The U.S. Department of Labor defines inflation as “the overall general upward price movement of goods and services in an economy.” As the U.S. economy continues recovering from COVID-19 and consumers and workers begin emerging back into the marketplace, many have noticed the increase in inflation in recent months.
The U.S. economy expanded in the second half of 2020 surpassing its high-water mark from 2019 (as measured by gross domestic product (GDP)) recording the quickest recovery on record. A surge in demand often leads to consequences such as inflation and labor and supply chain pressure. We parsed through the data to understand the level of inflation concern pertinent to various stakeholders in real estate — from occupiers and users to developers and investors.
We will discuss four factors influencing inflation, including: labor; logistic and supply chain challenges; U.S. government size, assistance and federal outlays; and rents and personal consumption. Real estate professionals will want to monitor each of these as they all influence real estate users, their behaviors, supply and demand balance, and capital markets (i.e., capitalization rates and cost of debt).