WASHINGTON, DC—Score another point for commercial real estate fundamentals. The US Commerce Department has revised upward gross domestic product for the third quarter to 3.9%, up from a previous estimate of 3.5%. The new reading beats economists' expectations that growth would be revised downward to 3.3%.
The upward revision was fueled by an increase in consumer spending and inventory investment—both of which also support to related real estate asset categories. The GDP report also noted a decline in US exports for the quarter, which reflects another trend in the US economy – concern that a global slowdown will impact growth next year and eventually, the commercial real estate markets.
Certainly the evidence is tilting in that direction. In recent weeks Japan has unexpectedly gone into recession for its third quarter; China's Central Bank unexpectedly cut interest rates to fuel growth after months of insisting it wasn't necessary. In a new report, the Organization of Economic Development worries that the Eurozone will be "affected by persistent stagnation tendencies."
For its part, the National Association of Realtors predicted on Monday that the wave of favorable growth will carry forth into the new year in its quarterly forecast. However, it went on to hint at a potential drag on US growth as overseas markets weaken. "Although GDP will likely climb to near 3% in 2015, the current pace of job growth could slow and ultimately impact commercial real estate activity if sluggishness in the global economy persists," Lawrence Yun, NAR's chief economist, said.
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