Economist: 'Americans are tired of being afraid'

Two of the three legs of the American economy are back on solid footing, according to a former Wichitan who will speak at the Feb. 16 Weigand Real Estate Forum at the Hyatt Regency Wichita.

In a stark change of tone from last year, Mark Dotzour, chief economist at the Real Estate Center at Texas A&M University, gave a qualified thumbs-up this week to the state of the U.S. economy.

"We're turning the corner but there's still work to be done," said Dotzour, the annual Weigand forum speaker and a former real estate professor at Wichita State University whose family was active in the local real estate market.

"Americans have been in hiding in fear of the economy for three years, and they're tired of it."

Dotzour, who last February told the 2010 Weigand gathering that only "naive hope" made him optimistic about commercial real estate and hiring markets in 2011, sounded an entirely different tune this week.

He said individuals and companies are suffering from "adversity fatigue" and are ready to invest again.

"One thing you can count on from Americans is that they don't tolerate deferred gratification for very long," Dotzour said. "People have postponed moving, buying second homes, business expansions — and they're hoarding cash. All things people do when they're afraid.

"Americans are tired of being afraid, and they're ready to move on."

There are several reasons for economic optimism, Dotzour said.

Small-business hiring forecasts are up, according to the National Federation of Independent Businesses, Dotzour said.

Only 19 percent of big American employers expect to lay off workers in 2011.

"Corporate profits are up for several quarters in a row," he said, rejecting the notion that personnel cutbacks and salary reductions play a major role in those profits.

"This is about businessmen and women serving their customers and making a living. Nothing to do with the backs of their employees."

"There's always a lot to be afraid of. Always has been. But when businesses postpone decisions long enough, it creates some pent-up demand."

The work that's left to be done falls on state, local and national governments, Dotzour said.

"Governments at every level have yet to right-size their balance sheets and live within their means like American households and businesses have done," he said. "They're the last shoe to drop in this cycle.

"Businesses have right-sized, and there's $2 trillion in capital on the sidelines doing nothing. Households are reducing debt and increasing savings rates.

"Two of the three legs of our economy have made the necessary adjustments. The cities, states, school districts and federal governments haven't. If they had, we'd be in an economic upturn right now."