The National Debt: Growing but More Slowly

September 8, 2014
Elliot Eisenberg, Ph.D.,  GraphsandLaughs, LLC

Elliot Eisenberg, Ph.D.,
GraphsandLaughs, LLC

The federal debt routinely captures headlines and continually grows but is there a crisis? Should congress fix the debt immediately, or have we made enough progress? Turns out, in the short-run we are fine, but there is heavy lifting that must yet be done if we are to get to a sustainable path.

While the debt is huge, it’s the ratio of debt to GDP that matters. Ignoring debt held by government agencies (such as the $5 trillion in IOUs held by the Social Securitv Administration), and focusing on debt held by households, firms and foreigners and upon which the treasury pays interest, the total amount of money the government has borrowed equals, $12.6 trillion, close to 75% of GDP.

To give some perspective, before the Great Recession the debt was 35% of GDP and it was projected to gradually rise to 50% of GDP by 2018 as more Baby Boomers became eligible for Social Security and Medicare and as healthcare cost rose. Then came the Great Recession which resulted in more borrowing as tax receipts fell and more had to be spent on countercyclical social programs including unemployment benefits and food stamps. As a result, debt rapidly rose to 50% of GDP and was projected to rise to 70% within a decade. Then to fight the Great Recession, President Obama persuaded Congress to pass the American Recovery and Reinvestment Act (aka “The Stimulus”) an $800 billion package of tax cuts and spending increases. That along with the weak recovery pushed the debt to 70% of GDP by 2011 and it was projected to rise toward 100% of GDP by 2021 as the economy returned to health and interest rates rose towards normal levels.

At that point things looked grim. Then came some big changes that dramatically improved things. Congress raised taxes on upper income families, cut discretionary spending, and the rate of increase in government spending on healthcare, particularly on Medicare, unexpectedly slowed by 2.25%/year. That improved the projected trajectory of the debt. Now, it is forecast to climb from 75% of GDP today to 80% of GDP by 2024 and it’s projected to climb higher after that. While the debt is high by historical standards, at least it’s getting worse more slowly, at least in the short-run.

The good news, outside of Social Security and Medicare, projected revenues and spending are balanced. The key to balancing the budget is closing the gap between promised future Medicare and Social Security benefits that are actuarially higher than future taxes earmarked for those programs. This can be done by cutting benefits, raising taxes or ideally some of both. Moreover, the earlier these changes are made, the less painful they will be. A second way to fix the budget; pass pro-growth legislation. This would include reducing tariff and non-tariff barriers via trade reform, reducing marginal corporate and personal income tax rates via tax reform, and enabling illegal immigrants to fully participate in the economy via immigration reform. Collectively these policies would raise annual GDP growth by $80 billion, or 0.5%, which when compounded over time is a huge amount.

Our budget problems now lie largely in the future. That, however, must not distract us from grappling with them soon as time passes all too fast. Moreover, assuring markets that we are solving future budget problems should help promote the current economic recovery.

Elliot Eisenberg, Ph.D. is President of GraphsandLaughs, LLC and can be reached at Elliot@graphsandlaughs.net. His daily 70 word economics and policy blog can be seen at www.econ70.com.


WINNERS ANNOUNCED OF THE 2014 PARADE OF HOMES ANNOUNCED! PEOPLE’S CHOICE AWARDS AND INDUSTRY AWARDS OF EXCELLENCE

September 3, 2014

60year_PH_logoThe Housing & Building Association of Colorado Springs announced the winners of the Peoples Choice Awards and the Industry Awards of Excellence for the 2014 Parade of Homes. This year’s featured homes ranged in price from less than $150,000 to more than $2,000,000. 25 builders presented 28 homes dispersed between 17 communities for the 60th Annual Parade of Homes.

Industry professionals from around the state judged the homes on a number of features including: landscape design, floor plan, architectural exterior, and interior decorating. The coveted People’s Choice Awards are voted on each year by Parade of Homes attendees. This year’s parade was attended by more than 14,000 guests – up 16% from 2013. The People’s Choice and Industry Awards of Excellence are both broken out into multiple categories divided by price point. Industry Awards of Excellence are then further divided among the following eight categories: Best Kitchen, Best Master Suite, Best Interior Design, Best Exterior, Best Landscape Design, Best Architectural Exterior, Best Craftsmanship and Best Overall Home.

On Friday, August 22, winners of both the People’s Choice and Industry Awards of Excellence were honored by the HBA at the Parade of Homes Awards Banquet held at the Pinery At the Hill with more than 200 in attendance. The sponsor of this year’s banquet was Arlun, Inc. and Ferguson Bath, Kitchen & Lighting Gallery. Luisa Graff Jewelers helped celebrate our diamond anniversary by giving away a diamond necklace to one lucky attendee of the banquet. Congratulations to Melissa Sievers. This was also a fundraiser for our charitable foundation, HBA Cares, raising $1,300.

HBA is proud to announce the winners of the 2014 Industry Awards of Excellence and People’s Choice Awards as follows:

 Under $300,000

Reunion Homes – Grays Peak

Best Kitchen

Best Master Suite

Best Interior Design

Best Floor Plan

Best Architectural Exterior

Best Landscaping

Best Craftsmanship

Best Overall Home

 

$395,000 – $460,000

Vanguard Homes – Hillingdon II

Best Master Suite

 

Oakwood Homes – Evergreen

Best Interior Design

Best Floor Plan

Best Craftsmanship

 

CreekStone Homes – A Little Gem

Best Kitchen

Best Architectural Exterior

Best Landscaping

Best Overall Home

 

$461,000 – $500,000

Vantage Homes – The Valencia

Best Master Suite

Best Architectural Exterior

Best Landscaping

 

Classic Homes – The Monarch

Best Floor Plan

 

Hi Point Home Builders – Princeton

Best Kitchen

Best Interior Design

Best Craftsmanship

Best Overall Home

 

$501,000 – $600,000

Vantage – The Nokota

Best Floor Plan

 

Goeztmann Custom Homes – Mayfield

Best Landscaping

 

Vantage – The Monaco

Best Kitchen

Best Master Suite

Best Interior Design

Best Craftsmanship

Best Overall Home

Best Architectural Exterior

 

$650,000 – $800,000

Elevation Homes – The Shavano

Best Master Suite

 

Stauffer & Sons Construction – Black Forest Revival

Best Landscaping

 

All About Home Design – Field of Dreams

Best Kitchen

Best Interior Design

Best Floor Plan

Best Architectural Exterior

Best Craftsmanship

Best Overall Home

 

$801,000 – $999,000

Copperleaf Homes – The Heritage Estate

Best Landscaping

 

Tuscany Homes – Amalfi

Best Kitchen

Best Master Suite

Best Interior Design

Best Floor Plan

Best Architectural Exterior

Best Craftsmanship

Best Overall Home

 

More than $1,000,000

Saddletree Homes – Colorado Concerto

Best Kitchen

Best Master Suite

Best Interior Design

Best Floor Plan

Best Architectural Exterior

Best Landscaping

Best Craftsmanship

Best Overall Home

 

The Parade of Homes also recognized the Main Sites

Flying Horse

Wolf Ranch

 La-Z-Boy Furniture Galleries provided a grand prize of a $2,500 shopping spree. Parade goers were able to enter the drawing at any Parade home or online.  This year’s winner is Gil Bolibol of Colorado Springs, CO.   Aspen Kitchens presented a prize of an Apple iPad was offered to attendees who visited 26 Parade homes and either registered their ticket at one of the homes or entered onlineThe winner of this prize is Tim Taylor of Colorado Springs, CO.

HBA would also like to thank the following Parade of Homes Sponsors for their generous support:

Presenting sponsor

The Gazette

Title Sponsors

Freedom Financial Services

La–Z–Boy Furniture Galleries

Mike Shaw Buick – GMC

Official Ticket Outlet

Safeway

Media Sponsors:

Cumulus Media

KOAA

 Click here for pictures from the Awards Banquet

About the Parade of Homes

The Parade of Homes offers the general public a first-hand look at the current trends and greatest innovations in new home design. This 17-day event showcases the latest design trends in affordable living to luxury dream homes complete with every amenity imaginable. The 2015 Parade of Homes will be held August 7 – 23. You can download the Parade App from the HBA Newsstand, free, from either the App Store or Google Play.

 

About the Housing & Building Association of Colorado Springs

The Housing & Building Association of Colorado Springs is a non-profit trade association comprised of more than 550 member companies. The local association is affiliated with the Colorado Association of Home Builders with a membership exceeding 3,000 and the National Association of Home Builders which has more than 185,000 member companies nationwide. The Housing & Building Association 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.

 


National Association of Home Builders announces Executive Officer of the Year Award!

August 19, 2014

renee accepting awardThis award honors a dedicated Executive Officer  whose actions, commitments and accomplishments in a single year have been truly exceptional. In addition, the EO promoted the goals of the NAHB Executive Officers Council (EOC)  and assisted in the advancement of his or her peers. This award is in memory of Gary Komarow, former chief legal counsel of NAHB and a very dear friend of the EOC.

This year’s winner of the Executive Officer of the Year Award was Renee Zentz of the Housing & Building Association of Colorado Springs.  Under Renee’s leadership, the local HBA was honored with 4 national awards, including Best Local Government Affairs Effort, Best Workforce Development Plan Implemented, Best Parade of Homes, and Best Publication.

Renee was nominated by  the current and 9 of her Past Presidents  of the Housing & Building Association of Colorado Springs.    Renee accepted her award on behalf of the Colorado Springs HBA members and her team in St. Louis on August 6.   Congratulations to Renee Zentz from the entire Membership of the Housing & Building Association!

Click here to see video


All Bubbles are Not Created Equal

August 11, 2014
Elliot Eisenberg, Ph.D.,  GraphsandLaughs, LLC

Elliot Eisenberg, Ph.D.,
GraphsandLaughs, LLC

In early 2000, the S&P 500 hit 1,553 and the tech-heavy NASDAQ surpassed 5,000. Two years later the S&P was at 768 and the NASDAQ was at 800! In the process, $6 trillion in household wealth was wiped out. We now call that period the dot-com bubble. About half a decade later, we experienced the housing market bubble. Interestingly, the value of residential real estate destroyed during that crisis was also about $6 trillion. Yet the dot-com bubble resulted in a mild recession while the housing bust lead to the Great Recession.   What was different? It turns a major culprit was which households suffered the destruction of wealth.

To set the table, ponder this: During the housing bust, retail spending fell 8% from 2007 to 2009, one the largest drops ever. By contrast, retail spending increased by 5% between 2000 and 2002. Clearly, the losses sustained during the dot-com bust had minimal impacts on household spending decisions and thus on the overall economy. Here is why.

The decline in home prices that began in 2007 was highly concentrated among households with very limited financial resources. As a result, these now much-poorer households dramatically pulled back on spending and in the process unwittingly helped usher in the Great Recession. Remember, retail spending is about a quarter of GDP, so a decline of 8% over two years reduces GDP by 2% — a huge amount. It is as if these poorer households were the transmission mechanism through which the Great Recession got its energy.

Exacerbating and reinforcing this downward spiral was the role of debt or leverage. Remember, by 2004 or 2005 a large percentage of first-time home buyers had low FICO scores, sketchy employment histories and limited assets. To compensate, these Alt-A and subprime buyers borrowed heavily with their now highly levered house being their major financial asset. For example, among the poorest quintile of the population, 80% of their net worth is in their house. Even among the middle quintile, home equity is still 60% of their net worth. By borrowing so much, just a small decline in house prices could put these buyers upside down and wipe them out. Which is exactly what happened and is what turned a recession into the Great Recession. Between 2007 and 2010 the bottom 20% of the population saw their net worth fall from about $30,000 to zero.

By contrast, the financial losses sustained during the dot-com bubble were essentially walled off and had relatively little effect on the overall economy. This is because stock ownership is concentrated among the wealthy. As the wealthy have less debt and more assets, they could essentially shrug off the much larger financial losses they sustained yet not have them alter their day-to-day spending decisions. Among the wealthiest 20% of the population, home equity represents just 25% of their net worth. Moreover, depression-era federal laws make it hard to borrow more than 50% of the cost of stock purchases, thereby limiting the potentially negative role of leverage.

In short, the home buyers who bought in 2004 and 2005 had limited wealth and had more of it at risk than earlier home buyers. When the music stopped they were highly levered and wholly unable to protect themselves. That quickly resulted in (among other things) reduced spending, which shrank GDP and quickly cascaded into the Great Recession.

Elliot Eisenberg, Ph.D. is President of GraphsandLaughs, LLC and can be reached at Elliot@graphsandlaughs.net. His daily 70 word economics and policy blog can be seen at www.econ70.com.


Randy Case, II Elected A Life Director at NAHB

July 14, 2014
Randy Case President, Case International Co.

Randy Case
President, Case International Co.

The board of directors of the National Association of Home Builders (NAHB) elected Randy Case, II of Colorado Springs, to be a Life Director at the Association’s Spring Board of Directors’ Meeting in Washington, DC., on June 6.

“The success and scope of NAHB is largely due to the dedication and hard work of members of its board of directors such as Randy,” said NAHB Third Vice Chairman Granger MacDonald. “By giving up time with their own businesses and families, NAHB’s Life Directors are instrumental in helping further NAHB’s work to advance housing opportunities for all Americans.”

Randy Case, II is the President of Case International Company in Colorado Springs. He has been a member of NAHB more than 20 years, and has served as a voting director for 10 years.

In order to be eligible for election as a Life Director, NAHB builder and associate members must have served as a voting director for more than 10 years, have attended at least two board meetings each year, and be recommended by their local or state association.

ABOUT NAHB: The National Association of Home Builders is a Washington-based trade association representing more than 140,000 members involved in home building, remodeling, multifamily construction, property management, subcontracting, design, housing finance, building product manufacturing and other aspects of residential and light commercial construction. NAHB is affiliated with 800 state and local home builders associations around the country. NAHB’s builder members will construct about 80 percent of the new housing units projected for this year.

ABOUT CSHBA: Named one of the Best Professional Association by the Colorado Springs Business Journal two years in a row, the Housing and Building Association of Colorado Springs was formed in 1950 by a group of builders who saw a need to unite to address the many concerns and issues affecting the home building industry. The HBA of Colorado Springs is made up of member companies including, builders, developers, remodelers, trade contractors, suppliers, mortgage lenders, Realtors, title companies, interior designers, architects, and landscapers. These companies all play a vital role in the construction industry in Colorado Springs and surrounding areas. Together they contribute to the growth, prosperity and quality of life this exceptional community has come to enjoy.

 

 


28 Homes in the 2014 Parade!

July 14, 2014

60year_PH_logoThe Housing & Building Association of Colorado Springs (CSHBA) announced that 25 home builders will feature 28 new homes in the 60th Annual Parade of Homes.

Prepare to be captivated as you enter several of the most exclusive communities in the city to experience some of the most spectacular examples of the latest in construction technology, sustainable living and interior design. What you will see in each of the 2014 Parade homes is the comprehensive ef­fort of thousands of contributing trade partners, which when all of the dust set­tles, create individual homes designed to inspire.

The 28 beautiful new homes and neighborhoods in the Parade of Homes will be open from 10am – 6pm daily starting Friday, August 1 and runs through Sunday, August 17.

Tickets will be on sale at all local Safeway stores beginning July 18 and includes a navigational proximity map. Admission is $10.00 for adults 18 and older. Children 17 and younger are free. One ticket will allow visitors to tour the Parade of Homes at their leisure during these 17 days. You can register for the $2,500 shopping spree at La-Z-Boy Furniture Galleries at any of the Parade homes anytime throughout the Parade; you can also enter to win an Apple iPad by getting your ticket stamped at 26 of the Parade builders identified on your ticket. You may also purchase tickets and enter online for both prizes at www.cshba.com.

Main sites will be located at Flying Horse and Wolf Ranch. In addition to the main sites, many of this year’s homes are scattered throughout Colorado Springs showcasing some of the finest neighborhoods in El Paso County.

As always, the Parade of Homes is easy to navigate with the comprehensive Plan Book and web site. Free Plan Books are available at any Parade Home and include detailed information about each of the Parade homes and hub site locations. The website will have an electronic copy of the Map and Guidebook as well as a list of the Parade Builders with their contact information. You can also download the free HBA Newsstand and get the Parade App with expanded content from all the builders, developers and select advertisers from the App Store or Google Play.

There will be several educational events throughout the Parade. Whether you are looking for tips on landscaping, planning a custom home, interior design ideas, financing your first home and fire mitigation practices, the Parade builders have information you want to know.

  • Deer Resistant Planting
  • Tiny House Movement
  • Living in a Kid’s World
  • Fire Mitigation
  • Trends in Materials and Design
  • Planning Your Custom Home
  • Financing Your First Home
  • The 7 Layers of Design
  • Inexpensive Ways to Create Big Looks

For a complete list of all educational events, with times and locations, log on to www.cshba.com and click on the Parade of Homes logo.

In April 2014, the CSHBA won Association Excellence Awards (AEA) awards from the National Association of Home Builders for both the 2013 Parade of Homes and the 2013 Parade of Homes magazine and App. The AEA is an annual program designed to recognize the outstanding accomplishments of state and local HBAs throughout the country. This followed on the heels of winning “Best of Houzz”, the leading platform for home remodeling and design. TheParade of Homes was chosen by the more than 16 million monthly users that comprise the Houzz community.

The Housing & Building Association of Colorado Springs would like to thank our major supporters of the Parade of Homes: The Gazette, Freedom Financial Services, La–Z–Boy Furniture Galleries and Mike Shaw Buick GMC. Safeway is the official ticket outlet for the Parade of Homes.

 About the Housing & Building Association of Colorado Springs

Named one of the Best Professional Association by the Colorado Springs Business Journal two years in a row, the Housing and Building Association of Colorado Springs was formed in 1950 by a group of builders who saw a need to unite to address the many concerns and issues affecting the home building industry. The HBA of Colorado Springs is made up of member companies including, builders, developers, remodelers, trade contractors, suppliers, mortgage lenders, Realtors, title companies, interior designers, architects, and landscapers. These companies all play a vital role in the construction industry in Colorado Springs and surrounding areas. Together they contribute to the growth, prosperity and quality of life this exceptional community has come to enjoy.


The 6th HBA Remodeled Homes Tour in Colorado Springs is on June 21 & 22

June 13, 2014
2014 Remodeled Homes Tour  June 21 & 22

2014 Remodeled Homes Tour June 21 & 22

Looking for a little inspiration and a weekend escape this year? The Housing & Building Association of Colorado Springs is holding the 6th Annual Remodeled Homes Tour, Saturday and Sunday, June 21 and 22nd from 10 am -5 pm. You can travel throughout the Colorado Springs area and explore remodeling possibilities through the eyes of some of Colorado Springs most talented and respected remodelers.

The Remodeled Homes Tour provides participating remodelers the opportunity to showcase their ability to improve a home, be it a simple beautification project or a full room addition. The Tour is perfect for any homeowner – from those wanting to add dimension and square footage to a room, those looking for a little added cabinet space, or the homeowner planning the gourmet dream kitchen. The public can see products first hand, enjoy the colors and textures of the interiors and visualize their own remodeled home. This Tour is the place to discover exciting new trends in home design, decoration and construction.

There are ten remodeled homes in the Tour; areas include The Broadmoor Bluffs, Briargate, Springs Ranch and additional scattered site locations. One ticket provides you the opportunity to visit 10 beautifully remodeled homes and talk one-on-one with the remodelers. The Housing and Building Association is thrilled to give the remodelers an opportunity to show off their great work and to visit with you.

Remodeled Homes Tour magazines will be published and distributed during the two-day event and will feature pictures and descriptions of each remodeled project.

Tickets are on sale at all local area Safeway stores. Tickets are $8.00 for adults, 18 and under are free. Tickets may also be purchased at any of the remodeled homes during the tour and are good for both days of the tour. This year’s Remodeled Homes Tour will be an outstanding value! Enter to win a $500 Shopping Spree at one of the participating stores in Coutura.

For Tour information, please call the Housing & Building Association of Colorado Springs at 592-1800 x 17. Visit the website at www.cshba.com to view the map and for additional information.

2014 Remodeled Homes Tour Sponsored by:

Gazette     Freedom Financial Services 5-2013Coutura   Ferguson PEAK 92


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