An Economic Update in Turbulent Times
July 06, 2022
By Travis Epp
In June 2022, EisnerAmper’s Sarah Brand and I were joined by JLL Chief Economist Ryan Severino for a webinar on the state of the U.S. and world economies. The timely, insightful session, “An Economic Update in Turbulent Times,” explored various economic issues from global supply chain challenges and inflation to rising interest rates and the impact of the Russian invasion of Ukraine, among others.
Here are some key takeaways:
Breaking Down Inflation
The topic of inflation is on everyone’s mind, and for good reason. No one yet really knows inflation’s true impact. In fact, we don’t have empirical evidence showing if hiking rates will slow inflation or if it even hurts the economy. During the session, Severino examined some of the short-term disruptors to better understand inflation and addressed questions such as:
- When will inflation peak?
- Should we fear inflation?
- What areas can the Fed target to curb inflation?
Global Supply Chain Pressure = Restricted Production
Regardless of the industry in which a business operates, the fractured supply chain impacts everyone. Demonstrated through a New York Federal Reserve index that shows the influence of supply chain disruptions over the past 25 years, Severino explained how international impacts have created challenges in the past and how we may be starting to see the light at the end of the tunnel.
Watch What Consumers Do, Not What They Say
In early June 2022, the Consumer Sentiment Index was at its lowest level on record, yet consumer sales were at their highest. Severino used this observation to drive home the point that it is important to understand what consumers are doing rather than what they may tell surveyors.
Furthermore, thanks to aggerated earnings growth metrics, Severino discussed how we can better depict the overall spending power of consumers in the economy by examining how many people are working, how many hours they’re working, and what the average wage is.
Economic Growth – Still Slowing but Solid
Having showcased his own forecasting model, Severino talked about how we are still seeing a positive trend in economic growth, though it’s still slow. He also discussed why he thinks there is still enough momentum, for now, to avoid an economic recession in the short term.
Determining CRE Stability Through Examining Vacancy Rates
Commercial real estate economics has always been an indicator of how our economy is performing. Using a CRE scorecard, Severino explained where we are in what we refer to as the “commercial real estate cycle,” and when we can expect it will be stabilized again in terms of vacancies and their historic peaks and recoveries.