BELLEVUE, WA—Although the US economy has recently been thrown into greater uncertainty by China's economic meltdown and the Fed's decision to hold interest rates, economist Marci Rossell believes that, in the big picture, it's just a blip on the country's steady pattern of recovery and will sort itself out over the next several months. Rossell, former CNBC chief economist, provided a capital markets update to attendees at CREW Network's annual convention, currently under way in Bellevue, WA.
Rossell predicted that China's downturn, which she believes is actually much more severe than currently recognized, will have only a short-term effect on the US, whereas its impact will be felt for much longer in other regions. Based on patterns in previous Asian crises, she expects there will be a second-round loss within the next six to nine months, though she can't predict which country's economy will feel the pain. And until that happens, the current high degree of risk aversion will continue to be in place.
She also predicts that the Fed will ultimately increase rates by the end of the year, but those increases will be minute compared with past patterns.
Buoying the US economy are several factors, particularly a fully recovered housing market, lower employment rates and cheap oil.
“Never underestimate the power of the pump when it comes to consumer confidence,” she told the audience. The difference between $2.50 for a gallon of gas and $4 typically nets American families an extra $1,500 a year, regardless of where they fall on the economic spectrum. And that bonus typically results in a spending boom, though it's not clear yet how US consumers will spend their money.
In terms of CRE, she said the current inflow of investment in US real estate bodes well for the industry, as well as the economy. The fact is that downturns elsewhere in the world are strengthening US, she said. The US is seen as a safe haven for investment. “The rest of the world is smarter than we are when it comes to our economy,” she said.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
