As 2023 gets started, the big question for investors is what they can expect from the economy. It’s anyone’s guess, as the fed continues to move interest rates higher, in order to bring inflation down. On a good note, inflation rates have peaked, as the Jan. 2023 inflation reads show continuing decline in all key measures. Unfortunately, inflation continues to be high for the Fed to ease rate hikes.

The good news is that forward indicators show positive trends for inflation. The cost of shipping from overseas has significantly declined, while overseas traffic has normalized, although some of that is due to decrease demand. Commodity cost for key inputs, like steel and wood, have both significantly gone down, which will contribute to inflation declines. Moreover, while decreasing inflation may signal a weakening economy, this is far from reality, as of now. Employment rates have remained strong, while an improving supply chain will continue to ease price pressure for the consumer. A lot of the forward indicators are signaling that inflation will continue to slow, leading to a soft landing for the economy. This is what everyone wants to see in 2023.

The question will be if the Fed see’s these signs as positive. For the moment, it’s up to the Fed in what it does in its Feb. 2023 meeting. If it signals that it’s easing its rate hike, then the commercial RE sector may see an upward momentum, at some point in 2023. Investors, in both Wall Street and Commercial RE will benefit from a clearer economic horizon.

Afterall, no one likes not knowing what is on the horizon. For the moment, investors will have to look for opportunities in an uncertain environment. Click on the link and let’s talk more.