Get Ready, It’s Coming: Stagflation Is on the Horizon
The United States and the rest of the world economy appear to be slowly coming out of a prolonged recession. What is going to happen next is a topic of much discussion among economists and other pundits. We strongly believe the U.S. economy will experience a period of stagflation, and the impact on commercial real estate performance will vary by property type.
PENT-UP DEMAND DRIVES ECONOMIC RECOVERIES American consumer spending has been slow during the past couple of years. In 2009 it contracted by 1.2 percent, while in 2010 it grew a meager 1.8 percent. For an economy that largely depends upon consumer spending, this has not been enough to pull the economy out of its malaise. However, the combination of consumers repairing their credit rating by paying down debt and historically low interest rates has laid the foundation for growth in consumer spending. Despite contracted credit markets, American consumers still have easy access to credit and one