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TRENDING & SPENDING Continued from page 21 number of new developments lead me to expect further improvement in housing as the year progresses," he said. At the core of the housing stagnation is the record number of foreclosed homes and the rate they are entering the pipeline. Foreclosures were down over 33% last year to 1.9 million, the lowest since 2007, according to RealtyTrac in Irvine, CA. But RealtyTrac officials say the drop was due to foreclosure activity being postponed be- cause of sloppy documentation like "robo- signing" and lawsuits. Brandon Moore, CEO of RealtyTrac said, "Tere were strong signs in the second half of 2011 that lend- ers are finally beginning to push through some of the delayed foreclosures in select local markets. We expect that trend to continue this year, boosting foreclosure activity for 2012 higher than it was in 2011, though still below the peak of 2010." However, for the long-term, it is more important that the number of homes entering foreclosure begin to fall, said Chow. Te Mortgage Bankers Asso- ciation reported that the percentage of mortgages with at least one payment past due fell in the Fourth Quarter of 2011. "Te total delinquency rate and foreclo- sure starts rate decreased and are back down to levels from three years ago," said Jay Brinkmann, MBA's chief economist. So, what does this all mean? RealtyTrac estimates about one million foreclosures will be completed this year, up 25% from 2011. "Te surge of home seizures may initially drive down prices because of the huge backlog," Chow said. "Don't expect foreclosure activity to ameliorate until the end of the year. " Tere are some new developments that may accelerate the clearing of foreclosed homes. First, banks are starting to em- brace short sales where lenders agree to sell the property for less than the loan and forgive homeowners of the remaining balance. Some banks are reportedly giving certain homeowners up to $35,000 as an incentive to do a short sale, Chow said. Also, attorney generals from all 50 states reached a $26 billion settlement with five major banks over foreclosure abuses. Lenders will pay $17 billion to buffer about 1 million homeowners from foreclosure through mortgage forgive- 22 March 2012 | Trade Show Executive ness, forbearance or loan modification. Te most promising program is the one recently announced by the Federal Housing Finance Agency where Fannie Mae, a large mortgage company under U.S. conservatorship, invited investors to buy their foreclosures in bulk to manage as rental properties. Te discount given to a bulk purchase has attracted Los Angeles-based Oaktree Capital Management LP and New York-based GTIS Partners to buy $2.5 billion of foreclosed single-family homes. Finally, the Obama administration has pledged almost $30 billion in its Making Home Affordable programs to expand loan modifications for delinquent homeowners to include some principal reductions and to allow certain underwater homeowners to refinance at current low interest rates. "All these programs will hopefully help the market to clear so the real estate recov- ery can then begin and give the general economy some legs," Chow said. Obstacles to a Continuing Recovery "I no longer consider the European sovereign debt crisis as the biggest threat to U.S. economy," said Chow. "Since this crisis has dragged on for almost two years, most American banks and large corporations have had enough time to minimize their exposure in the event of a default and collapse of the euro." Te European Central Bank's injection of almost 500 billion euros of cheap three- year loans to the continent's banks will ease stresses in the Eurozone's financial system, he added. Barring any unforeseen disaster, the two biggest obstacles to a continuing U.S. recovery are the recent escalating energy prices and the geopolitical issues in Te Middle East. Crude oil prices are again over $100 a barrel and gas prices are over $4 a gallon. Higher energy costs have a ripple effect on the trade show industry ranging from immediate pressures such as transportation costs to the eventual, such as hikes in booth materials, drayage and badges. Te impact on trade show attendance may be felt as early as next week. Hard-hitting promotional cam- paigns on the value of show participation should be on everyone's priority list. TSE Trade Show Executive's Trending & Spending Forecast Fig. V: Sector Performance BEST PERFORMING SECTORS n Apparel n Security n Business Services MIXED PERFORMANCE n Communications n Government n Manufacturing n Automotive n Housing ECONOMIC INDICATORS Consumer Confidence surged 9 points to 70.8, close to the post-recession peak of 72 reached in February 2011. Tis is a dramatic bounce aſter it sunk to an all-time low of 25.3 in September. Core Inflation, which omits volatile food and energy prices, climbed 2.3% over last month and 0.95% over last year. It remains lower than the long-term average of 3.9%. Corporate earnings for the corporations listed in the Standard & Poor's 500 Index rose only 7.5% in the 4th Quarter. Tat broke a streak of eight consecutive quar- ters of double-digit growth and was a fraction of the 17.3% growth in Q3 of 2011 and the 28% in Q4 of 2010. Gross Domestic Product grew nicely in Q4 of 2011 — 3.0% vs. 1.8% in Q3 of 2011. However, GDP growth was lower than a year ago, growing at an annual rate of 1.7% in 2011 vs. 3.0% in 2010. Housing Starts for single family homes continued to gain momentum, increasing by 699,000 units in January, which was 9.9% above the January 2011 rate of 636,000 units. Industrial Production in January jumped 3.4% above its level a year earlier. For the 4th Quarter as a whole, industrial production increased at an annual rate of 3.1%, the tenth consecutive quarterly gain. Interest Rates (short term) remained near 0% in February. Job Growth reached 243,000 in January, up from the 155,000 added in December. Te Leading Economic Index, a weighted gauge of 10 economic indicators that helps predict the future direction of the economy, rose 0.4% in January to 94.9, largely based on improving employment, personal income and retail sales. Economic activity in the manufacturing sector expanded in January for the 31st consecutive month, with the PMI Index at 52.4%, according to the latest ISM Report. Retail Sales increased a robust 4.7% over February 2011, following a strong showing of 4.2% in January. Unemployment has been declining gradually over the past few months, reaching 8.3% in January. n Medical n Retail n Food SECTORS UNDER PRESSURE n Construction n Home Furnishings n Technology n Hospitality n Transportation