HOUSTON – The U.S. economy continued to show signs of slowing just before going into the 16-day partial government shutdown in October. Overall job growth, weak core durable goods sales, falling consumer confidence and retail sales continue to be anemic and reflect the political and budget uncertainties. While there are some bright spots, the slowing economic climate and political uncertainty are likely to continue to be a drag on hiring, business investment and retail sales in the near term, according to the October edition of “the BRIEFING” report compiled by Transwestern.
The Federal Reserve effectively confirmed that it shares this view when it emerged from its October two-day policy meeting with the $85 billion bond buying program still intact. The Fed provided no clear signal whether it would begin easing stimulus before year-end as previously announced. However, the rehiring of furloughed government employees and reinstatement of salaries should provide some lift in the fourth quarter.
Banks have started to get squeezed by slumping mortgage demands, a sluggish economy and a tumultuous bond market. The 10 largest bank and securities firms reported adjusted 3Q13 revenues are down 4.8 percent and earnings are down 6.9 percent. However, auto sales remain a bright spot and rose 11 percent to 1.2 mm vehicles in October. The government shutdown slowed auto sales in the first half of October, but they picked up speed in the last two weeks. Stable fuel prices, low interest rates and increased availability of credit fueled demand.
Meanwhile, commercial real estate is still a safe haven for institutional and non-institutional investors. The U.S. office market continues to slowly improve as 3Q13 vacancy rates nudged down to 16.9 percent from 17.0 percent the previous quarter and a recession peak of 17.9 percent. The third quarter saw a 0.3 percent growth in rent, with 3.3 percent over the past year.
More information can be found in Transwestern’s October issue of “the BRIEFING,” a monthly publication analyzing the national economy, capital markets and commercial real estate. The full report can be read here: http://www.transwestern.net/public/corporate/Briefing/TheBriefing_1013.pdf
“The BRIEFING” is an aggregation by Tom McNearney, Transwestern chief investment officer, of other articles and reports. McNearney leads Transwestern’s capital market efforts for development and investment nationwide. McNearney also serves on the firm’s investment committee and board of directors, and he directs the execution and expansion of the firm’s principal investment activities across the country.
Transwestern is a privately held real estate firm specializing in agency leasing, property and facilities management, tenant advisory, capital markets, development, research and sustainability. The fully integrated global enterprise leverages competencies in office, industrial, retail, multifamily and healthcare properties to add value for investors, owners and occupiers of real estate. Transwestern facilitates better decision-making for clients by combining penetrating local market intelligence and macro-market research through its affiliate, Delta Associates. Transwestern has 34 U.S. offices and assists clients through more than 181 offices in 40 countries as part of a strategic alliance with Paris-based BNP Paribas Real Estate. For more information, please visit www.transwestern.net and follow us on Twitter: @Transwestern.
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