The Coronavirus, the End of the Cycle, and U.S. Commercial Property Markets: Early Thoughts

ABSTRACT

[...]order impacts will be potentially even larger, as an expected plunge in business and consumer confidence will undercut the willingness of businesses and consumers to continue investing and spending. The coming surge in worker layoffs will only amplify the collapse in spending, which accounts for more than two-thirds of GDP Already, leading employers in the airline and hospitality industries are planning enormous layoffs, while more than 50 major retailers - with names like Apple, Nike, Footlocker, and Chico's, are temporarily closing stores globally.6 The earliest data on jobless claims suggest unemployment could quickly surge beyond the 10% peak reached in the Great Financial Crisis ("GFC").7 A related concern is the wealth effect associated with the rapid drop in the value of almost all financial assets. [...]supply chain impacts will cripple industrial output as critical inputs cannot be obtained from either domestic or especially offshore sources. The severity of the recession should be tempered by the low interest rates and the regulatory guardrails adopted after the GFC. [...]the speed and scale of the Fed and federal government's (belated) response are encouraging.