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NAR’s Yun Sees CRE “Warning Signs” Amid Strong U.S. Jobs Report
Although a stronger-than-expected September jobs report may seem on the surface to be cause for celebration, economists were wary of the news Friday. “The job market continues to crank out jobs in high figures: 336,000 in September and over four million more compared to pre-COVID-19 March 2020,” said Lawrence Yun, chief economist at the National Association of Realtors. “It does not mean all is well.”
Yun noted that the jobs data is considered a lagging indicator “as the firms will only make a job cut decision after having cut costs in other areas. Commercial real estate, in particular, is flashing warning signs. Net leasing on retail and warehouse spaces is slowing. The office sector is continuing to bleed with rising vacancy rates. Community banks, many with exposures to commercial real estate, are watching their balance sheets carefully.”
He said that in view of an already-cooling inflation rate, “the Fed needs to stop raising rates and strongly consider cutting interest rates next year. That would be the soft landing without the net job cuts to the economy.”
Other economists expressed skepticism that the Federal Reserve was done with its present course. “The jump in employment, the extremely low level of unemployment claims, and the rise in job openings keep alive the possibility of the Fed raising rates one more time this year,” Kathy Bostjancic, chief economist at Nationwide, told Reuters. “Moreover, it underscores that they will be in no hurry to cut rates – higher rates for longer.”
At Inflation Insights, founder and president Omair Sharif similarly told the Wall Street Journal, “This is a blowout report, and it’ll have people thinking that the Fed may pull the trigger on another hike before year-end.”
- ◦Economy
