National and Macroeconomic Market Overview
The Bureau of Economic Analysis “final” GDP estimate for the Second Quarter was released on September 29, 2016. It showed overall economic growth at a 1.4 percent annual rate. This was the third consecutive subpar quarter, and confirmed that the long expansion (now at 86 months in duration) is slowing its momentum. The initial Third Quarter estimate will not be out until early November. Preliminary data indicate continued sluggishness. Retail sales are up just 1.9 percent year over year. Housing starts, permits, and home prices slipped during the summer. Industrial production and capacity utilization are also in decline from 2015.
More positively, net real exports have risen for the last several months, and this should be strengthening GDP during the second half. The
auto industry has also been trending upward. Incomes have started to rise, and for the first time in this cycle lower and middle-income households are benefiting materially, according to a Census Bureau study released in September. This is contributing to a small uptick in inflation, with core CPI now up 2.3 percent year over year.
Read more: 2016-central_q3_state_of_market
Economist Hugh F. Kelly PhD, CRE, who leads TCN’s Real Estate Economic Committee, is Clinical Professor at New York University’s Schack Institute of Real Estate where he has taught for 30 years. He is widely cited in the real estate industry and is a frequent speaker around the world.