Investors and their money are attracted to opportunities. They purchase assets, including properties and businesses, in the pursuit of profits.
That’s probably why YOU are reading this.
It’s why we perpetually peruse the news … looking for clues about where investors, businesses, jobs and money might be going and growing.
After all, where people and prosperity are … demand and capacity to pay for real estate are too.
So when we saw this headline pop up in our feed, we decided to look past the political positioning and see if we could find opportunity …
– Bloomberg, 5/7/19 via Yahoo Finance
“ … the 2,622 mostly rural and exurban counties [Trump] won in the 2017 added jobs at twice the pace as they did under … Obama …”
“Red America overtook Blue America … in 12-month employment growth for the first time in seven years …”
Of course, the article is focused on the political ramifications … which is fine for raising your blood pressure or getting unfriended on Facebook.
But we really struggle with all that red and blue stuff.
When we look out the window from the airplane, we see mostly brown and green. And when we talk to folks on the ground, it’s true there are different colors … but not blue or red.
Maybe we’re missing something.
In any case, we’re far more interested in discovering the investing opportunities of where “jobs are booming” and why … so we can get in on the action.
The Bloomberg article affirms a trend we’ve been commenting on for some time …
“… the changes are driven largely by a spread of growth to outlying areas typical of the late stages of an economic expansion and a bounce-back in energy production and manufacturing.”
In other words, when people get priced out of expensive areas because of a boom … they move to more affordable areas.
Meanwhile, the resurgences in energy and manufacturing are very important economic drivers to watch.
Energy has been a big jobs driver post-2008 … and continues to play an important role in the creation of domestic jobs.
Meanwhile, the rebirth of manufacturing is affecting some former boom towns whose fortunes fell as American manufacturing went offshore over the last two decades.
It’s no secret President Trump believes the U.S. must re-establish itself as a manufacturing powerhouse. This makes sense for a guy who made his fortune building things.
What may be less obvious is how Trump hopes to achieve this fundamental transformation of the way America produces prosperity. But there are clues.
We may or may not agree with Trump’s goals or methods. But that’s not the point. What matters is what he’s doing and the effect it’s having.
When we asked then-candidate Trump what a healthy housing market looks like in a Trump administration, he simply replied, “Jobs.”
Of course, back then it was just talk. Now, just over two years on the job, headlines say …
U.S. creates 263,000 jobs in April as unemployment falls to 49-year low – MarketWatch, 5/3/19
Job openings in U.S. jump to 7.49 million — more proof of ultra-strong labor market – MarketWatch, 5/7/19
While there’s more to the story than we can delve into today, most observers agree those are pretty good numbers.
Of course, to get from interesting to actionable, we need to dig a little deeper …
Our good friend, world-class tax-strategist, CPA and best-selling author Tom Wheelwright wrote this in his recently updated book, Tax-Free Wealth …
“ … tax laws … have evolved to become tools of social and economic policy making.”
But this isn’t a anything new …
Way back in 1946, then-Chairman of the Federal Reserve Bank of New York gave a speech and made these shocking admissions …
“ … taxes … serve … to express public policy in the distribution of wealth and of income … subsidizing or … penalizing various industries and economic groups …”
In other words, tax laws move money where the government wants it.
Right now, the tax laws tell us Donald Trump wants money moving to Main Street.
As Tom Wheelwright explains in his presentation at The Future of Money and Wealth, the new tax law makes real estate EXTREMELY attractive for investors.
In fact, many real estate syndicators are having success attracting investors who are just as eager for tax breaks as they are for the profit potential of the deal!
And now that the opportunity zones regulations are becoming more clear (watch for a follow-up radio show on this hot topic shortly) … it’s likely even MORE money will be moving from Wall Street to Main Street.
For a glimpse of what’s coming, we took a look at the Jobs Opening and Labor Turnover (JOLT) report from the Bureau of Labor Statistics (BLS).
Here are some notable highlights …
“The number of jobs openings increased for total private(+363,000) and was little changed for government.”
“ … largest increases in transportation, warehousing, utilities (+87,000) construction (+73,000), and real estate and rental and leasing (+57,000).”
No surprise there’s a lot of job-creating money going into distribution and related commercial real estate.
What remains to be seen is whether Trump’s tactics will trigger long-term sustainable domestic manufacturing … and the middle-class jobs that come with it.
There’s been some progress, but it takes a lot of capital to create the infrastructure to support serious manufacturing.
But just as the tax law helps attract billions into the shale oil production revolution …
… the Opportunity Zones tax incentives could pull billions into creating the real property infrastructure to rebuild atrophied manufacturing communities.
Money moving from Wall Street to Main Street. We like it. And it’s a trend alert real estate investors are watching carefully.
Until next time … good investing!
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