March Market Update
Eric Tannenbaum takes a look at some economic performance indicators outside of the banking whirlwind in the March Market Update.
Get expert insights on the potential economic trajectory as the 2024 presidential election approaches. Industry titans discuss the impact of Fed decisions, tariffs, and political change on real estate markets and the U.S. economy.
As we move closer to the 2024 presidential election, there is no shortage of questions about what lies ahead for the U.S. economy. With the latest Federal Reserve meeting in the rearview mirror, the intersection of economic policy and political change is more critical than ever. In a special roundtable podcast episode, three industry titans—Mark Zandi, Chief Economist at Moody’s Analytics, Ryan Sweet, Chief U.S. Economist at Oxford Economics, and John Burns, Founder of John Burns Research & Consulting—joined forces to discuss the potential trajectory of the economy, real estate markets, and what’s next after the Fed’s recent decisions as we wait for the results of the election.
Listen to the full episode below or keep reading for a detailed recap of the key insights, themes, and predictions that were shared during this insightful conversation.
Listen to the full episode
Economic Scorecard: The Experts Weigh In
The episode kicked off with a fun but revealing exercise: rating the current U.S. economy on a scale of 1 to 10, where 1 is abysmal, and 10 is spectacular. The responses set the stage for a lively debate, reflecting different perspectives on where the economy stands today and what lies ahead.
- Ryan Sweet gave the economy a 6.9. He acknowledged that the U.S. is in “pretty good shape,” but highlighted pockets of weakness in interest rate-sensitive sectors like housing and manufacturing.
- John Burns rated the economy at a 5, explaining that while the present conditions are relatively strong, his outlook is more cautious, particularly when considering factors like the Fed’s efforts to manage growth.
- Mark Zandi was the most optimistic, giving the economy an 8. He pointed to solid GDP growth, low unemployment, and inflation being under control. However, he noted that high interest rates are a significant challenge and have yet to fully normalize.
The Fed’s Role: Cooling Inflation, Maintaining Stability
One of the key discussions centered around the Federal Reserve’s impact on inflation and interest rates. With inflation appearing to be under control, there was consensus that the Fed’s efforts have worked thus far. Zandi noted that inflation is “back in the bottle,” with the Fed successfully guiding the economy away from overheating. However, interest rates remain high, a topic of concern for sectors like housing, where higher rates have already impacted affordability and demand.
Ryan Sweet echoed this sentiment, but emphasized that job market resilience is another critical element of the economy’s health. Despite recent rate hikes, the prime-age employment-to-population ratio is near record highs, signaling a strong labor market. The experts agreed that, while inflation seems tamed for now, the Fed’s future actions, particularly in response to global factors like tariffs or political shifts, could destabilize that balance.
Election Scenarios: Harris vs. Trump
The conversation then turned to the 2024 presidential election and its potential impact on the economy. Each expert outlined different scenarios, offering their take on how the political outcome could influence economic policy.
- Mark Zandi walked through a series of possible outcomes, with his baseline scenario featuring a divided government (Harris presidency, Republican Senate, and Democrat House). Under this scenario, he expects the economy to remain stable, giving it an 8 at the end of 2025. However, he also explored the possibility of a Republican sweep (Trump presidency with a Republican-controlled Congress), which he warned could lead to economic deterioration, particularly due to aggressive tariffs, stricter immigration policies, and executive orders.
- John Burns brought up immigration as a key factor in the economic outlook. He highlighted the importance of immigration for the labor market, particularly in construction and real estate, where labor shortages and increased costs for materials have hampered growth. He suggested that reduced immigration would put further strain on these sectors.
- Ryan Sweet agreed, adding that under a Trump administration, inflation could rise due to tariffs and tighter immigration policies, which would shrink the labor pool and push wages higher.
Tariffs and Trade: A Looming Concern
Tariffs emerged as a central theme, with both Sweet and Zandi pointing out that Trump’s tariff policies—if reinstated—could quickly lead to higher inflation. As Zandi explained, tariffs act like a tax on consumers, disproportionately affecting lower- and middle-income households. He also warned that tariffs could ignite a trade war, with other nations responding in kind, further destabilizing global markets.
Burns brought the real estate angle into the conversation, noting that tariffs on building materials would exacerbate the already high costs in construction, particularly in multifamily housing. “We’re undersupplied by about a million and a half homes,” Burns stated, and any additional cost burdens would worsen the housing shortage, making it more difficult for developers to keep up with demand.
Winners and Losers: A Regional Breakdown
When asked which regions of the U.S. would benefit or suffer under the different election outcomes, the panelists provided diverse perspectives:
- John Burns focused on affordability. He predicted that Sunbelt regions, which have benefited from strong migration patterns, will continue to thrive, but cautioned that markets like Austin, Texas, could see cooling as affordability wanes. On the flip side, high-cost areas with little room for expansion, like California, may struggle as interest rates and material costs rise.
- Ryan Sweet noted that regions benefiting from clean energy investments under the Inflation Reduction Act (IRA), like Phoenix, Columbus, and Portland, could lose momentum if Trump rolls back clean energy subsidies. Meanwhile, areas reliant on fossil fuels could see an uptick in investment under Trump’s policies.
A Complex, Uncertain Future
As the conversation wrapped up, one thing became clear: the U.S. economy is standing at a crossroads. With the recent Fed rate cut signaling a shift in monetary policy, there are short-term factors to consider, but the longer-term outlook will largely depend on political outcomes. While inflation may be under control for now, the broader economic landscape—marked by concerns over the labor market, tariffs, immigration, and housing affordability—remains uncertain.
What makes this period particularly unique is the intersection of the upcoming election and economic policy. The experts agreed that while presidents may inherit economies, the upcoming 2024 election holds the potential to drastically shape the trajectory of the U.S. economy depending on who takes office and how policies are implemented. Will we see a continued focus on growth, or will tariffs and tighter immigration controls lead to greater long-term challenges?
In the meantime, sectors like real estate, manufacturing, and energy remain vulnerable, especially as interest rates continue to affect borrowing costs. Regions that have thrived on affordability or clean energy investments may face new headwinds if political priorities shift. This uncertainty puts both businesses and individuals in a delicate balancing act, trying to navigate a world where economic predictions are only as reliable as the next election result.
As we look ahead, it’s clear that there are no easy answers. What we do know is that the choices made over the next year—by both policymakers and voters—will have a profound impact on the economy, and the ripples will be felt across industries.
Learn More About the Guests
Want to dive deeper into the insights shared by today’s expert panel? Check out more from our esteemed guests below:
Mark Almeida
Operating Partner at Welsh, Carson, Anderson, and Stowe
Mark Almeida is an expert in building and leading businesses, with nearly 40 years of experience. Best known for his tenure as President of Moody’s Analytics from 2008 to 2019, Mark played a pivotal role in growing the company into a global leader in financial intelligence.
Mark Zandi
Chief Economist at Moody’s Analytics
Mark Zandi is a leading voice in economic policy and financial markets. In addition to his role at Moody’s Analytics, Mark co-hosts the popular Inside Economics podcast, where he provides in-depth discussions on the latest economic trends and insights.
Follow Mark Zandi on X
Listen to Inside Economics Podcast
Ryan Sweet
Chief U.S. Economist at Oxford Economics
Ryan Sweet is known for his expertise in U.S. macroeconomics and for being one of the most accurate high-frequency forecasters. His research and analysis help businesses and individuals navigate the complexities of the U.S. economy.
John Burns
Founder of John Burns Research & Consulting
John Burns is a thought leader in the housing and real estate industry, helping clients make smarter investment decisions. His firm, John Burns Research & Consulting, provides top-tier insights on housing demand, affordability, and market trends.
Follow John Burns on LinkedIn
Listen to the New Home Insights Podcast
Explore more from each guest and continue following their expert analysis to stay ahead of the market’s biggest shifts!