February, 3 2017 

  • Executive Summary: U.S. employers added 227,000 jobs in January, which exceeded market expectations. Wage growth slowed to a three-cent per hour increase. The unemployment rate was little changed at 4.8%.
  • Fed Watch: We continue to expect the Fed to increase interest rates up to three times in 2017.
  • Job Growth Outlook: Despite increased economic optimism, CBRE EA has not changed its pre-election forecast of slower job growth in 2017. Potential economic stimulus by the Trump administration most likely will not have a direct impact on job growth until 2018.
  • Wage Inflation: Nominal wages grew by 2.5% in 2016. We expect wage growth to continue in 2017, giving the Fed additional reasons to raise rates. This would be accelerated by any labor shortage caused by stricter immigration policies.
      • Productivity: A key concern for economic growth is the extremely poor rise in productivity of American workers, growing only 0.2% in 2016. Without meaningful productivity growth, wages will not grow for any sustained period. The average annual productivity growth from 2007 to 2016—corresponding to the current business cycle—is 1.1%, well below the long-term rate from 1947 to 2016 of 2.1%.
  • Labor Force Participation: The labor force participation rate increased 0.2 percentage points to 62.9% in January, continuing to hover between 62.4% and 63.0% since August 2013. A key tenet of President Trump’s proposed jobs stimulus is to draw more workers back into the workforce, so this will be a key metric to watch.
  • CRE Implications:
    • Retail: More than 46,000 new jobs retail jobs were added in January (229,000 added in the trailing 12 months). Areas showing strength included clothing accessories stores (+18,000), electronics and appliance stores (+8,000) and furniture & home furnishings stores (+6,000).
          • Flash Conference Call: We are planning a Flash Conference Call for retail in March, as much of the negative sentiment about retail is overblown when reviewing overall statistics. Our next Flash Call will be on tax changes, and will be scheduled for late February or early March.
    • Office: Positive but weakening fundamentals got a reprieve with above-trend job growth, including heavy office-using jobs such as real estate, insurance, credit and other financial services activities.
Spencer G. Levy | Head of Research
CBRE | Americas Research

+1 617 912 5236 
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Jeffrey Havsy | Chief Economist | Managing Director
CBRE | Americas Research | Econometric Advisors

+1 617 912 5204 
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