Research | Inflation, The Economy, and Commercial Real Estate

In June and July of this year, the Fed raised the interest rate at the fastest pace in forty years: it raised the federal funds rate 75 basis points at each open market committee meetings. Why did it do so, and what do its actions and current economic data say about the economy? This report will investigate and answer these questions, as well as explore the thinking that is guiding the Fed’s policies and explain the implications of these policies for commercial real estate.

INFLATION AND THE ECONOMY

• What is the federal funds rate and what did the Fed do with it in June and July of 2022?

• Why did the Fed raise the fed funds rate by so much in June and July?

• What does current economic data say about the state of the economy?

• What does the mixed economic data imply for future Fed policy regarding rate?

COMMERCIAL REAL ESTATE IMPLICATIONS

• Given future increases by the Fed and current inflationary conditions, what implications does this have on commercial real estate?

Sunwest Bank 2020 Economic Forum Recap

The 'Sunwest Bank 2020 Economic Forum' was held in Boise on November 5, 2020. It was interesting to be at a live event again and was facilitated by the Boise Center very well.

At the forum CEO Eric Hovde, gave a great presentation, starting with his thoughts and facts on Covid-19 and the effect on the economy and society in 2020. 

It was interesting to see the two slides he put together based on which presidential candidate gets elected.

The 2021 predictions are a little uncertain. One part that was interesting to me was the prediction of white-collar job layoffs. Eric mentioned there are banks already starting this, and he believes that will increase throughout the next year. A second stimulus package will have a short term impact on how all of this plays out and have some challenging long term implications for our country to dig out of after the stimulus high wears off.

His predictions on interest rates and equity markets suggest good things for Idaho’s real estate market. The increase in demographic shifts from high-cost, high-tax states, coupled with low-interest rates, will continue to push demand and values higher in our real estate market. This is showed in the next photo, with Idaho being the biggest winner by the percentage of net domestic migration.