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THREE FACTORS DRIVING INVESTOR UNCERTAINTY
Labor Shortage Still Substantial Despite Interest Rate Hikes And High-Profile Layoffs
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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
HOW THE LABOR MARKET IS IMPACTING THE ECONOMY
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- Looking forward into 2023, which key indicators should investors watch?
- How could the Fed’s decision in February impact the CRE market?
- Why the Fed’s labor shortage battle influences CRE space demand
01/10/2023
EMPLOYMENT RESEARCH BRIEF: JANUARY 2023
Persistently Low Unemployment Brings Implications for Fed and CRE
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Job growth tapers slightly in December. Across the country, a net 223,000 jobs were created in December, pushing the unemployment rate back down to 3.5 percent. While still above the 2000-2019 average, monthly hiring has been trending down since July of this year. Staff additions last month were most prevalent in the leisure and hospitality sector, as well as in health care and construction. Payroll changes in other industries were modest. While joblessness remains low, the concentration of employment growth in only select fields that are either still in recovery or face acute labor shortages may foreshadow a sharper slowdown in job creation to come. This has important implications for Federal Reserve monetary policy, and by extension, the performance of financial markets and commercial properties.
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