What the Fed does with interest rates this year will have a "profound effect" on the economy, commercial real estate space demand, financial markets and capital markets — and the labor market remains one of the top factors in the Fed's decisionmaking, according to Marcus & Millichap's John Chang.
"Basically the employment market remains airtight and wages have been growing at an annual rate of nearly 5%," Chang notes. "That's about double the normal rate of wage growth and it's a key inflation element being cited as a problem by the Fed."
Unemployment has been running north of 3.5% since March of last year, and nearly 10.5 million jobs remain open. And while some sectors are beginning to soften, that's not true for all businesses: hospitality still faces a major shortfall, as does healthcare.
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