Murphy's Law: The Changing American Dream
Contrastingly, the AHR Expo had something the Builder’s Show did not have: Near record show attendance at the beginning of what is expected by many to be a year of only modest growth. Professional forecasters of home construction are touting 2012 as the best year for housing starts since 2008, yet the Orlando event was about half of what it once was.
I’m not sure what the deal is, but even with projections for only slight HVACR industry growth in 2012, and after a recent fourth quarter that saw lower inventory replenishment at the distributor level, people flocked to the aisles of McCormick Place in Chicago. Maybe they know something that builders at the Orlando show failed to understand?
Frank Nothaft, chief economist of Freddie Mac, spoke with The NEWS in Orlando between mouthfuls of potato salad about the woes of college-bound children and the prospects for the American Dream. I joked about a car in every garage and a chicken in every pot; we both laughed, exposing the fact that we were old enough to have studied the same history books in the fifth grade.
However, Newt Gingrich historian jokes will not get in this story.
It looks like the dream has changed regarding home ownership. People want two cars in somebody’s garage now, but they still want a pot to call their own. Family formation is an important trend that Freddie Mac follows, according to Nothaft. He noted that young people make their first home purchase at a later age in life. More children depend on parents for a longer period of time as jobs are tougher to find after school. These young people spend more time in their parents’ home, then more time in an apartment, before forming that first family and moving into their own American Dream. It is a bubble that, when it peaks, will bring a nice surge in the housing market. But it’s not here yet.
Most companies have voiced cautious optimism for the 2012 business year. Some may boom, some may bust — it depends upon where you live. After all, all business is local.
HVACR firms have a business option available to them that most home builders do not — service. It is a nice complement to installation, retrofit, and replacement work. Most new home builders are one-trick ponies. If home construction is slow, so is that basic business — there just aren’t many options when it comes to building a house. You either do or you don’t.
If the aisles in McCormick Place in Chicago were any indication of business for the HVACR industry, then it looks as though the flat edges might be smoothing out this year. However, there are a couple of other indicators worth noting.
The U.S. stock market finished higher in January at 4.4 percent, its biggest January gain since 1997. A good January is a positive sign for the coming year about 89 percent of the time.
Even better is the fact that Super Bowl XLVI advertising was dominated by car advertisers for the first time in a while. About two dozen of the 70 30-second commercial spots came from the automotive industry, which if you recall, hasn’t been doing so hot for the last few years.
According to Clint Eastwood in his Super Bowl ode to Detroit automakers, the No. 1 commercial among male viewers, “It’s halftime, America.” Yes, things might be somewhat slow again this year for many businesses, but the first half is getting off to a decent start. There does seem to be light at the end of the tunnel. (Now, if The NEWS could just get $3.5 million per ad spot.)
If you want to see Eastwood or even David Beckham, the No. 1 Super Bowl ad among female viewers, snap a picture of the tag on this page or click to http://binged.it/w9Jy7p.
Publication date: 02/20/2012