Location Strategy Chartbook 05.31.25

More numbers came in Friday that show how the US economy slowed down last month. Consumers hit the brakes while goods imports plummeted by a record as companies adjusted to higher tariffs. Inflation-adjusted personal spending rose just 0.1% after rising 0.7% a month earlier, Bureau of Economic Analysis data showed. Separate data showed an almost 20% slump in imports.

Meanwhile, the Federal Reserve’s preferred price gauge remained tame. The personal consumption expenditures price index, excluding food and energy, increased 0.1% from a month earlier. Compared with a year earlier, the so-called core inflation gauge rose 2.5% from April 2024—the smallest annual advance in more than four years. So in that respect the widely predicted spike in inflation tied to President Donald Trump’s trade war has yet to manifest, in the data anyway.

Trump has argued that his trade policies will stoke economic growth in the future, though many economists predict the opposite. And on Thursday, more data appeared to affirm their suspicions. The US economy shrank at the start of the year, restrained by weaker consumer spending and an even bigger impact from trade. Gross domestic product decreased at a 0.2% annualized pace in the first quarter. And there were also warning signs from the labor market.

It’s not over. Pending appeal of a ruling, President Trump’s tariffs will remain in place, and he probably has other ways to impose levies on trading partners anyway. That, plus comments by Treasury Secretary Scott Bessent that trade talks with China are "a bit stalled," soured investors’ mood. Stock futures point to modest losses when trading begins.

Bad news—prices could rise by 5.1% annually over the next five years. No, wait, reverse those digits if you’re a Republican.

That was the yawning partisan difference in inflation expectations in April’s University of Michigan consumer survey. Back in October, a month before the presidential election, Democrats responding to the survey said they expected inflation to average 2.7%. Meanwhile Republicans expected 3.4% over the coming five years.

In other words, the two groups’ price projections swung wildly in opposite directions depending on who was in the White House.

Traders rattled by the rout in long-dated Treasuries are turning more bearish as yields continue to oscillate around a key 5% psychological threshold.

A JPMorgan Chase & Co. survey of traders released Wednesday spotlighted that investors expect the selloff to worsen, keeping yields elevated in the $29 trillion Treasury market. The survey’s all-client category for outright short positions — which includes central banks, sovereign wealth funds, real money and speculative traders — has climbed to the most since around mid-February.

The bearish sentiment comes on the tail of a decline in global long-dated bonds as investors grow concerned about widening government fiscal deficits.

The US 30-year yield is lingering around 4.97% after soaring last week to 5.15%, the highest since October 2023, amid the US losing its top credit score, a steep selloff in Japan’s super-long bonds and the passing of President Donald Trump’s tax-bill in the House. Long-bonds got some relief Tuesday as a global debt rally sent benchmark yields tumbling. However, the 30-year yield still hovering around 5% signals investors remain fickle. That’s being expressed in the options market too, where traders are paying higher premiums to hedge an extended selloff in long-bond futures versus a rally.

Bloomberg: Recurring applications for US jobless benefits jumped to the highest level since November 2021, possibly presaging a rise in the unemployment rate this month. Continuing claims, a proxy for the number of people receiving benefits, increased by 26,000 to 1.92 million in the week ended May 17. That exceeded the median forecast of 1.89 million in a Bloomberg survey of economists. The period includes the reference week for the government’s employment report for the month of May, which is due June 6.

Heather Long, Wapo: American parents are NOT okay.

-Latest Federal Reserve data shows how parents w/kids at home are struggling more financially than childless households. Only 65% of parents w/kids are ok financially versus 76% of childless households.

-New medical study shoes only 25.8% of moms report "excellent mental health," a decline from 38% in 2016.

Homebuilder unsold inventory at decade high: Housing markets to find deals in

There’s greater slack in the new construction market, giving buyers/investors leverage in certain markets to negotiate better deals

U.S. housing market now has 500,000 more home sellers than homebuyers

That’s the most homebuyers have outmatched home sellers in over a decade, according to Redfin

“The balance of power in the U.S. housing market has shifted toward buyers, but a lot of sellers have yet to see or accept the writing on the wall. Many are still holding out hope that their home is the exception and will fetch top dollar,” wrote Redfin economist Asad Khan on Thursday. “But as sellers see their homes sit longer on the market and notice fewer buyers coming through on tour, more of them will realize that the market has adjusted and reset their expectations accordingly.” According to Redfin, there’s a wide variation across the country. That’s something that ResiClub agrees strongly with. Most of the softest housing markets where homebuyers have the most power are in the Sun Belt, in particular, pockets of Texas, Florida, Colorado, and Arizona. While the tightest markets where home sellers still have the most power are in pockets of the Northeast and Midwest.

Owners of trophy office towers in big U.S. cities may have reason to feel like it’s 2019, the pre-pandemic time when workers pushed through crowded lobbies and elevators to log in for the day.

Class A+ buildings in major markets are exceeding 90% of pre-pandemic use on peak days, according to a midyear report from building security firm Kastle Systems. That use reaches 94% on Tuesdays, the top day for in-person work.

The report offers hope for landlords throughout the country that have struggled to overcome historically low demand for corporate space as remote and hybrid work habits have persisted more than five years since the onset of COVID-19.

It also highlights wide gaps between top-tier properties in the largest cities and the broader U.S. office market.

Kastle’s report is the latest example of the so-called flight to quality, and the latest sign of office properties — the best ones, at least — slowly returning to pre-pandemic norms.

Newer, well-located properties filled with amenities have attracted an outsized share of overall leasing activity as a number of companies have sought to use more attractive work space as one method to entice employees back to the office.

“For the best buildings in the best markets, it’s basically back to normal on peak days,” Kastle’s executive chairman, Mark Ein, told CoStar News.

Some of the largest employers that can afford top-tier space, such as JPMorgan Chase, Google, Amazon, Starbucks, Microsoft and Salesforce, have led a national push to curtail remote work.

Pedestrians pack the streets, dipping in and out of the newly opened shops and restaurants that line the wide sidewalks and plazas of Miami Worldcenter. But this scene is more than just a bustling weekday downtown. It marks the culmination of a 20-year vision the developers dreamed of when they began planning this $6 billion mixed-use neighborhood, the nation's second-largest project of its kind, which is still underway.

Miami Worldcenter Associates, led by Art Falcone and Nitin Motwani, envisioned Miami Worldcenter as a walking-friendly downtown neighborhood when they first started working on the project in the early 2000s, drawing inspiration from Paris, London and other global cities that were developed before the advent of the automobile.

"It's people that make great communities, not just buildings. You can build beautiful buildings, but if you have four-foot sidewalks, that doesn't create a sense of place to people to co-mingle and come together. That's what we've accomplished here," said Motwani, managing partner of Miami Worldcenter Associates, at an event last week celebrating the grand opening of the project's 300,000 square feet of retail and entertainment space.

And while Miami Worldcenter has 2,000 parking spots, they are concentrated in a handful of accessible garages, unlike the parking podiums that tend to dominate the first few floors at other mixed-use projects in Miami. This equates to a street level where Miami Worldcenter's buildings are all active with people.

About 100,000 square feet of pedestrian walkways weave together the shops and restaurants, all centered around World Square, the development's central plaza. The 20,000-square-foot World Square offers seating and lush landscaping for shade during hot days and includes downtown Miami’s first standalone Apple store, a 15,000-square-foot mass-timber structure with a rooftop garden at 100 NE 8th St.

The open spaces and glass towers are a far cry from the empty lots and dilapidated warehouses that used to dominate the neighborhood 20 years ago. It wasn't until 2014 that things really started to change, said Motwani, after the opening of a $1 billion tunnel to Port Miami rerouted the more than 300 trucks that had up until then passed through the area, bringing noise and smog and keeping residents and investors away from the area.

“We've got space for strollers, pedestrians, bicyclists, cars,” said Motwani, emphasizing how the $100 million in privately funded infrastructure improvements the developers built paved the way for wider sidewalks, improved sewers and drainage that made the street-lining retail possible.

Also boosting the neighborhood’s appeal is its connection to Miami’s mass transit system, said Ryan Harter, principal and head of development at CIM Group, at the event. Miami ranks 14th in the world and sixth in the nation for traffic congestion, according to transit analytics firm INRIX, with residents losing an average of 74 hours a year on Miami’s crowded roadways.

In contrast to other parts of South Florida where a car is typically the only way to get around, Miami Worldcenter is within walking distance to the Miami Metrorail and the downtown people mover, called Metromover, alongside South Florida’s Tri-Rail commuter rail service, and private intercity service Brightline that connects residents to cities as far north as Orlando.