Signs We Are In a Rolling Recession

Is there a recession coming/? For all those asking, RealPage says there are signs of one already here — a rolling recession in industries that are particularly vulnerable to interest rates.

The discussion about inflation and a recession has largely been one of “will it come” or can the country count on a soft landing/? But the RealPage blog post is a reminder that there are other alternatives.

Jamie Dimon, chief executive of JP Morgan Chase and frequent risk-managing pessimist has been warning about potential stagflation for many months. In such a scenario, inflation runs hot, growth is low, and unemployment, high. It was the scourge of the 1970s.

A rolling recession is different. Instead of an unusual collection of mismatched characteristics, there is a recession but one that doesn’t act evenly across the entire economy. Only certain industries feel the crunch at a time. The slowdown moves from one part of the economy to another, taking turns. The World Economic Forum mentioned in March 2023 that multiple global economists thought the United States might be in a rolling recession.

In December 2023, Cushman Wakefield’s 2024 U.S. Macro Outlook called the U.S. economic condition a rolling recession. “The backdrop for CRE in our baseline forecast is one with many shades of grey,” Rebecca Rockey, Cushman Wakefield deputy chief economist and principal author of the report, said at the time in prepared comments. “Some sectors that are decelerating will probably surprise onlookers with their resilience—such as what we envision for industrial and multifamily demand. As for retail, limited supply puts a cap on just how high retail vacancy will go.”

So, the thought isn’t new.

“The highest wage sectors such as Information (largely tech jobs), Professional and Business Services (office-based jobs) and Financial Activities have seen interest rate pressures erode recent growth,” Carl Whitaker, director of research and analysis of market analytics for RealPage, wrote. “Conversely, sectors like Education and Health Services and Government, which are understandably well insulated from interest rates, are still achieving good to great growth, according to recent data from the Bureau of Labor Statistics.”

He suggested that two sectors warrant monitoring over the next few months: construction and also leisure and hospitality services. “Construction seems like it’s bound to ease,” Whitaker wrote. “Leisure and Hospitality Services has boomed due to pandemic-era excess savings, but with those savings burning off how long will that sector continue to see its strong growth?”

He also noted that the “still-resilient overall nature of job growth has been a boon for [multifamily] demand” and any drag on higher wage sectors hasn’t hurt Class-A multifamily.