Bisnow Exclusive: 8 Top Economists Weigh In On Today's Jobs Report
With the latest jobs report pushing up markets, Bisnow got eight top economists to weigh in on the impact and what the strong numbers mean for the commercial real estate market.
Ken McCarthy, Principal Economist, Applied Research Lead for Cushman & Wakefield
"The report is unambiguously positive for the real estate market, with very strong job growth. The combination of job growth with wage growth up 2.5%—the strongest 12-month, year-over-year increase in six years—means more disposable income and likely means more spending, which is obviously good for the retail and industrial markets. So overall it’s a really positive report."
Ray Torto, Harvard Lecturer, Retired Global Chief Economist at CBRE
"Excellent employment report today and solid revisions to earlier months…..This is unlike the early 2000s when we had a jobless recovery—strong GDP growth, no job growth. We are now experiencing a job-full recovery…good job growth but slower GDP growth….I think the Fed focused on the right metrics, and I support Bernanke’s 'courage to act' during the darker days. A job-full recovery is much better for CRE. You can see that in the leasing market metrics for most property types...save retail...which are proceeding to full capacity at a good rate of speed."
Victor Calanog, Chief Economist, REIS
"The job figure of 292,000 for December capped off a solid year for employment growth, with a total of 2.65 million jobs added for all of 2015. At an average of around 220,000 jobs per month, it’s slightly below the 260,000 figure for 2014, but there were plenty of headwinds that held back US economic growth this year—most of which were non-domestic and primarily geopolitical. Overall, this is in line with a “steady as she goes” view for commercial real estate, with outperformers like the apartment market continuing to be solid this year, with steady progress (if slow) for other property types."
Jamie Woodwell, VP of Commercial Real Estate Research, Mortgage Bankers Association
“The December jobs report is another sign the economy has regained its footing. The extra jobs mean increased demand for offices, industrial properties, shopping malls and other commercial space, and for housing of all types. Despite the strength of hiring, wage growth and inflation have remained muted. Add in a dollop of global turmoil—lately focused on China—and interest rates and yields are lower than one might expect. The result is more fuel for today’s commercial and multifamily real estate markets.”
Rajeev Dhawan, Director, Economic Forecasting Center, Georgia State University
"The domestic market is doing well, so the real cause of concern is on the international front, whether it is the strong dollar, the migrant crisis in Europe, the slowing China, or conflict in the Middle East. This is good news for the domestic market. However, the real estate market relies heavily on foreign capital, so that’s where the real worry is."
Robert Bach, Director of Research – Americas, Newmark Grubb Knight Frank
"Friday’s employment report delivers three key takeaways:
1.The “Main Street” economy is doing fine despite headwinds from Wall Street, China and the energy industry. The 292,000 jobs created in December brings the fourth quarter average to 284,000 per month, compared with 200,000 in the first nine months of 2015. The unemployment rate of 5.0% is close to full employment.
2. The strong report supports the Federal Reserve’s intent to raise interest rates several times this year, but the aforementioned headwinds argue for restraint. The Fed may proceed more slowly than planned.
3. This could be the best of both worlds for commercial real estate: Strong job growth will propel leasing activity, while interest rates could be slow to rise, maintaining investor demand."
Mark Vitner, Senior Economist, Wells Fargo Securities
"The larger than expected absolute number of job gains was a real relief, particularly coming in a week when fears that slower economic growth overseas and political rifts in the Middle East might weigh a little heavier on the U.S. economy. December’s stronger job gain put those fears to rest. While the 292,000 jobs added during December were much more than was expected, warmer than usual weather likely played at least a small role in producing that outsized gain. Construction payrolls “added” 50,000 jobs during the month. In reality, construction employment always pulls back in November and December, as the weather turns colder and there are fewer workable hours. This year, however, unseasonably warm weather has allowed more construction activity to take place, which led to a large seasonally adjusted gain. We expect the payroll numbers to give back some of these gains in coming months and expect to see smaller jobs gains in February and March of this year."
Mark Dotzour, Chief Economist, Real Estate Center, Texas A&M University
"The underlying economy is still fairly strong. People are getting jobs and spending money. The faltering stock market is not a harbinger of doom for the 2016 economy. Continued job growth in Texas will created continued demand for residential and commercial real estate."