Navigating the Economy

Navigating the Economy

October 15, 2019 Off By Chris

Costar just posted an article on the economy titled, “Costar Economy: Seeking to Stay in a Good Place.” In this article, the author starts out with two quotes…

“The economy faces some risks, overall, it is – as I like to say – in a good place.” – Federal Reserve Chairman Jerome Powell

“The U.S. economy is currently in a good place with low inflation, low unemployment and an outlook for continued moderate growth.” -Kansas City Federal Reserve President Esther George

Obviously, the common phrase is “a good place.” So, are we in “a good place”? A few points noted in the article were:

  • A recent survey indicated that “businesses have become much more pessimistic entering the fourth quarter.”
  • When businesses increase prices, it is a reliable indicator of future inflation and small business plans to increase prices have fallen drastically. Only 15% of businesses plan to increase prices.
  • With such a low percentage of businesses planning to increase prices, the Fed may take an “even more accomodative path” in their future meetings.
  • New claims for unemployment insurance declined yet again which is notable in a time of heightened recession fears showing that “firms are not panicking, they seem to be simply pausing.”
  • It is likely that the Fed will further aid conditions with another interest rate cut to close the year.

As it relates to commercial real estate, “a slowing, less dynamic economy limits upside for markets and real estate investments, but perhaps limits downside. The odds of being completely blindsided by the deadly combination of halting growth and rising prices appears to still be low.”

A link to the full Costar article is attached.