Tweet

A government shutdown and default was diverted in September when Congress pushed decisions about government funding and borrowing to Dec. 8.

August marked 83 consecutive months of U.S. job growth, the longest run on record.

All 45 countries tracked by the Organisation for Economic Co-operation and Development are growing, with 33 accelerating.

The Federal Reserve Bank and European Central Bank are taking a measured approach to normalizing rates and sovereign balance sheets.

    You can also download a PDF file of this edition of the BRIEFING
ECONOMIC SNAPSHOT

The possibility of another government shutdown and default disrupted pricing of short-term securities this month under looming deadlines to lift the statutory debt ceiling by Sept. 29 and pass a Fiscal 2018 federal budget by Oct. 1. Tensions eased when the White House defied some Republicans to compromise with Democratic leaders and kick the can of government funding and borrowing to Dec. 8. Meanwhile, the markets continue to prosper despite dysfunction in Washington, underscoring that the primary economic risk today is geopolitical.

August marked 83 consecutive months of U.S. job growth, the longest run on record. All 45 countries tracked by the Organisation for Economic Co-operation and Development are growing, with 33 accelerating. Pervasive economic progress spurred the International Monetary Fund to raise its global growth projection to 3.6% for 2018, up from 3.2% in 2016. Although real estate assets appear fully priced, they are supported by property fundamentals, growth in corporate profits and jobs. Corporate spreads over the 10-year Treasury remain healthy at 250-plus basis points. Consumer and business sentiment are at all-time highs.

The Federal Reserve Bank and European Central Bank are taking a measured approach to normalizing rates and sovereign balance sheets, and with good reason: As former Dallas Fed president Richard Fisher recently noted, 10 of the 13 tightening cycles the Fed has initiated since World War II landed the economy in recession. This cycle could be one of the exceptions, however. Given a lack of inflation and meaningful wage growth despite full employment, market wisdom assigns only a 33% probability of another Fed interest rate increase this year.







20 FAST FACTS

1 Almost 80% of investors responding to a State Street Global Advisors survey cited geopolitical tensions as one of their top concerns for 2017.
2 Annualized auto sales fell to 16.14M in August from 17.22M a year earlier.
3 The UK will phase out the London Interbank Offered Rate (LIBOR) by the end of 2021.
4 Millennials’ share of first-time home purchases climbed to 35% in 2016 from 32% the previous year.
5 Public companies number 3,600 today, down from 7,355 in 1997.
6 Scientists using HIV virus alter T cells to attack cancer, with great promise for treating variety of cancers.
7 In the auto industry, Japan leads the world in robotics with 1,562 robots per 10,000 workers, vs. 1,133 in Germany and 1,091 in U.S.


8 A Competitive Enterprise Institute study argued that the cost of regulation to businesses now exceeds annual cost of taxes.
9 Large public pension plans earned 12.4% during fiscal 2007 but are only 70% funded, with an estimated $1.6T to $4T shortfall.
10 Through second quarter 2017, banks achieved a core capital level of 9.69%, return on assets of 1.07% and return on equity of 9.74%, the highest levels in 10 years, the FDIC reported. The number of problem banks has declined to 105, the lowest level in 10 years.
11 Fund operators report a record $963B in dry powder; Blackstone alone has $32B to invest in global real estate.
12 Fannie and Freddie expect to break their collective record of $112.1B in multifamily mortgages purchased in 2016 as they fill a lending void created by cautious banks.
13 Rutgers Real Estate Center estimates total property losses from Hurricane Irma at $50B to $150B, and Harvey at $70B to $190B.
14 Credit Suisse predicted a surge in store closings, with a quarter of the nation’s 1,100 shopping malls to be lost within five years.
15 Online purchases counted for less than 1% of the $1T grocery sales in 2016, making it one of the lowest online-penetrated retail categories, according to Moody’s.
16 Canadian homeownership costs have risen to 44% of median household income and a staggering 85% in Vancouver, Bank of Canada reported.
17 NCREIF Property Index total returns increased to 1.75% in the second quarter from 1.55% the previous quarter; the annual total return was 6.97%, including 4.69% income return and 2.2% appreciation.
18 According to Real Estate Alert, commercial real estate sales were down $10B or 8.3% in the first half of 2017, with New York City’s $12B drop accounting for the national change.
19 China’s crackdown on outbound investment led to a 40% decline in foreign direct investment. The Chinese Yuan rose to its strongest level in 16 months in September, and has risen 7% against the dollar in 2017.
20 Austria issued $4.2B in 100-year bonds at 2.1%, with active interest for more than $12B.
Tom McNearney

the BRIEFING is an aggregation by Tom McNearney, Transwestern Chief Investment Officer, of other articles and reports. Tom leads Transwestern’s capital market efforts for development and investment nationwide. Tom also serves on the firm’s investment committee and board of directors, and he directs the execution and expansion of the firm’s principal investment activities across the country.

TRANSWESTERN

the BRIEFING
THE NATIONAL ECONOMY AT A GLANCE
SEPTEMBER 2017


DISCLAIMER
Copyright © 2017 TRANSWESTERN. All rights reserved. No part of this work may be reproduced or distributed to third parties without written permission of the copyright owner. The information contained in this report was gathered by Transwestern from various sources believed to be reliable. Transwestern, however, makes no representation concerning the accuracy or completeness of such information and expressly disclaims any responsibility for any inaccuracy contained herein.


transwestern.com
Sign up today to join our mailing list community.

JOIN THE CONVERSATION

Transwestern's Twitter Feed  Facebook Transwestern's Youtube Channel  Transwestern's LinkedIn Page  Transwestern's Flickr Page  Transwestern's Instagram Page  transwestern's SlideShare Page  Transwestern's Pinterest Page  Tranwestern's Vimeo Channel  Transwestern's RSS Feed  Transwestern's LinkedIn Page

return to top of page