How does the January jobs report impact CRE in the short-term vs long-term? What is the relationship between job creation and absorption? Should CRE investors feel optimistic or discouraged by the latest jobs report?

Softening economic data warrants less-assertive rate increase. The Federal Reserve has extended its tightening cycle into 2023 by raising the federal funds rate to a lower bound of 4.50 percent. The 25-basis-point increase is nevertheless the smallest hike since March of last year, reflecting both easing inflation pressure and diminishing economic growth. Headline CPI actually dipped 0.1 percent on a monthly basis in December, for a year-over-year change of 6.5 percent. The 14-month low in consumer… Read More

Slowing rate of inflation a welcome sign. Core retail sales in the last month of 2022 were up by 7.2 percent year-over-year. Despite a notable upward stretch, spending may be softening. December’s retail sales volume was a step back from recent months, a potential signal of the challenges facing consumers in the year ahead. While overall cash savings is some $4.4 trillion above the pre-pandemic mark, not every household was able to set aside funds. These… Read More

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… Read More

Job creation robust in October. Hiring continued at a strong clip last month with the creation of 261,000 jobs, although the pace is decelerating. Employment growth averaged 562,000 positions per month in 2021 and 457,000 in the first seven months of this year. Since July, that tempo has moderated to 289,000, which is nevertheless about 60 percent above the 2010-2019 mean. Notable October onboarding occurred in professional and technical services, manufacturing and accommodation. The most staff… Read More

Hiring allows spending to elevate and broaden. Overall retail sales climbed by triple the pace of CPI inflation last month, up 1.3 percent. This indicates that spending improved in real terms. Expectation-exceeding October job creation that pushed the national headcount to 800,000 positions above the pre-pandemic mark partially offset the impacts of higher prices, steeper borrowing costs and other economic concerns. While consumers continued to place an emphasis on necessary items such as food and gas,… Read More

Hiring sustains pace in November. Employers brought on a net 263,000 new personnel in November, roughly in line with the prior three-month average. Over 4.3 million jobs have been created year-to-date, which already marks 2022 as the second-best year for employment growth in over two decades, with one month left to go. Hiring was led by sectors still in recovery, with a combined 175,000 new roles at bars, restaurants and hotels, as well as in government… Read More

Consumers reserve discretionary buys for promotional events. Apart from several necessity-based segments, spending declined across most retail categories last month, translating to a 0.6 percent drop in sales. This is significant, considering purchasing was up 12 percent year-over-year on Black Friday, and a record $11.3 billion was spent on Cyber Monday. Higher sales volumes were registered during these promotional events, but the overall decline in monthly retail sales suggests many consumers curtailed their discretionary spending during… Read More

Affordability constraints remain the key storyline in 2023. Prospective homebuyers are encountering the compounded effects of a pandemic price run-up and subsequent surge in mortgage rates. Adding to those challenges is a growing concern over a potential economic slowdown or recession. The possibility of stalled career advancement makes taking on sizable long-term debt unappealing. Residents that have been waiting for the opportune moment to buy a home will struggle to find much relief this year. The… Read More

What should investors focus on as interest rates rise? How could the Fed’s latest guidance impact the CRE market? How can CRE investors best position themselves in the current climate?