Commercial real estate owners got some encouraging news during the past few weeks. Several economic reports showed promising signs, and the FDIC made clear how it is looking at commercial real estate loans sitting on the books of banks. For the first time in two years, tangibly good news came out of the Bureau of Economic Analysis on GDP growth. The government agency reported 3.5 percent annualized growth in gross domestic product, which is the highest since the third quarter of 2007. Many economists are declaring the recession over.

Bob Seger in “Against the Wind” and, more recently, Toby Keith sang “I wish I didn’t know now what I didn’t know then,“ expressing a desire to erase cumbersome knowledge and move on. Many lenders are now stuck with that feeling as they want to originate new loans, but knowledge of the past 12 months just won’t let them. Flow of Funds data recently released by the Federal Reserve support what most borrowers are experiencing.

If you are on the transaction side of the commercial real estate business, you may feel as if you are an unwilling participant in a video of heavy metal band Quiet Riot’s “Bang your head” song where nonstop music streams to your ear in ever louder chords. Every day is similar to the last. Deals are few and far between, and they just don’t close.

On many fronts, the economy appears to be looking up. But commercial real estate can’t seem to shake its perception as “the next shoe to drop.“ If value write-downs by the country’s two largest pension funds are any indication, the other shoe has already dropped. California Public Employees’ Retirement System (CalPERS) wrote its real estate holdings down by 35.8 percent as of March 31. The California State Teachers’ Retirement System (CalSTRS) wrote down its holdings by 43 percent for the fiscal year that ended June 30.

Abluegrass tune “I ain’t broke, but I’m badly bent” recently recorded by The Dan Tyminski Band accurately describes both commercial real estate lenders and investors today. On the lender side, more focus is placed on managing current portfolios and avoiding substantial write-offs than on new business. New business for investors is limited to bargain-basement shopping. Most of their effort and time is spent on managing debt that is coming due and property level cash flows.

The commercial real estate market has been labeled by many bond traders and portfolio investors as the next shoe to drop. But there are signs that perhaps news of commercial real estate’s demise are somewhat exaggerated. To borrow a line from a song by indie rock band Harvey Danger, “I’m not sick, but I’m not well.“ This aptly describes the state of today’s commercial real estate market.

It isn’t clear if Wynonna Judd was singing about commercial real estate in her hit “Rock Bottom” from a few years back. But the lyrics “rock bottom is good solid ground” most certainly applies to the industry to day. The economy seems to be bumping along at what many are calling the bottom, where the lack of more negative news is good news, and a few bright notes give hope there is light at the end of the tunnel.

John Maynard Keynes is perhaps best known for his economic views that advocate heavy government intervention to ensure that markets run smoothly. He was once quoted as saying: “Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.“ While the events of the past year have made Keynesian theories popular again, implementation issues are hounding the current administration and markets.

Hopes for the economy to pull out of its nose-dive were bolstered last month with the passing of a $787 billion stimulus package. According to the latest survey from The Conference Board, consumer confidence is at an all-time low, and when combined with mounting job losses, it’s no wonder that personal consumption has fallen off a cliff. Since personal consumption makes up about 70 percent of economic activity, the government is attempting to fill the spending gap through its stimulus initiatives. Put another way, the economy is flat-lining, and Uncle Sam is applying the paddles.

COMMERCIAL MORTGAGES: Last year will go down as the one the financial markets became unhinged. Jolting stories unfolded at a breakneck pace leaving few investors secure. Commercial real estate was far from immune to the car nage.

During the past 18 months, daily economic headlines have progressively worsened. So much has happened that it is hard to focus on a single Treasury or Fed edict, much less try to understand its ramifications.