What Factors Are Driving Uncertainty in CRE Markets?
Prolonged Inflation and Rate Hikes Present Recession Risk
- Inflation and aggressive fed rate hikes have eased, making a 25 bps rate hike likely at the Feb. 1 meeting
- Although recession risk has moderated, roughly 50% of economists still expect a recession during 2023
Despite Tech Layoffs, Labor Market Still Exceptionally Tight
- Attention grabbing headlines surrounding layoffs at Microsoft, Google, and others can foster uncertainty, but the unemployment rate remains at a 50-year low
- Overall, the U.S. economy added nearly 225,000 new jobs in December, and still has over 10.5M job openings
What This Means For CRE Markets
- If the economy can avoid a major recession in 2023, a shift in sentiment could lead to a revival of apartment, retail, and industrial space demand
- Underlying data paints a more positive picture than some of the sensationalist media coverage
*Unemployed through December; Job openings through November
Sources: Marcus & Millichap Research Services, BLS
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