Global Economic Insights: Economic Factors Causing Uncertainty
In the latest edition of Global Economic Insights, LeadingRE’s Chief Economist Dr. Marci Rossell, Ph.D., addresses the temporary economic factors causing uncertainty.
The beginning of 2019 has already experienced disruption with the
shutdown of the U.S. Government. While the shutdown has come and
gone, the economy is still facing other temporary factors that are causing
Factors causing uncertainty:
• Brexit is creating uncertainty in the global financial environment.
• The trade war between the U.S. and China continues.
• The Federal Reserve is tacitly tightening monetary policy as an effort to reverse many years of quantitative easing.
Economic uncertainty creates three different responses:
- Irrational Response – These consumers are not making any investments. They hold on to cash or invest in gold.
- Rational Economist Response – These consumers see the current economy as a buying opportunity.
- “Wait and See” Response – This is the most common response and falls in between the first two responses. These consumers wait for the uncertainty to dissipate before making any type of economic decision.
The factors causing uncertainty are temporary and most will dissipate near the end of the first quarter of 2019. When that happens, the global economy and U.S. economy are likely to go back to a trend of 3% growth, year-overyear, which will be good for the markets, good for employment and good for real estate.Irrational Response – These consumers are not making any investments. They hold on to cash or invest in gold.
Contact Christy and Garth Gillespie for more information on the real estate market.