The rumblings have begun across the nation that the U.S. is headed for another recession.
The signs are all there, economists say. For one thing, the timing is right: Recessions generally occur about every 10 years. If we accept that as the case, clearly, we can expect the next recession to begin a decade after the end of the Great Recession. Generally speaking, the recession ended in the United States in mid-2009; the recovery, however, took much longer, and never really gained speed. So it’s been seven years, give or take, since the most recent recession ended; now is about when the next one will begin to form – hence the rumblings.
Further evidence comes from the housing market. Just a few weeks ago an editorial ran in this space declaring it was “all good news in August’s housing numbers” – and while that’s still true, the market is definitely cooling as we head into November. Realtors across the country report home prices dropping and houses lingering on the market if they are not aggressively priced.
The commercial real estate market is more of mixed bag. As it stands now, cities comparable to Boston are still commanding record rates – but whispers in the industry of bad and overleveraged loans are starting to grow louder.
Notice a trend in all of this doom and gloom? Very little of it currently applies to Greater Boston.
While it’s true the housing market has slowed somewhat in recent months, it has less to do with a surge in inventory and more to do with timing; late summer, fall and especially winter are notoriously slow times of the year. There is every reason to believe the market will surge back into high gear as soon as winter ends.
Boston’s job market is hopping. Unemployment (as of August) was 3.5 percent – lower than the state overall and lower than the national average of 4.9 percent. Consumer confidence is pretty high and wages are up.
Of course, rents and housing prices are also up. Reports indicate rental rate growth has slowed in recent quarters – but it is still growing. And while that’s a significant burden on would-be buyers and the middle class, it’s good news for the local economy.
And in the commercial market, many of the city’s largest landlords are industrial investors with enormous portfolios well able to weather market fluctuations – B&T’s Steve Adams recently reported that even the 800,000 square feet of space about to come online in Back Bay isn’t resulting in reduced rates.
All signs point to yes for a nationwide recession approaching. How quickly and harshly it will descend upon us remains to be seen. The outcome of the upcoming elections may accelerate it or head it off – although, it must be noted, it’s probably at least three years away, so good luck to the candidates in 2020 – but it’s definitely coming.
But all signs, so far, also point to Greater Boston coming through the next recession as well as it did the last one – that is to say, very well indeed.
