In the real estate industry, it is crucial to stay on top of market trends, of course, but also those of the global economy, which affects not only real estate, but most aspects of daily life. Keep up to date with Luxury Portfolio International here, where Dr. Marci Rossell, chief economist for Leading Real Estate Companies of the World, shares her top five insights from the past month.
1. Federal Reserve's monetary policy and debt ceiling
The Federal Reserve held steady on interest rates but paused quantitative tightening due to the uncertainty surrounding the U.S. debt ceiling. Chairman Jerome Powell emphasized the need for Congress to resolve the debt ceiling issue, reached in January, to avoid disturbing financial markets.
2. Economic policy uncertainty and recession concerns
Economic policy uncertainty remains high due to ongoing tariff policies and budget disagreements in Congress, affecting investments, hiring and other economic activities. Despite negative sentiments, Dr. Rossell is not convinced a recession is imminent, as key indicators, such as initial claims for unemployment benefits and layoffs, have not increased significantly.
3. Impact of tariffs and imports
Businesses in sectors such as construction materials and automotive are stockpiling imports to get ahead of potential tariffs, affecting GDP numbers. This preemptive action causes a temporary increase in imports, potentially leading to a decline in GDP, but does not necessarily indicate a real economic downturn.
4. Home builder sentiment and new construction in the U.S.
Home builder sentiment has dropped significantly due to elevated building material costs, tariffs and other supply-side challenges. Builder confidence in newly built single-family homes is at its lowest level in seven months. Tariffs are estimated to add around $9,200 to the cost of a new home.
5. Global economic outlook
In Europe, inflation has slowed, but economic uncertainty remains high due to trade disruptions. The European Central Bank is lowering rates to address economic weakness. In China, the economy is struggling with a significant recession driven by falling home prices, with potential losses exceeding $30 trillion in output. The lack of institutional mechanisms in China exacerbates the situation.
As LeadingRE’s chief economist, Dr. Marci Rossell explores how global economies, policies and politics affect the real estate industry and our everyday lives, either directly or indirectly. Dr. Rossell has a proven track record for analyzing the economic market as the former chief economist at CNBC and corporate economist at OppenheimerFunds.
