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Nelson: “Consumers are happy right now, and when consumers are happy, the economy is happy.” Nelson: “Consumers are happy right now, and when consumers are happy, the economy is happy.”

SAN FRANCISCO—While several macro factors including volatility in the stock market, low oil prices and the stumbling Chinese economy have some economists and investors concerned that the US may be heading into another recessionColliers International‘s chief economist Andrew Nelson puts the facts into perspective and says the outlook is actually quite encouraging – even if the risks are rising. (Colliers International is a GlobeSt.com Thought Leader.) In his recent blog, Nelson provides a detailed analysis why each factor doesn’t necessarily spell gloom and doom for the economy. Here, he breaks it down for GlobeSt.com exclusively and discusses the economy’s impact on the commercial real estate sector.

There are at least three indicators that have people spooked about the economy, Nelson tells GlobeSt.com. “First is the downward trend on Wall Street. The stock market’s recent fall of about 10% could be a leading indication that we are falling into recession, but there’s a famous joke attributed to the economist Paul Samuelson that the stock market has predicted nine of the last five recessions—meaning there are a lot of false positives. Just because the stock market declines, it doesn’t mean the economy will follow, too.”

Nelson is cautious about what the stock market’s recent volatility indicates about real estate for this year. “I don’t forecast the stock market, and I don’t trust people who do. But I will say any potential impacts on the broader economy depend on how long and how much. The stock market goes through these cycles of volatility periodically and then calms down. It had one period like this at the end of the summer that lasted a few weeks, and then over the next few months the market gained back everything it had lost. Now we’re in another correction and volatility remains elevated. But so far it has not reached a scary level or duration.”

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