Lower Interest Rates And An Industrial Boom: Peter Linneman’s Predictions For The U.S. Economy

February 23, 2024

Economist Linneman, in a recent Walker Webcast, forecasts economic steadiness with 1.5% to 2.25% inflation and a 3.5% 10-year Treasury yield post-pandemic. He anticipates five interest rate cuts in 2024. Despite positive signs like new restaurant openings and supply chain stabilization, Linneman questions the Federal Reserve’s goal of increasing unemployment to cool the economy. With 20% of sectors facing interest rate dampening and 80% catching up, he highlights the challenge. Linneman suggests incentivizing local jurisdictions to boost housing supply using federal funds. Industrial and multifamily sectors lead in property demand, with multifamily benefiting from undersupply in single-family housing. Linneman underscores the growing need for warehouse space due to increased online sales. Hospitality faces ambiguity, with hotel revenues down despite high bookings. Linneman predicts healthcare savings from weight-loss drugs and foresees rate cuts, a 3.5% 10-year Treasury, a 6% to 7% Dow increase, and oil at $68 to $70 a barrel.

 

Bottom line: Economist predicts steady economy, rate cuts, and challenges in hospitality.

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NEAL'S TAKE

I shared this article because I find every interview with Peter Linneman entertaining and enlightening. Peter is brilliant and has razor sharp insight, and I watched the Walker Dunlop interview live with great interest. The whole article is worth reading. I generally agree with Peter’s predictions, except I think that 5 rate cuts in 2024 are one too many.