This Economist Believes the US Economy is Embarking on a New Eight-Year Cycle

The US economy has kicked off a new eight-year cycle after a mild COVID-induced recession, CBRE’s Richard Barkham said in the company’s recent podcast.   

Barkham, global chief economist and head of Americas research for CBRE, said that while the recovery from COVID has been a “bit volatile,” the US had an “ordinary” and “relatively mild” recession.

“You can see that in the number of workers that are not temporarily laid off statistics…we are at the start of a new cycle over the next seven or eight years,” Barkham said. “And that, I think, will be dominated by some new trends emerging,” including decarbonization, productivity growth, and the shift of millennials out of cities into suburban areas.

Barkham says the last factor in particular will kick off a “single family home market revival” that was completely absent in the last cycle.

He says the commercial real estate market is in full recovery, with a few “question marks” around the office sector. That’s been especially true when viewed through the lens of REITs, which plummeted last March and began recovering in November.

“We’ve seen this reopening play, which has played out where we’ve seen retail come back tremendously, hotels come back. And then on a separate track, we’ve seen the tremendous results in multifamily tracking sort of the growth, everything that’s going on in housing markets generally,” said John Worth, executive vice president of research and investor outreach for NAREIT. “Over the whole course, we’ve seen equity reads up about 12% over that entire period, despite being up 27% this year.”

The US economy has posted 4 to 5% GDP growth in the third quarter, bolstered by what Barkham calls “very supportive government policy” and low interest rates.

“That said, it’s quite clear that we’re running into some issues in the global economy—not so much the American economy—that will throw up some volatility,” he said. “The supply side, the supply chain shortages, the difficulty in getting goods to market. The difficulty of getting people into jobs. It’s proving much bigger than we first thought.”

Another challenge the economy will face: Over the next five years, Barkham predicts the labor force in the US will shrink, constraining growth.