Miller: Now that the election is behind us, and Washington is still trying to avoid the “fiscal cliff”, what’s your take on what this means for the real estate economy and consumer sentiment?
Linneman: It’s interesting. I think that the consumer largely shrugged off the “fiscal cliff” concern, not brushing it off as a serious issue, but they correctly brushed off that anything serious would get done about it. The reality still hangs out there and is a big problem and it’s not going to get solved soon or easily. That is, the fundamental deficit issue. I think somehow the consumer understands that it’s not going to get solved soon or fundamentally, but I think they’ve understood that if the deficit’s going up a lot faster than it ever has before, and it’s done it now for a number of years, and the baby boom’s going to start retiring which means they stop paying and start receiving, it’s not going to be good.
Miller: They’ve counted it into their behavior?
Linneman: They’ve counted it into their behavior, and therefore, given that the election ended up with the exact same political chessboard with the same players, not just by number count, but the leadership being identical on all sides — I think that they’ve come to understand that for the next couple of years there’s going to be a lot of huffing and puffing, but not much is going to happen. They’ve already built into their behavior that this is the norm for a couple of years, so I think it’s a cautious expansionism. That is, if something fundamentally got done, some consumers would be fundamentally worse off, some would be fundamentally better off. You’d know exactly where you were, and you would react to your position with clarity.