The Commercial Real Estate Alpha Site

via Titan

Christopher Waller and Michelle Bowman, two Federal Reserve officials who led the push for higher interest rates to curb inflation last year, signaled they may be comfortable holding rates steady for now. Waller mentioned that policy is well positioned to return inflation to the Fed’s 2% goal while Bowman refrained from mentioning anything regarding future hikes.

The commentary is a vote of confidence from two of the most hawkish Fed officials and a sign that we may be approaching the end of the rate cycle. Although rate hikes may be coming to an end, how long we need to stay at current levels will become the focus for investors moving forward – a higher for longer scenario will likely have downstream impacts on capital investment, borrowing, and consumer sentiment moving forward.

Via USNEWS – Gross domestic product grew at an annual pace of 5.2%, up from the initial estimate of 4.9%. Increased investment and government spending drove the higher estimate. Economists had predicted a 5% number.

“Even hotter: real GDP expanded by +5.2% (q/q ann.) in 3Q23, up from initial estimate of +4.9% … personal consumption revised lower while business investment revised higher,” Liz Ann Sonders, chief investment strategist at Charles Schwab, posted on social media.

It was the strongest quarterly growth, outside of the pandemic recovery in 2020, in a decade.

“The update primarily reflected upward revisions to nonresidential fixed investment and state and local government spending that were partly offset by a downward revision to consumer spending,” the BEA said, “Imports, which are a subtraction in the calculation of GDP, were revised down.”

At the end of the day, it seems like Jerome Powell may come out swinging and bullying the markets a bit as the growth is substantially stronger than the Fed likes to see and while I don’t foresee rate increases, I can see tempered talk about reduced or extended delays in rate decreases for 2024.

#economy

#inflation

#thefed

#interestrates

#jeromepowell

#commercialrealestate

#DPCRE