By Kevin Thorpe, Chief Economist
We enter 2017 with measured optimism. After all, the U.S. economy and property markets performed well despite a turbulent 2016, and they’re positioned for a strong 2017, which should carry over to 2018.
Even before the election, the U.S. economic fundamentals were showing signs of heating up. We observed a big GDP number in Q3, accelerating wage growth, surging consumer confidence – a string of really robust trends were already forming. Now when you layer in the expected tax cuts and the potential for new spending from the new administration, it creates an even stronger economic backdrop for property markets.
Although it will take time for policy to form, Cushman & Wakefield expects that President-elect Trump, alongside a Republican-controlled House and Senate, will deliver fiscal stimulus measures that will further boost the U.S. economy and property markets. That said, some of the expected growth in fiscal policy will be negated by tighter monetary policy, higher interest rates, higher inflation and more global volatility.
On net, Cushman & Wakefield forecasts the U.S. real GDP will grow by an upwardly revised 2.3 percent in 2017, and will hit 3.0 percent in 2018. This will be enough growth to generate over 3 million net new jobs over the next two years and an increasingly robust environment for consumers, driving more demand for commercial real estate space than was previously assumed.
Although headwinds have come and gone and come again, the major force driving growth – the consumer – is still gaining momentum. Of course, we are ushering in a new era of fiscal and monetary policy, and that will continue to generate uncertainty. However, we believe there will be a net positive impact on economic growth as well as the property markets in 2017 and 2018.
What are your predictions for the new year and beyond?
Kevin is Cushman & Wakefield’s Global Chief Economist, focusing on global economic trends and forecasts. He and the firm’s worldwide research team produce studies and statistics on topics affecting the global and U.S. economy, capital markets, finance, leasing fundamentals, property and project management and factors that affect supply-demand fundamentals in commercial real estate. Kevin has developed several econometric models to predict market trends, is a member of the National Association for Business Economics (NABE), and has authored numerous studies and survey reports. In 2014, he was recognized as the nation’s most accurate economic forecaster with the NABE’s Outlook Award.