U.S. Sees Unexpected Decline in Discretionary Spending With Lower Oil Prices

Transwestern Report Includes Global Economic Overview and Real Estate Outlook

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Apr 08, 2015, 07:05 ET

HOUSTON, April 8, 2015 /PRNewswire/ -- Economists expected the consumer savings reaped at the gas pump to translate into higher discretionary spending and boost the economy as much as 3 percent. Contrary to those predictions, retail sales fell 0.8 percent in January after declining 0.9 percent in December. Despite this decline, with steady increases in employment and rising wages, the consumer is well-positioned to drive economic expansion, according to the April edition of "the BRIEFING," a report compiled by Transwestern that covers the national and global economy, capital markets and commercial real estate.

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NATIONAL ECONOMY

Overall average gross domestic product (GDP) growth for 2014 was 2.4 percent, up slightly from average growth rate of 2.2 percent in 2010 through 2013
295,000 jobs added in February
Unemployment dropped slightly to 5.5 percent in February
February Labor force participation grew to 62.0 percent, up 20 basis points
Average hourly wages grew 0.5 percent in January, the largest increase since September 2008
Consumer Price Index fell 0.1 percent in January
Factory orders down 0.2 percent in January, on top of declining 3.5 percent in December and 1.7 percent in November
Crude oil dipped as low as $43.88 on Nymex, a six-year low, amid fears of easing Iranian sanctions

GLOBAL ECONOMY

Total global debt has reached $199 trillion, up nearly $60 trillion since 2007
European Central Bank launched a stimulus program to buy 60 billion euros in bonds a month for a total of 1.1 trillion euros
Eurozone grew 0.3 percent in fourth quarter, with annual growth at 1.4 percent
German 10-year bond yields dropped to 0.18 percent, while five-year bond yields were negative for the first time in history
Greece's GDP is down by 25 percent, and its bailout is being extended by four months

CAPITAL MARKETS

Strengthening dollar is wreaking havoc on U.S. exports and dramatically lowering the cost of imports
31 major banks passed the stress test – Goldman Sachs and Zions had the smallest cushion, while Deutsche Bank and Banco Santander failed the test
FDIC fourth-quarter 2014 banking profile shows slowing profits despite increased revenues

COMMERCIAL REAL ESTATE

2014 total sales hit $351 billion, a 15.5 percent increase over 2013, with volume returning to 2006 levels
Prices showed healthy growth of 13 percent and, on average, have surpassed the 2007 peak
U.S. industrial vacancy dropped to 6.8 percent at year-end 2014, the lowest rate in 14 years
An estimated 70 percent of local government tax revenue comes from real estate
Real Estate Investment Trusts (REITs) lead other industry groups with 28 percent total return in 2014, with apartment REITs providing total returns of 39.7 percent
REITs have issued $12.5 billion on new and follow-on offerings
Last year saw 52.7 million square feet of office absorption with only 27.3 million square feet of completed developments
Commercial mortgage-backed securities delinquency rate fell to five-year low

More information can be found in Transwestern's April issue of "the BRIEFING." Download the full report at: http://twurls.com/briefing0415

"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
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SOURCE Transwestern