Paul Beitler: Frugal consumers don't help the economy, or real estate

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J. Paul Beitler

Because I’m the editor of a real estate trade magazine I often get to speak with influential leaders in the world of real estate. This morning I spoke with J. Paul Beitler, president of Chicago-based Beitler Real Estate Corporation, one of the more influential commercial real estate companies in the country.

You might remember that back in 1991 Beitler attempted to develop what would have been the world’s tallest building, the Miglin-Beitler tower. The global economy’s woes back then scuttled that project, but Beitler has certainly claimed more hits than misses when it comes to real estate development.

I was talking with Beitler this morning about the struggles that the commercial real estate industry was still facing. Eventually, Beitler started talking about the type of society that the United States is. Basically, Beitler said, the U.S. economy won’t work if consumers are frugal.

The United States’ economy depends upon consumers spending money, Beitler said. When they save, the economy falters.

Here’s what he told me: “Our economy depends upon the individual consumer having expendable income beyond the bare necessity of home, clothing, food and a car.”

Of course, there were some serious excesses from consumers that led to our current economic troubles, many of them having to do with residential real estate. Too many consumers were too greedy; they wanted to get into bigger, more expensive houses, regardless of whether their income justified it. They took out mortgage loans that they couldn’t really afford.

There’s a difference now, though, Beitler said. There are more checks and balances in place to prevent consumer excesses.

“Now we need a period of stabilization so that the consumer can do two things: First, begin to save money. And second, to take a portion of their earnings and purchase consumer products,” Beitler said.

That sounds like a recipe for an economic recovery. Let’s just hope that we all find some of that disposable income.

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