Economic Indicators for 2026

Next Year May Offer CRE Reprieve From Recent Volatility
If Economic Forecasts Prove True

Economists continuing to call for GDP growth in 2026. While this year has not lacked for short-term disruptions, the economic forecasts for 2026 are starting to get dialed in. Top of mind for economists are risks of recession and stagflation.

• The Blue Chip consensus forecast, representing the assessments of 44 economists, anticipates GDP growth of around 2.5 percent for the third quarter of this year, slowing to an annualized gain of 1.0 percent for the closing period of 2025.
• In 2026, the Blue Chip synopsis calls for a greater improvement in GDP of 1.8 percent for the year. Few economists are predicting a drop in the measure.
• In terms of inflation, the consensus calls for the year-over-year change in CPI to remain range bound in the 3 percent band for the rest of this year and through 2026.
• As such, the majority of contributing economists are not predicting extended inflation risk, nor chance of recession.

Labor market durability predicted for 2026. The Blue Chip survey's relatively modest GPD and inflation forecasts are joined by similarly slow-but-steady labor and interest rate metrics

• The consensus prediction for the unemployment rate remains in the mid-4 percent range through the end of next year.
• The number of jobs that have to be created each month to keep the unemployment rate flat has likely declined from 75,000 roles to about 64,000 positions. This reduction reflects the estimated falloff of international immigration to the U.S. 
• As a result, interest rates are predicted to stay relatively low. The Blue Chip forecast for the 10-Year Treasury yield has the measure holding in the 4.1 percent zone next year.
• If these forecasts prove out, it would be a welcome reprieve from this year's volatility, as well as a boon to demand for spaces in all types of commercial real estate.

Forecasts bode well for CRE, but outcome not certain. The relatively stable environment implied by economists' consensus reiterate the durability of the U.S. economy. Such a year would be a clear positive for commercial real estate; however, there is no guarantee these forecasts will come to fruition. There are substantive headwinds that could ultimately derail many of these predictions, which would impact the performance of different various commercial property sectors.

• Investors should continue to monitor U.S. trade policies. How tariff-induced price increases affect the upcoming holiday shopping season will pose implications for many retailers.
• The inflation outlook is also not certain. Tariffs are expected to have a short-term impact on inflation before flattening out, but prices for services have also been climbing faster, according to recent data. Some of the factors that might be driving higher fees for services, such as tighter immigration policies, could have a more lasting impact on CPI.
• The labor market also warrants further consideration. If monthly hiring shifts down into actual net losses, as seen in the September ADP report, that could be a cause for concern.

Sources: Marcus & Millichap Research Services; Blue Chip Economic Indicators; Federal Reserve;
U.S. Bureau of Labor Statistics