In the fall of 2022 and into 2023, there was widespread concern among economists that the United States would enter a recession. However, as we approach the end of this year, it seems that a soft landing is more likely than an economic downturn.
According to John Chang, senior vice president national director at Marcus & Millichap’s research and advisory services division, most economists now believe in the possibility of a soft landing. In their recent video titled “5 Potential Risks That Could Derail A Soft Landing,” Marcus & Millichap highlights five potential factors that could shift our economy from its current trajectory towards a possible slump.
The first risk is related to decisions made by The Federal Reserve. If they raise interest rates too high or hold them for too long, it could have negative effects on businesses and consumers alike.
Another factor to consider is retail sales growth. While consumer spending has been keeping our economy going strong so far, there are signs that retail sales may be starting to plateau due in part to decreased savings from pandemic relief measures ending and student loan repayments beginning.
Additionally,the rising cost of capital can also impact businesses’ ability to invest in growth opportunities such as hiring new employees if they are burdened with higher debt payments due increased interest rates when refinancing loans or taking out new ones.
The stability of banks and financial institutions must also be monitored closely as debts become due for repayment – not just commercial real estate loans but business loans overall which can lead some companies with significant leverage struggling financially if unable make timely payments on outstanding debts resulting reduced cash flow available other investments like expanding operations through hiring additional staff members..
Finally , unexpected events such government shutdowns surging oil prices significant union strikes global recessions all have potential shockwaves throughout entire economies including ours here at home . It’s important remain vigilant against these types external risks even though none appear imminent currently according Mr.Chang who believes remainder looks solid with potential for annual growth in 2% range. He also adds that if consensus among economists of only 1% growth in 2024 materializes, it could still be a very strong year for commercial real estate market.
