Labor Shortage Still Substantial Despite Interest Rate Hikes And High-Profile Layoffs

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