Signs that consumer strength will positively impact retail, multi-family and commercial real estate sectors for 2019

Domestic Economy

The following news about the domestic U.S. economy on January 4, 2019, supports reasonable optimism for continued growth in and value of the retail, multi-family and commercial real estate sectors for 2019 (for the BLS press release click HERE).

·     Total non-farm employment increased by 312,000 from November 2018 to December 2018. 

·     Real average hourly earnings increased 0.3 percent over the month in November. 

·     Inflation was unchanged in November 2018; rising 2.2 percent over the last 12 months. 

·     Productivity increase 2.3 percent in the non-farm business sector in the 3Q 2018.

A broader context reveals that that nearly 20.5 million jobs have been added to the economy for period December 2009 to December 2018.

Source: U.S. Bureau of Labor Statistics; Hoffman Strategy Group

Source: U.S. Bureau of Labor Statistics; Hoffman Strategy Group

Federal Reserve

Federal Reserve Chairman Jerome Powell spoke about these latest economic measures in a roundtable in Atlanta at the American Economic Association’s annual meeting (watch HERE). His outlook for 2019: “with the muted inflation readings that we’ve seen coming in, we will be patient as we watch to see how the economy evolves.” That has been translated by Wall Street to mean a low probability for interest rate increases in the New Year. We will learn more at the Federal Open Market Committee meeting scheduled for January 29-30, 2019.

Recession fears are still expressed in the yield curve as pricing in the markets reflect concerns about slower global economic growth, trade dispute with China and political uncertainties around the government shutdown and the federal budget.

Implications

Overall, however, the macro-economic measures provide evidence that the U.S. economy remains in a growth cycle that has entered its 114th month since the expansion began in June 2009. All cycles end or at least dip at some time.

These are positive signs that consumer strength, which is two-thirds of the U.S. economy, is highly likely to support growth and development activity in the retail, multi-family and commercial real estate sectors for 2019.