Weekly Editorial

Economic Outlook for Commercial Interiors

Written By Rob Kirkbride, Editor-in-chief, OI Publications • February 26, 2024

The Insider_Weekly_editorial_2.26.24

My heart is with journalism and my head is with economics. Journalism and economics are my two professional loves (and not surprisingly, match my professional degrees). So why is it so difficult to write about the economy right now? Are we slipping toward a recession or are we at the cusp (or even well into) an economic boom? It depends on who you listen to.

A recent story in the Wall Street Journal with the headline “Data Show the Economy Is Booming. Wall Street Thinks Otherwise” is a good example of the confusion over the economy right now.

According to the story: “Data suggesting the U.S. economy is too hot for comfort are getting a cool reception in some corners of Wall Street. A handful of high-profile economic reports, covering the big topics of inflation, economic growth and the labor market, have leaned decidedly on the too-warm side. But many economists have minimized these surprises, pointing to other data that are less alarming and measurement challenges that are unique to the start of the year.”

Investors are in a tricky position, according to WSJ. They want growth strong enough to avoid a recession but mild enough to allow the Federal Reserve to cut interest rates — a seemingly narrow path, with inflation running above the Fed’s 2% target.

According to the story, nearly all the economic news that is coming out is good, which is definitely a positive sign. Still, if it is too good, interest rates will remain high. The S&P 500 ended last week just 0.5% off a record high and investors continued to bet on rate cuts later this year.

“From a very big picture perspective, it’s still looking good,” Brian Rose, senior U.S. economist at UBS Global Wealth Management told the Wall Street Journal.

To make the outlook even muddier, we have political forces at work. Republicans are trying to downplay the economic strength, afraid to give Biden a boost in the run-up to the election while Democrats are trying to take credit for the red-hot economic news.

For those of us in the commercial interiors industry, the economic outlook is even more difficult to read. All the forces that are pushing and pulling the economy are doing the same to our industry. Add to that the uncertainty over the future of the office and continued high commercial real estate vacancy rates, two issues that are affecting our industry in an outsized way.

It is important for our industry to cut through the clutter and not focus on perceived negatives that really don’t affect our industry. I don’t know about you, but I’m bullish about the future — especially when it comes to the industry. Companies continue to rethink their office space, which means there is plenty of work to update offices. Companies hoping to attract workers back to the office are also doing a lot of rethinking and remodeling. Corporate customers continue to spend and healthcare and education remain strong. What’s not to like?

And every economic indicator I watch seems to be in our favor. Only inflation and shipping remain elevated, but both are coming down from recent highs. Barring a wider war in either the Middle East or Ukraine and I think we are in for a very good year.

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