CBRE: 2017-2018 Economic Prospects Brighten Under Trump

The U.S. has changed course from fiscal contraction to fiscal expansion, which will drive economic growth in the U.S. over the next two years, particularly in 2018, and result in increased imports from the rest of the world, according to Richard Barkham, Ph.D., chief economist, global, CBRE; and Neil Blake, Ph.D., head of research, Europe, the Middle East and Africa, CBRE, writing in the “CBRE Viewpoint Global” report.

Here are six potential impacts on U.S. real estate to watch for:

  1. The banking sector will probably expand, with significant changes being made to Dodd-Frank, which could “increase the flow of debt to real estate, including construction, which has been relatively weak this cycle.”
  2. Medical office demand could be depressed by significant changes to the Affordable Care Act (also known as “Obamacare”). “This said, demographics—specifically the growth in the number of 65-year-olds and over—points to long-term demand growth,” the reported predicted.
  3. Skilled worker numbers in the U. S. could plummet with significant immigration restrictions. This could hurt high tech in the U.S. “Tech has been the main driver of office absorption this cycle,” the report warned.
  4. Tariff restrictions could also pose a threat: “Our best case is that increased growth in the U.S. means more imports, leading to greater industrial demand and port activity. This would be reversed if the imposition of tariffs escalated into a tit-for-tat trade war,” said the report.
  5. Wage growth should drive consumption and retail sales near-term. “However, stricter immigration policy could affect labor supply and costs for retailers and restaurants.”
  6. If the dollar gains in strength, as predicted under a Trump stimulus policy, tourist luxury retail spending and the hotel sector could suffer, the report concludes.

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