- Consensus GDP estimates continue to move higher, up by nearly two percentage points from three months prior.
- The latest Consensus Economics forecast is for a 6.6% real GDP gain in 2021.
- The highest forecast is predicting 7.7% growth this year, while the lowest is a still-robust 5.5%.
- Strong federal spending has contributed, and tax increases on the table should concern real estate investors.
Consensus Economics released its May survey of economic forecasts, the aggregate of reports by numerous prominent economic forecasters who in recent months have become more bullish on the U.S. economy. The latest mean forecast is for 2021 GDP growth of 6.6%, the strongest in recent memory. The current mean forecast is up nearly two percentage points from three months ago. Strong stimulus spending and proposed government spending are key contributors.
Six different forecasting shops have GDP expectations of 7% or better. This includes Oxford Economics (most bullish at 7.7%), followed by Goldman Sachs, Georgia State University (generally bearish in recent periods), BBVA, Wells Fargo, and Bank of America – Merrill, all predicting 7% gains. Moody’s Analytics, another prominent economic forecaster, anticipates 6.8% gains, slightly above consensus. The Economist Intelligence Unit is the most bearish, predicting a 5.5% GDP this year; no other shops are sub-6%.
Growth is good for commercial real estate. It creates jobs, which fill space and provide incomes that are spent to grow the economy. Investment sales volumes have shown signs of returning to normal in certain property sectors, and strong economic growth should aid the recovery of other asset types. Of course, the federal spending and future spending proposals will need to be paid for. If tax increases on the table are passed, that could influence real estate investors.