Another Housing Bubble?

By: Dr. Lynn Reaser
With housing prices rising at a double-digit pace, such as in San Diego, along with multiple bids, the housing market is starting to look a little frothy.  Are we headed for another bubble?

For now, the housing market is still in its early stages of recovery.  A slowly healing job market, a dramatic improvement in affordability due to lower home prices and interest rates, and a shift in the economics toward ownership versus renting have boosted demand.  Meanwhile, inventories of homes for sale are being constrained by the reluctance of homeowners to put their homes on the market along with a still low level of new homebuilding.

Another bubble could certainly develop within a few years, particularly if the Federal Reserve is too slow in withdrawing its aggressive easing and in raising interest rates.

Although we usually say, “never again”, housing will probably always be vulnerable to cycles, especially in California.

Image Credit: http://www.sdhomedatabase.com/home/

Work Which Expresses Our Faith

By: Randy Ataide

One of the unique things about our work at the FBEI is that we have such a diversity of projects to tackle, relationships to build, and deadlines to meet. Over the past years, we have tackled a dizzying array of tasks, some small, some big but nearly all interesting. We are grateful to the many clients, supporters, advocates, partners and stakeholders who have assisted us in this work.

On Tuesday May 28th, at the Jacobs and Cushman San Diego Food Bank, we had the privilege of presenting the original research report San Diego’s Food Bank Population: Profile, Analysis, and Solutions. Original field research done by PLNU undergraduate and MBA students, ably led by FBEI Manager Emily Gallentine and FBEI Business & Economic Research Associate Dieter Mauerman and research assistant Mark Undesser, met with Food Bank clients as they waited in line at their particular distribution site. Thirteen sites were visited and well over 500 clients were talked to in several languages. This work succeeded in providing Chief Economist Lynn Reaser the necessary data to “put a face on hunger.”

The work of the San Diego Food Bank is mind boggling. At a 152 regional distribution sites, in 2012 they distributed nearly 18,000,000 pounds of food representing approximately 14,000 meals! They serve about 350,000 San Diegans per month and the study has unequivocally demonstrated that those with hunger in our midst are seniors, children, military families, and often single or two income households. This means that the issues of underemployment and/or low wages are primary drivers of hunger in San Diego.

Speaking for all of us at the FBEI, we are hard pressed to think of a more important issue than one of hunger among the citizens in our community. This has not just been an economic project but one of high personal and professional interest for all who worked on the study. And this interest furthers some of the core values of PLNU, namely:

The stewardship of resources – We are caretakers of all that has been entrusted to the University (people, facilities, money, and knowledge). We are to use these resources in a way that reflects the purposes of God and protects the goodness of God’s creation.

Service as an expression of faith – We are stewards, not owners, of our time, talent, and selves. Part of our call as Christians is to serve the world, working to better the condition of humankind both locally and globally.

This project has been an expression of our own faith at the FBEI, and I think shows how PLNU’s faculty, staff, students and alums are an absolutely unique and indispensable resource for our community. We invite you each to take the time to read the study and to also consider getting involved in supporting the Food Bank or any other group or organization that will help to feed our community. Let’s make San Diego an even greater place for all!

To read the complete study please click here.

Assessing the Federal Reserve Board’s Chairman

Q:  Is Federal Reserve Board Chairman Ben Bernanke running the “most inappropriate monetary policy in history,” as claimed by a noted Wall Street hedge fund manager?

A noted Wall Street hedge fund manager recently severely criticized Federal Reserve Board Chairman, Ben Bernanke, for running the “most inappropriate monetary policy in history”.  Is this an accurate description or far from the mark?

Chairman Bernanke has led the Federal Reserve through an extremely difficult period and helped prevent a U.S. and global financial meltdown.  The current path of extraordinarily low interest rates and swelling the Fed’s balance sheet at a rate of $1 trillion a year does mark unchartered territory.  It entails sizable risks, including another asset price bubble or higher inflation down the road.  Scaling back or ending these policies could be disruptive to both markets and the economy, but such policies cannot be sustained.

Mr. Bernanke’s rating in history will ultimately depend on the Fed’s exit strategy and how it implements that strategy.

Image Credit: http://www.thebcobserver.com/2010/02/23/dollar-gains-against-euro/

Graduating from the Greek: Part 2

By: Dieter Mauerman

Late spring early summer is commencement season.  It is a time to celebrate hard work committed to achieving a goal and represents the beginning of new ambitions.  These goals can vary greatly depending on what degree someone is getting and what their next goal is, if they even know what that goal is yet.

Having seen two different PLNU commencement ceremonies and getting a taste of the mood in the air at both of these ceremonies, they are both very different.  At the Graduate commencement ceremony everyone has already been through a graduation ceremony and knows the drill.  Graduates are still excited to be finished with the program and starting a new chapter in their life.  But most people in the MBA graduating class already have a job and a career where they have been working throughout their time in the MBA program.  Many are wondering how they are going to leverage their new degree to help them advance their career and increase their salary.  This degree will enable them to move forward with their long term goals.

Bachelor’s graduates have a very different thought process.  They may go and do anything after completing their degree. Some may go on travel across Europe or Asia or Africa for a few months.  Some don’t like the idea of growing up and try to put off that idea/reality as long as they can by doing any number of things.  But everyone is looking forward to the next adventure.  The experience one gets from getting a Bachelor’s degree goes well beyond what is taught in the classroom, and the subject matter.  This extra-curricular learning process helps shape people, what they value, and what they are passionate about.  Continuing this learning process by traveling or doing other life adventures that don’t involve an entry level career type job is a good thing.  Because when people are passionate about something and are able to work in that, they are much more effective and make a bigger impact.

So to all the graduates whether you just finished you master’s degree and are well on your way to the next step in your established career, or you just got a bachelor’s degree and have no idea what you want to do next, congratulations.  You have climbed a mountain and conquered it so be proud of your accomplishment.  

To quote Abraham Lincoln, “Whatever you are, be a good one.”

Image Credit: 2013 PLNU Commencement by Marcus Emerson

San Diego Exports—A Potential to Be Realized

By: Dr. Lynn Reaser

President Obama set a goal in his State of the Union speech in early 2010 to double U.S. exports in five years.  Although U.S. exports have displayed considerable strength, San Diego has lagged behind.  A recent study conducted by the Brookings Institute severely criticized our region for its shortcomings.

Although San Diego does face constraints from both its seaport and airport facilities, our region holds enormous promise for exports.  San Diego has great potential for exporting agricultural products, manufactured goods, and services in the period ahead.  Mexico’s manufacturing renaissance affords San Diego firms an exemplary opportunity to export various parts and components.  San Diego merchants can also benefit from rising incomes in Mexico and the preference for cross-border shopping. 

Our exports of produce and consumer goods should find receptive markets in the growing Asian economies.  High-tech electronics, medical equipment, pharmaceuticals, sporting goods, and other products hold bright export prospects.  Finally, the strength of our tourism, higher education, software development, and engineering talents can boost San Diego’s important service exports.

Perhaps the biggest road block to realizing our export potential lies in the reluctance of many small and midsize firms to tackle markets away from home.  But those fears should be overcome as exports provide enormous promise for ongoing growth.

Image Credit: http://www.kpbs.org/news/2013/may/13/san-diego-could-be-exporting-more-brookings-instit/

FBEI Commencement Farewell: Part 3 – The Long and Winding Road

By: Cathy Gallagher

May 4^th, 2013, I thought the day would never come…  

Just a few days before, as I wrapped up my finals and traveled to SF for a 36 hour business trip ahead of our Friday night School of Business Commencement Reception, those bittersweet thoughts crept up on me as they do each year. Thoughts of the students I had grown so fond of, feeling the pride in all that they have accomplished… sadness of knowing that they are moving on to a new and exciting chapter of their life and the world that awaits them… thankful for whatever small role I may have had in their time at PLNU.

Then before I knew it, it was here… In keeping with past years, I arrived early that morning as the haze gave way to the bright morning sun to celebrate and support our graduating MBAs, 60 or so this year, many of whom I had gotten to know quite well. This year even more important as one of our staff, Dieter Mauerman, was among the MBAs. As I looked around me, I was a little surprised… and a bit sad that I didn’t know all of the faces… but those I did know had become near and dear to my heart. It was wonderful to be there to share in their excitement and to offer congratulations to a job well done!

I returned, as I always do, later that afternoon for the undergraduate ceremony… but this year was different as I wandered through the smiling faces looking for my own place in line, I was so happy to find it was next to James Garcia, one of our most valued student employees and only senior who we were losing this year. As I stood waiting, the laughter, smiles, and energy was contagious… it surrounded me in a new way this year… We stood together and waited patiently until they ushered us to the Greek and the ceremony began.

As I sat robed in my black cap and gown with several hundred undergraduate students half my age (…or less!!)  listening to the opening address, I heard, “welcome to the graduating class of 2013…”, and though I hadn’t given it a thought before, it suddenly dawned on me… after 8 ½ years as an undergraduate student I was preparing to walk across the stage of the Greek to accept my diploma 30 years after graduating from high school! It was done!

Students, who may be reading this, be encouraged that your day will come and know it is MUCH easier (and highly recommended by me!) at 20 than at 47 when a spouse, children, grandchildren, parents, a job, and life are all vying for your time and energy…

There were many times throughout my nearly 9 years as a student that I was ready to throw in the towel, when I couldn’t see the light… not even a glimmer… at the end of the tunnel. Perseverance, hard work, and frustration, and the love, encouragement, and understanding from family, the institute staff, friends, and colleagues, as well as the encouragement, support, and occasional swift kick (10 ½ EE…) of my dear friend and advisor… yes, you guessed it, Randy, helped tremendously along the way. I honestly couldn’t have done it without you.

Thank you to everyone who was a part of this very long chapter of my life’s book… I appreciate and love you all.

Image Credit: 2013 PLNU Commencement by Marcus Emerson

FBEI Commencement Farewell: Part 2 – A Landmark for a New Chapter

By Dr. Lynn Reaser

May 4, Graduation Day at PLNU, of 2013 will forever be burnished in my mind as a glorious day but also as one of some regret.  I am so proud of Cathy Gallagher on completing her BA, of Dieter Mauerman with his MBA, the 60 MBAS, James Garcia, and the others earning their degrees.

I had anxiously anticipated being part of the academic procession and hugging all of my students and friends on that wonderful day.  But, alas, God had other plans and I remained in the hospital until late that day.  Please know, however, that my heart and spirit were with all of the students that day and I pictured them vividly in my mind.

It has been only a short while that I have been teaching an MBA class at PLNU but it has been such a joy to see students embrace the power of economics and how it provides a prism to help view the world.  I treasure my students and my colleagues as dear friends and hope those friendships will continue throughout our lives.

And so, although May  4, 2013, was a bittersweet day for me, much more importantly, it was a landmark for our students as they begin new chapters in their lives.  I am so very proud of all of them and only offer whatever I can do to support them and their followers in the future.

Image Credit: 2013 PLNU Commencement by Marcus Emerson