U.S. Macro Outlook: Mild Recession ≠ Pleasant

CUSHMAN & WAKEFIELD RESEARCH U.S. Macro Outlook

DOWNSIDE SCENARIO*, 5% PROBABILITY

2020

2021

2022

2023

2024

2025

U.S. Economy Real GDP (AR, %)

-2.8% -9,109

5.9%

1.9%

-1.3%

0.3%

3.3%

Nonfarm Employment

6,170 1,522

4,867 1,123

-6,552 -1,680

2,229

3,289

Office-using Employment

-1,131 6.8%

431

886

Unemployment Rate

4.2%

3.7% 8.8% 7.3% 3.7% 3.8% 5.6%

7.7%

6.7% 3.2% 1.7% 1.9% 3.3% 5.9% $56.7

5.7% 4.7% 1.7% 1.8% 3.7% 5.5%

Retail & Food Services Sales

4.1% 18.9%

-2.5% 4.8% 4.4% 3.8% 7.2% $58.7

CPI Inflation

1.2% 0.1% 0.9%

6.7% 0.1% 1.5% 2.4%

Federal Funds Rate

10-Year Treasury Rate BAA Corporate Bond West Texas Intermediate Office Sector Net Absorption (msf)

2.1%

$42.7

$77.2

$88.5

$63.9

-75.7

-68.5

-37.1

-90.0

-32.1 24.6

29.7

New Supply (msf)

51.9

58.6

49.0

36.3

6.3

Vacancy

14.8% 16.8%

18.2% -0.9%

20.0% -7.3%

21.1% 20.7%

Effective Rents

-7.3%

-5.7%

-3.9%

3.4%

Industrial Sector Net Absorption (msf)

297.5 361.9 5.0%

561.4 361.9

477.3 495.0

149.6 389.9

83.8

216.5 266.6

New Supply (msf)

332.2

Vacancy

3.4%

3.3%

4.6% 3.9%

6.0%

6.2% 2.2%

Effective Rents

6.0% 12.8%

20.5%

-0.9%

Retail Sector Net Absorption (msf)

-24.6

36.0 10.2 6.5% 4.2%

40.9

6.8

-24.2

22.2

New Supply (msf)

13.7

9.0

14.1 5.7% 2.0%

13.5

9.9

Vacancy

7.2% 1.4%

5.7% 4.7%

6.6% 0.7%

6.3% 0.5%

Effective Rents

Multifamily Sector Net Absorption (units, 000s)

303.0 349.1 4.4%

661.4 345.5

-104.3

118.3 485.6

192.6 285.3

270.0 192.7

New Supply (units, 000s)

345.7

Vacancy

2.6%

4.9%

7.1%

7.8%

7.3%

Effective Rents

-0.8% 15.6%

8.9%

1.1% -2.2%

0.5%

Sources: U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics, Federal Reserve, U.S. Census Bureau, Moody’s Investor Services, U.S. Energy Information Administration, CoStar, Axiometrics, Cushman & Wakefield Research *This scenario represents a tail-end downside scenario wherein the economy weakens substantially more than in our baseline. Cushman & Wakefield Research views this scenario as a “downside scenario” relative to our baseline scenario. The probability can be interpreted as the economy having a 95% chance of performing as well as or better than this scenario, and a 5% chance of performing worse.

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