By Jason Tolliver
With the economy near full employment, corporate leverage approaching previous business cycle peaks, and the yield curve flattening, some are wondering if a recession is around the corner. Not so fast. A host of economic data (jobs, confidence, manufacturing and transportation measures, etc.) indicate that the current expansion still has room to run. Our U.S. Macro Forecast calls for continued growth through at least 2018. Others have similar expectations; Oxford Economics recently evaluated the odds of a U.S. recession in 2017 at 1%. Eventually, the current expansion will end, industrial leasing velocity will slow, and the business cycle will reset; however, that does not mean the U.S. industrial market will experience a prolonged slowdown or every industrial market will register negative net absorption.
Recessions are a natural part of economic and business cycles. Not all recessions, or recessionary triggers, are created equal. The 2001 recession lasted eight months, coinciding with the tech bubble burst and the 9/11 attacks. The Great Recession lasted 18 months and was sparked by the subprime mortgage crisis that created a global banking crisis. Regardless of length or trigger, industrial markets enjoying a diverse economic base, strong demographics, and the geographic advantage of being proximate to population centers (that have the infrastructure needed to reach them efficiently) tend to perform best when economic growth stalls.
Senior Director, GIS & Market Analytics
Industrial Analyst, Americas
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Head of Industrial Research, Americas
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