“In February, the Bureau of Labor Statistics reported an addition of 311,000 jobs, keeping the unemployment rate at a low 3.6%.
This report follows a surprising job growth in January with 517,000 jobs added, much higher than the expected 185,000. The performance of the labor market will play a significant role in the Fed’s decision to continue increasing the federal funds rate to reduce broad price inflation. Despite the decrease in job growth from the previous month, the current level of growth suggests that the Fed will implement at least three more 25 bps hikes at the next three FOMC meetings, targeting a range of 5.25-5.5% at the lower end of our forecast. This is different from our previous forecast, which anticipated only one more hike to conclude the current rate hike campaign by the Fed.
If the interest rates do reach the 5.25-5.5% range, it may tighten financial conditions, possibly leading the U.S. economy into a recession. However, the labor market and U.S. consumers’ strength suggest that any recession will likely be short-lived and shallow. While a strong labor market is desirable, as it influences demand for apartments, if the Fed increases interest rates, this may slow down growth not only in multifamily but across all markets. We have expected moderation in multifamily growth for some time, but solid fundamentals could result in increased demand sometime in 2024.”
Founded in 2008 and with over $1.3B in transactions as of the date of this release, CONTI Capital provides capital solutions to acquire, manage, and sponsor real estate investments across the U.S. on behalf of individuals, wealth managers, and institutions. CONTI’s mission is to create outstanding value for investors through active stewardship of their capital and with efforts backed by years of industry experience, strong company culture, and a relentless drive to perform. CONTI Capital has offices in Dallas, Miami, and New York, as well as an affiliate office in São Paulo, Brazil. Learn more at www.conticapital.com.