Mark Zandi, chief economist at Moody’s Analytics and founder of Economy.com, told more than 1,000 attendees at the CRE.Converge NAIOP conference in Miami Beach, Florida that while the pandemic is changing the US economy, the changes in business are good news promise commercial real estate.
On the positive side, the economy has regained 17 million of the 22 million jobs lost as a result of the pandemic. The policy responses from the Federal Reserve, Congress, and the White House, including the maintenance of low long-term and short-term interest rates, the CARES bill, and the US rescue plan, have all together saved the economy from failure.
“I assume that the pandemic will continue to subside and with each new wave the disruptions to the economy will become less significant. Over the course of the next 18 to 24 months, the pandemic will not go away, but it will largely fade in terms of our work and our lives. “
Zandi noted that whatever the outcome, the infrastructure spending packages will also be beneficial to the economy.
And, on monetary policy, he said the Fed will slowly get its foot off the monetary accelerator – hike short-term rates by spring 2023 and curb quantitative easing on bond purchases.
The pandemic has not only accelerated certain trends, it is also causing permanent shifts. These include teleworking, less domestic travel in general, less business travel and increasing net migration from the metropolitan areas.
Before the pandemic, an average of 275,000 people left urban cores in the US to live elsewhere; During the pandemic, that number rose to more than 600,000.
Zandi also identified the risks inherent in the post-pandemic economy:
- The delta variant of COVID-19 has unsettled consumers and employees.
- Fiscal policy is in jeopardy as Congress threatens to fail to fund the government’s fiscal year beginning October 1.
- House prices are tight and may be prepared for a correction if interest rates start to rise.
- Maybe not today, but at some point national debt and deficits will become a problem.
- Bottlenecks in the supply chain continue to make the procurement of building materials and consumer goods difficult.
Meanwhile, the pandemic has also led to a significant increase in productivity.
“There are fundamental things in the economy that speak for greater productivity growth. Companies are investing in labor-saving software, baby boomers are retiring and the workforce is getting younger. “
“This is a big thing for business. It’s about profits, wages and our ability to address our fiscal policies. “
Kathryn Hamilton is NAIOP’s vice president of marketing and communications.
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