado Springs Parade of Homes among our “Best Of” professionals for design as judged by our community of homeowners and design enthusiasts who are actively remodeling and decorating their homes”.

With Houzz, homeowners can identify not only the top-rated professionals like Colorado Springs Parade of Homes, but also those whose work matches their own aspirations for their home. Homeowners can also evaluate professionals by contacting them directly on the Houzz platform, asking questions about their work and reviewing their responses to questions from others in the Houzz community.

The 2014 Parade of Homes will be held August 1 – 17 and marks the 60th Anniversary of the Parade!  The Parade of Homes offers the general public a first-hand look at the current trends and innovations in new home design. This event showcases the latest design trends. Each home is professionally judged for a multitude of features including landscaping, floor plan, architectural exterior, interior decorating etc. and every year the HBA includes the People’s Choice Award.  The People’s Choice Award is voted on by those who attend the Parade and is the most coveted award by the builders.  in affordable living to luxury dream homes complete with every amenity imaginable.

Follow Colorado Springs Parade of Homes on Houzz

About the Housing & Building Association of Colorado Springs

The Housing & Building Association of Colorado Springs is a member trade association made up of companies that include not only builders, developers, and remodelers, but also trade contractors, materials suppliers, mortgage lenders, Realtors, title companies, interior designers, architects, landscapers, and many more! Our members all play a vital role in the construction industry in Colorado Springs and surrounding areas.

About Houzz

Houzz is the leading platform for home remodeling and design, providing people with everything they need to improve their homes from start to finish – online or from a mobile device. From decorating a room to building a custom home, Houzz connects millions of homeowners, home design enthusiasts and home improvement professionals across the country and around the world. With the largest residential design database in the world and a vibrant community powered by social tools, Houzz is the easiest way for people to get the design inspiration, project advice, product information and professional reviews they need to help turn ideas into reality. For more information,

Interest Rate Movements: What Are They Telling Us?

February 10, 2014
Elliott Eisenberg, Ph.D.

Elliott Eisenberg, Ph.D.

Over the last eight months interest rates have gyrated more dramatically than in years.  This process has not only whipsawed investors but seriously called into question the nascent housing recovery.  After all, how can housing starts rise from their near historic lows if rates are one percent higher than they were in late spring and with interest rates expected to rise somewhat higher over the course of 2014?  Is not the housing sector highly interest rate sensitive?  And isn’t the Federal Reserve deliberately buying tens of billions a month in mortgage backed securities to keep 30-year mortgage rates low to help the housing market?  Relax.  While new residential construction is indeed interest rate sensitive, it is also heavily dependent on other macroeconomic factors and they will more than compensate for the recent rate rise.

To use an analogy, interest rate movements are like a thermometer.   A rise in body temperature may or may not be a good thing; it all depends on the initial level.  A rise in body temperature of two degrees from 94 degrees to 96 degrees is excellent news and suggests a patient recovering from hypothermia.  By contrast, a rise in body temperature of an adult from 102 to 104 is serious, and suggests a very ill patient in need of prompt medical attention.  Changes in interest rates should be similarly viewed.

Interest rates are the cost of borrowing money.  When times are good and economic growth is robust, interest rates rise because investors borrow funds for investment purposes while households borrow to finance purchases of cars, houses and other big ticket items.  This increase in demand raises rates and this rise is healthy.  Returning to our thermometer analogy, this would be like a rise from 96 to 98 degrees.  Sometimes, however, the economy grows so fast that shortages of workers and supplies start to materialize, resulting in inflation.  If allowed to fester, inflation can spin out of control.  That is why interest rates continually rose during the 1960s and 1970s.  Eventually, things got so bad the Federal Reserve raised rates to 20% to weaken the economy and squeeze inflation out of the system.  This would be equivalent to a rise in body temperature from 103 to 105 degrees.  This rise was necessary but was a sign of a profoundly sick economy.

Until recently, despite amazingly low interest rates, no one borrowed; witness the ridiculously low levels of new home construction and investment in plant and equipment by firms, because everyone was pessimistic about the future.  This would be akin to fall in temperature from 95 to 93, a bad sign.  However as the economy improves, and trust me it is, albeit way too slowly, and as we become increasingly optimistic about the future, interest rates will rise and this is what is finally starting to happen.  The thermometer is now in the process of going from 94 to 95.

In this early phase of the recovery, firms hire workers, begin buying equipment and start building plant.  As a result, unemployment rates decline, wages start rising and household spending increases.  And this boosts GDP growth, which results in yet more corporate spending and more household consumption on, among other things, housing.  Given the immense slack in our economy this process could last several years, accompanied by slowly rising interest rates akin to the thermometer rising from 96 to 98.6!

Elliot Eisenberg, Ph.D. is President of GraphsandLaughs, LLC and can be reached at  His daily 70 word economics and policy blog can be seen at

Government Affairs Report – 1/2/14

January 2, 2014
William Mutch VP of Government Affairs

William Mutch
VP of Government Affairs

Happy New Year!

Board of County Commissioners Approves HBA Position Regarding Fire Codes

On December 17th, the El Paso County Board of County Commissioners approved an amended series of Fire Codes incorporating HBA’s suggested amendments into the 2009 International Fire Codes.  These changes included the removal of the rural water fund and also exempted individual single family lots from a fire review as part of the subdivision process.  Fire reviews will only be required for large subdivisions defined as those over 5 lots by the County’s Land Development Code (LDC) where water supplies, access roads and addressing needs will be identified and required.  County staff has also been directed to begin a process of reviewing the Land Development Code to ensure consistency with the fire code and that a workable process for fire reviews (especially within the Wild land Urban Interface) are included in the LDC.  Please contact Marla Novak for more information at: or (719)231-3906.

City of Fountain Postpones Action on Fire Codes

On December 17th, HBA worked with the City of Fountain Fire Department, and City Council, urging a delay of the adoption of proposed fire code amendments until a joint working group could be formed between HBA and the City of Fountain for a full review.  The City of Fountain City Council gave their unanimous approval to the working group process and HBA looks forward to working with the City on the next code adoption process.  Prior to the Council action, HBA had provided comments to the City of Fountain Fire Department and HBA’s comments were well received by the Department and incorporated into the proposal before Council on the 17th.   HBA is reviewing the proposed changes and will meeting with fire department staff on January 10th.  Please contact Marla Novak for more information at: or (719) 231-3906.

HBA Provides Comments to the EPC 1041 Transportation Package

Also on December 17th, Kyle Campbell with Classic Consulting, appeared before the El Paso County Board of County Commissioners during their work session regarding implementation of their proposed 1041 regulations for transportation.  HBA had previously provided comments to this regulatory package through a working group process and HBA’s comments were incorporated into the draft.   The County Commissioners have moved the package forward to a future hearing date along with the HBA recommendations.  HBA’s suggested changes dealt with consistency of transportation definitions between the 1041 rules and the County’s Engineering Criteria Manual (ECM).  HBA’s main concerns were outlined during the working session with the Commissioners and re-affirmed:

That a 1041 permit is not required for:

1)      Arterial highways and interchanges and collector highways planned or constructed within the scope of an application under the El Paso County Land Development Code;

2)      Arterial highways and interchanges and collector highways owned, maintained, or constructed by El Paso County

3)      Arterials highways and interchanges and collector highways included within funding categories A, B, or C of the Pikes Peak Rural Transportation Authority.

HBA greatly appreciates the collaborative process on this regulatory package with El Paso County, and HBA will continue monitoring this issue as it moves through the approval process with the Board of County Commissioners.  Please contact William Mutch for more information at: or (719) 592-1800 Extension 16

William D. Mutch

Vice President of Government Affairs

Housing & Building Association of Colorado Springs

4585 Hilton Parkway, Suite 100

Colorado Springs, CO  80907

719-592-1800 ext. 16

720-308-3497 Cellular


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