NAR Chief Economist Weighs In On Commercial Real Estate Survey

Goldman Sachs Headquarters, New York City

Fifty-one major economists predict that the US economy will grow markedly this year.  While predictions seem to vary in press reports, a recent survey conducted by the Wall Street Journal shows economists becoming more bullish.  Most suggest that neither unemployment, inflation nor state budget problems will halt growth.

A survey respondent, Goldman Sachs chief economist Jan Hatzius, has changed his predictions to a more favorable outlook in just a few months.  He answered 10 questions about the economy with yes/no answers with a “yes” to whether we’ll see a real recovery.  Hatzius says deleveraging will slow, and consumers will start to spend a larger portion of their incomes, which will lead to organic growth outside inventory changes and or fiscal policy.

Dr. Lawrence Yun, NAR chief economist says, “There is a tax incentive to spend this year from full business expensing rather than depreciating asset purchase, so we could get a quite a rush in spending as the year progresses.  However, companies are still worried about more burdensome and uncertain regulatory environment and a higher tax climate in upcoming years.”

The growth prediction, published in this week’s survey is a year-over-year increase in GDP of 3.5% by Q4, 2011.  Of course, unemployment impacts commercial real estate, and while its rate is expected to dip, it is not expected to drop enough to see office and retail occupancy rates become healthy by year end.

Yun said one big wildcard to the speed of economic recovery is when businesses will open their wallet.  “Big companies are flush with cash but have been just sitting on it rather than redeploying into the economy in terms of hiring or buying equipment and property,” he added.


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