How Can We Help You?

Sector and market analytics

Driven by economists and leveraged by market makers.
CRE performance across major metros and asset classes. History and forecast by CBRE.

Thought leaders abound

Depth, breadth and rigor concentrated at all levels.
Synthesizing macro factors and leading indicators into actionable national, sector and market research.

Advantage is CBRE

Perspectives, scale and connections that work.
Commercial and cultural insight aligned with intellectual capital and experience to fuel informed real estate decision-making.

Which data are right for you?

Data views and extracts by scenario and on demand.
Check out the fundamentals, capital markets, and data tools now on our one-pager.

Experience the platform

See first hand why top institutional investors, direct lenders and private equity firms are clients.
Set a time that works for you.

Leverage CBRE's 
Live, Work, Play Index.

TRY IT NOW

Econometric Advisors' blog

Strongest Q3 GDP Growth Since 2014

Oct 26, 2018, 12:08 PM by Richard Barkham
  • Executive Summary: Gross Domestic Product grew at a better-than-expected annualized rate of 3.5% in Q3, compared with 4.2% in Q2. While Q3 GDP growth was strong, its deceleration from Q2 reflected a downturn in exports and nonresidential fixed investment. Growth was driven by a strong 4% gain in consumer spending and an increase in government spending. Consumer spending comprises more than two-thirds of GDP. Economic growth remains on track for its strongest performance since the global financial crisis.

    Fed Watch: Given strong employment growth this year, today’s announcement virtually ensures the Fed will maintain its current approach to monetary policy normalization. Nevertheless, a key measure of inflation—the PCE price index (personal consumption expenditure)—came in well below expectations (1.6% vs. 2.2% expected), so inflation worries likely are unfounded and likely won’t drive the Fed past current expectations. We expect another rate increase in December and maintain our forecast that the 10-year Treasury rate is much more likely to remain above 3% by year’s end, absent a black-swan event. The Fed has maintained its stance to reduce its nearly $4 trillion balance sheet. As of today, the 10-year Treasury stands at 3.1%. The 10-year breakeven inflation rate—a measure of markets’ expectation of inflation 10 years from now—is just below 2.1%.
  • Policy: Favorable fiscal policy at federal and state levels continues to support employment and wage growth. Wage growth could induce workers on the sidelines to re-enter the labor market, raising the labor force participation rate. On the other hand, productivity growth remains uneven and low by historical standards. As a result, it is likely that inflation will gently pick up.
  • CRE Implications
    • Retail: Consumption growth and a strong labor market augur well for consumer spending and retail sales in quarters ahead. Retail sales continued to show steady growth in Q3.
    • Office: With the economy operating at or near capacity, employers may find it difficult to fill skilled positions from the current workforce. While an increase in labor force participation would help, growth will be limited by an aging population and other demographics. Likewise, fiscal policy may boost the job market, but gains will likely be modest given that the timing coincides with the economy operating almost at full capacity.
    • Industrial: Potential changes in trade policy have thus far been largely rhetorical, which is a positive for industrial real estate. Imports use more warehouse and distribution space than exports do. With rising personal disposable incomes, consumers may spend more on imports in the months ahead.
    • Multifamily: Demand for apartments remains strong, but supply has gotten ahead of demand for Class A units. Rent growth remains positive for Class B/C units, but Class A rent growth has stalled. Solid economic growth should help renters’ pocketbooks and their ability to pay more. Recent tax reform should benefit the multifamily sector further. An increased standard deduction (which reduces or eliminates the benefit of the mortgage-interest write-off for many taxpayers) makes renting more attractive for moderate-income households, and decreased mortgage-interest deductions make renting more attractive for higher-income earners.

Ready to Get Started?

60 second demos.


WATCH NOW

Experience the platform.


TRY IT TODAY

Become a client.


NEXT STEPS

Global Research Tools

redirect pin user minus plus fax mobile-phone office-phone data envelope globe outlook retail close line-arrow-down solid-triangle-down facebook globe2 google hamburger line-arrow-left solid-triangle-left linkedin play-btn line-arrow-right solid-triangle-right search twitter line-arrow-up solid-triangle-up calendar globe-americas globe-apac globe-emea external-link music picture paper pictures play gallery download rss-feed vcard