Looking back on the past year, inflation-adjusted economic growth ended up weaker than many expected. My view that it would continue to be difficult to “fight the Fed” proved accurate, but notably non-linear in a year of significant shifts in monetary policy. The year began on a sluggish note facing such strong headwinds as rising rates also pressured bank balance sheets which contributed to notable bank sector weakness…
As we wind down 2023, our concerns about slowing growth from interest rate pressures as well as the Fed's path to further domestic economic involvement have proven to be on target. For now, the impact of these issues have been concentrated in the financial industry and office CRE space and has remained insulated from the broader economy. Yet, lofty equity market valuations and the firming of structural inflationary forces – continue to remain on our radar.
Looking back over the first half of the year, our prior stated concerns regarding slowing economic growth, persistently elevated consumer prices and latent risks emanating from increased interest rates appear mostly on target...
