Fluctuations in the U.S. Economy Push Expectations for Fed to Raise Interest Rates to Fourth Quarter

HOUSTON, June 4, 2015 /PRNewswire/ -- Concerns about inflation, emerging market vulnerabilities and down-shifts in economic growth in first-quarter 2015 have pushed expectations for the Federal Reserve to raise interest rates back to fourth-quarter 2015, according to the June edition of "the BRIEFING," a report compiled by Transwestern that covers the national and global economy and capital markets.

Photo -  http://photos.prnewswire.com/prnh/20150604/220925-INFO 

NATIONAL ECONOMY

• First-quarter gross domestic product has been revised down to 0.2 percent.
• The March trade deficit exploded to a six-year high of $51.4 billion, suggesting growth may be further revised down to negative 0.3 percent.
• April employment increased to 223,000, and the jobless rate ticked down slightly to 5.4 percent.
• Labor force participation rate rose to 62.9 percent, up 20 basis points.
• Consumer confidence declined in April after rising in March.
• U.S. industrial output declined 0.3 percent in April, the fifth straight monthly decline.
• March new home sales fell 11 percent from February to an annual pace of 481,000; however, first-quarter 2015 sales represented a 21.7 percent year-over-year gain.
• The 30-year mortgage interest rate has declined to 3.65 percent from 4.4 percent last year.
• Average hourly wages have increased 2.2 percent over the last 12 months to $24.75.
• Oil hit $58.93 per barrel on May 4 compared to $43.46 on March 17, firming up inflation.

GLOBAL ECONOMY
Fresh fears about Greece, the rising dollar, falling energy prices, rising debt levels, uneven global expansion and the threat of rising U.S. interest rates continue to buffet the market and economic prognosticators around the globe.

• Europe's economy appears to be on the mend: governments have halted austerity and are actively stimulating economies.
• The International Monetary Fund raised eurozone growth forecast to 1.5 percent.
• German bonds are returning negative yields out to the eight-year mark.
• Spain, Italy and Portugal enacted changes, giving labor markets flexibility and business climates support for growth.
• Greece is again close to default and an exit from the euro, raising doubts about the ongoing European recovery.
• China is launching broad stimuli, assisting local government to restructure heavy debts, while lowering rates and prodding banks to lend.
• Japan showed eye-popping first-quarter growth of 2.4 percent.

CAPITAL MARKETS

• The death of the 35-year bond super cycle (period of steady interest rate decline) appears to be inevitable but perhaps not imminent. Rates are likely to increase in fourth-quarter.
• First-quarter bank earnings were better than expected, with distressed commercial real estate assets at $25.9 billion at year-end 2014, down by a third from $38.4 billion at year-end 2013.
• NASDAQ composite finally exceeded its March 2000 tech-bubble peak as sharing economy and social networks drive valuations, reminiscent of the dotcom bubble.
• The Illinois Supreme Court ruled the state's pension overhaul as unconstitutional.
• Moody's downgraded Chicago's credit rating to junk bond status (Ba1)

More information can be found in Transwestern's June issue of "the BRIEFING." Download the full report at: http://twurls.com/briefing0615

"The BRIEFING" is an aggregation by Tom McNearney, Transwestern's chief investment officer, of other articles and reports. McNearney leads Transwestern's capital market efforts for development and investment nationwide. McNearney also serves on the firm's investment committee and board of directors, and he directs the execution and expansion of the firm's principal investment activities across the country.

ABOUT TRANSWESTERN
Transwestern is a privately held real estate firm specializing in agency leasing, property and facilities management, tenant advisory, capital markets, research and sustainability. The fully integrated global enterprise leverages competencies in office, industrial, retail, multifamily and healthcare properties to add value for investors, owners and occupiers of real estate. As a member of the Transwestern family of companies, the firm capitalizes on market insights and operational expertise of independent affiliates specializing in development, real estate investment management and research. Transwestern has 34 U.S. offices and assists clients through more than 180 offices in 37 countries as part of a strategic alliance with Paris-based BNP Paribas Real Estate. For more information, please visit transwestern.com and follow us on Twitter: @Transwestern.

Media Contact:
Stefanie Lewis
713.272.1266
[email protected]

SOURCE Transwestern

Related Links

http://www.transwestern.net