The Tribune

FOR a writer, it’s hard to make economics exciting.

Writing about business is not like writing about sports. Every sporting activity (even cricket) has a beginning, a middle and an end which you can either celebrate or cry over. In sports, whether it’s synchronized by a starting gun, horn or tee-off, there is always a start, followed by a race, a round or a set, and a finish. It’s a defined space and timeline. Sports writers use words packed with action. They put you in the game, make you part of the action, raise your blood pressure, build suspense, fear, excitement as competition heats up, gets tighter, fiercer, closer to the finish line. By the time the first athlete or horse crosses that finish line, you are standing, shouting, exhausted as if you had run the race yourself.

But covering business is not like that. It does not have a beginning, middle and end. It just goes on. Yet what happens in that space that business writers write about – in the raising of interest rates by central banks or the quick exits from certain markets by major investors – impacts us in a way sports never will unless we are the athlete. Interest rates, market movements, technology advances, changes in executive leadership or management, affect what we pay at the grocery store, or for fuel, housing, education, travel.

There is no explaining why a Pauline Davis running her personal best in the 100m or Lewis Hamilton winning another F1 race at the Monaco Grand Prix empowers us and The Central Bank’s decision to raise interest rates to stem the rising tide of inflation does not. One hits our immediate psyche, it’s a win, the other is a gradual adjustment. One is exciting, the other is ‘there they go again,’ whoever they is. One is visual and instantly visceral; the other is harder to get a camera around.

As a result, most of us pay little attention to that changing business environment, partly because we figure someone else is in control. We believe whatever happens, we will somehow get through. What happens in the wider world of business, in those fluctuations in interest rates or movements in major markets, happens to us not because of us.

So this week when the Central Bank in the U.S. raised interest rates by half a percent, the largest hike in 20 years, we went about our daily lives as if nothing had happened. I once taught Economics but I am no economist. I once had the privilege of auditing a graduate class taught by the late, great John Kenneth Galbraith at Harvard, author of a dozen books and more than a thousand articles on economics, but I am not a business writer, and like most of us, I pay too little attention to those market changes because I do not feel empowered to do anything about whatever is coming at me.

Chill in the air

This time, though, it is slightly different. I feel a chill in the air of our economic well-being. We have lived too well for too long and I fear we are going to soon pay the price for what one economist this week called “our limitless optimism” that has allowed us to carry on in this foolhardy manner like fiddlers when Rome burned, or the Titanic sank.

Do I feel good about saying our reality is going to change, that we are about to take a dive into the deep crevasses of a near-recession? Of course not. I wish the dream would just keep playing on, but we would be fools not to heed the signs that it cannot, that the alarm is going to go off and we will have to wake up. Prices of everything are too high for many of us. We can adjust to a little pain at the pump. Most of us in The Bahamas just ask for $20 worth without bending down to look at the tiny price per gallon numbers on the pump. We can adjust to some increases in the food store, even though we may look a little more carefully at what we are buying and complain.

Higher prices on those small purchases pinch the pocketbook, but it is the big-ticket items like land, housing and insurance that make it crash. The heightened desirability of warm weather destinations like The Bahamas and Florida has made it almost impossible for regular working Bahamians to buy land or a new home. Banks are increasingly risk-averse post COVID-related high unemployment and loan defaults, making it even harder to obtain a mortgage on a mid-price range home or capex for business expansion. The cost of health care continues to rise, driving insurance rates higher meaning more people will suffer medical challenges by neglecting preventative care because they will not be able to afford the more costly premiums.

Average house price $799,981

Housing and land, though, are where we are going to feel the greatest sting.

According to one local real estate agency website with 908 listings, the average price for a home in The Bahamas as of today is $799,981, a figure no doubt skewed by the very high-end listings like a single home in Ocean Club Estates offered at $36 million. Despite the skewing, there is little doubt that prices of land and homes have risen exponentially putting home ownership on a burner so far back many working Bahamians believe they will never be able to reach it. An undeveloped lot on a popular Family Island is for sale at $650,000, the lot next to it sold for $200,000 a few years ago. A rundown villa on a stunning property in Eleuthera is going for more than $2 million.

It’s no different in South Florida. A January 2022 story in the Palm Beach Post reported the average sale price of a single-family home in 2021 was $926,303, the writer describing it as “a whopping 71% increase from 2019.” Realtor.com pegs the average price of a home in Palm Beach County at $450,000. Whether it is under half a million or under a million may be open for debate. Both reflect an artificial inflation driven by demand for a better life, a demand that will in the end cost The Bahamas and South Florida dearly for those who call either home.

Economics may not be as exciting to write about as sports, it may not get the adrenaline pumping like watching the lightning-fast speed of a human machine like Pauline Davis in a 100m sprint, but financial performance demands our attention.

Sometimes, the least exciting things are the very things that hit the hardest and hurt the most. If there is a take-away, it is to exercise care, eyes wide open, invest what you can wisely minimizing risk. There may be rougher waters ahead but if we conserve and pay attention to the less exciting business news, we will navigate the course. Medical care and land will be our precious resources while national resolve to raise our skill levels will let us ride out the wave and guide us to the finish line. Thanks, Kelly Clarkson, for reminding us what doesn’t kill us makes us stronger.