The economy will continue to grow in 2022 and 2023, according to Richard Barkham, global chief economist, head of global research and head of Americas research for CBRE. In a recent CBRE webinar, Barkham offered an optimistic outlook for strong economic fundamentals next year and beyond, predicting that the economy would grow above trend at about 4.7% in 2022. “That is quite strong. We are looking at very good demand conditions,” he said.
Three factors are supporting the economic recovery out of the pandemic, and driving the outsized GDP growth. Fiscal and monetary stimulus is at the top of that list. “The monetary expansion last year created positive business and consumer confidence, which prevented the economy from going into a tailspin of negative sentiment and laid the foundation or growth,” said Barkham. “It also supported consumer incomes, which was crucial to the multifamily sector.”
While the stimulus has dried up, the impact has not. Plus, more fiscal expansion and government spending is coming—a good sign for the recovery. “The effects linger in the US economy, both the government spending and the low interest rates remain supportive of economic growth,” says Barkham. “With the Build Back Better agenda, there is more fiscal expansion to come, and that will create positive sentiment. We see these factors staying strong and continuing to drive the economy in 2022 and 2023.”
Second, the continued and full reopening of the economy, which will likely happen next year, will help drive more economic recovery in 2022. While the economy has mostly reopened, some regulations remain in place, especially as new variants emerge. The success of the vaccine program and the availability of booster shots will make a full reopening possible. “That is all based on the success of the vaccination program,” says Barkham. “The economic reopening, particularly in the service sector, will continue to drive the economy and the above trend growth in 2022.”
A revival in consumer spending is the last ingredient in the recipe for economic recovery. After two years of sitting at home and several rounds of personal economic stimulus checks, people are flush with cash and they want to spend it. “That will drive higher than normal levels of consumer spending. If that spending continues in the goods sector, it will create opportunities in industrial and logistics,” says Barkham, adding that it isn’t only consumers that have extra money. Companies have also built up healthy reserves during the pandemic, and many are spending that money to upgrade IT systems and other office-related technologies.
These trends are supporting macro economic growth as well as a recovery in our industry. Barkham says, “All three factors resonate for individual property sectors. The recovery that we have seen over the last 12-18 months has led to an almost full recovery in real estate. We have had positive net absorption in industrial, multifamily and retail.”
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