Predictions of a U.S. recession seem to be fading away, with recent economic data showing better-than-expected numbers in consumer spending and unemployment and pointing to a resilient U.S. economy.
The economy is looking so solid, in fact, that the Federal Reserve will likely double its projections for growth when it publishes its economic outlook next week. One estimate produced by the Atlanta Fed shows the economy expanding by 5.6% in the third quarter. And last week, Goldman Sachs cut its odds of recession to 15%, well below its projection of 35% in March.
While the Atlanta Fed’s data is often volatile, and the numbers will likely change in the coming weeks, one thing is clear: The U.S. economy is doing well, which is always good news for real estate investors.
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What the Data Is Telling Us
The summer was a great time for retailers, with robust consumer spending numbers in June and July and unemployment around a five-decade low. Economic activity in the service sector rose for the eighth month in a row in August, while inflation has eased slightly but still remains above the Fed’s 2% target.
Financial markets have also shown resilience, even amid ongoing uncertainties. While corporate profits were down for the second straight quarter, investors remain undeterred, and some analysts are predicting the optimism will continue.
The numbers weren’t so positive three months ago, when Fed officials last updated their projections, estimating the economy would expand by a mere 1% in 2023. Still, it was much higher than the Fed’s projections in March, when they predicted a recession.
Now, the Fed is expected to increase those projections even more at the conclusion of its Sept. 19 and 20 policy meeting. And that could also mean the central bank scales back on the number of rate hikes in the coming year.
What This Means for Real Estate Investors