Feb. 8, 2016–Cushman & Wakefield, a global leader in commercial real estate services, releases its U.S. Macro Forecast, which predicts positive economic results for 2016 despite early year stock market jitters.
Worries about China and oil prices have caused stock markets around the world to stumble, leaving the Dow Jones and S&P 500 both nearly 9 percent lower at the end of January 2016 since late last year. However, history has shown that the stock market is not the best predictor of a recession, and continued moderate growth for the U.S. economy is expected. The 2.4 percent forecast for GDP growth in 2016 is quite healthy in the face of demographic shifts that are putting downward pressure on the labor participation rate. This level of GDP, coupled with the current pace of job growth, is consistent with the robust level of demand for office and industrial space observed in 2015.
“Economic turbulence at the start of a new year is nothing new,” said Kevin Thorpe, Cushman & Wakefield’s Chief Economist. “We have seen it come and go for the past several years without any long-lasting damage to the health of the broader economy. Typically, the volatility drives capital flows back to United States with a refocus on core assets, and that is happening again. The key indicators to watch right now are consumer confidence and the labor markets. Those are both telling us that the core of the U.S. economy and the property markets are still in reasonably good shape.”
For the U.S. commercial real estate sector, the U.S. Macro Forecast predicts:
“At this tenuous time in the cycle, it is important to remember that the global central banks remain highly accommodating,” explained Thorpe. “Whether it’s by keeping interest rates well below the normalized rate (such as U.S.), or by moving forward with additional capital injections (occurring in many other countries), the bottom line is that they will continue to take extraordinary measures to prolong this business cycle. And more likely than not, those extraordinary measures will continue to create a highly robust, albeit, highly uneven, real estate environment.”
Click to download the full U.S. Macro Forecast.