February 7th, 2023
A Recession, but Chill
Am I worried? Yes, constantly. About many things. Catalytic converter thefts, the price of eggs, is my mother proud of me. But lately my favorite thing to worry about is the ever-looming, just around the corner, inevitable recession.
While the word alone can paint terrifying images of depression era bread lines, there is reason to have hope according to Richard Barkham, CBRE’s Global Chief Economist and Global Head of Research. He writes, “Next year won’t be pleasant, but neither will it be a disaster like the Global Financial Crisis. The economy will stabilize and start to improve in 2024. The recovery from there might surprise on the upside.” “Not a disaster” is music to my anxious heart. “Might be surprised on the upside”, I am practically swooning. Who knew Mr. Barkham was such a flirt. But what makes this financial Casanova so confident of a chilled-out recession?
He’s possibly been chatting with Ross Mayfield, an investment strategy analyst at Baird Private Wealth Management. I imagine him shouting to our Mr. Barkham over a rowdy game of Pickle Ball that “the case for a relatively mild and short-lived recession can be made by examining current economic data, including robust consumer spending and a strong labor market.”
And Mr. Mayfield is not alone in his beliefs. Especially regarding the US labor market. The Deloitte Global Economist Network reports, “Since the trough of April 2020, the economy has added 21.5 million jobs, unemployment has fallen to 3.6%, and the employment-to-population ratio is edging back to what it was before COVID-19 hit American shores.”
Arizona in particular has emerged as a top contender in new job creation. This great state, which admittedly I am a tiny bit biased about, created more than 200,000 new jobs over the past two years, with 110,000 jobs this year alone, according to ABI Multifamily’s Q3 MSA Report.
They also conclude that this intense job growth combined with increased wages, excellent weather, and comparatively low housing costs has led to a surge in new residents bursting across state lines with the veracity of the 1848 Gold Rush. These newly welcomed Arizonians bring their need for housing and their spending power. Or in simpler terms, their money honey, boosting Arizona’s economy and fighting off a major recession for another day.
So, we can all make a cup of tea, call our mothers, and be comforted by the words of Dr. Christopher Thornberg, nationally recognized economist, and founder of Beacon Economics, “We’re not in a recession. We really aren’t… the dominant source of growth in the U.S. economy is the U.S. consumer, and the consumer is alive and well.”