MID-OCTOBER ECONOMIC UPDATE
Written by: Cade Polter
What’s in the News
The recent news of the Hamas attacks in Israel has captivated the eyes of almost everyone in the United States. It’s too soon to tell what the United States’ involvement will be in this conflict, but we do know that uncertainty in a time of struggle is not helpful for the economy. JPMorgan’s Chief Executive, Jamie Dimon, believes the already high interest rates could continue to rise because of U.S. involvement is Ukraine and Israel. Companies like JPMorgan Chase, who are large and seen as safe, are majorly benefitting right now with JPMorgan’s 3rd quarter profit increasing 35%.
The Federal Reserve’s raising of interest rates over the past year have worked in cooling down the economy. Economists now predict that we will achieve the soft landing that we’ve been hearing about. Avoiding a recession that at one point seemed inevitable is a big win for our country’s economy, but with the good we must take the bad. The American people no longer have as much buying or leveraging power for things like cars, houses, and jobs, which is an effect of the rising interest rates.
What's Next for CRE
The key to commercial real estate recently has been adaptability, as we’ve seen large retail or office buildings being transformed into multifamily communities. Hybrid working roles have taken over since the pandemic ended, with most workers enjoying flexible schedules only needing to be in the office a few days each week. As a result, companies seem to be downsizing their office space and shortening their leases to be able to adapt to their current and future moves. One of the biggest problems for the office market especially in places like Texas is overdevelopment. Guided by their reaction and handling of the pandemic, Texas was one of the first states back on their feet, and they are seeing major economic growth and job creation. But, their office vacancy is extremely high because of the huge development boom that created an overpopulation of commercial buildings.
Sources: Globe St, WSJ, Business Insider.