Economic Insights Report — December 2023

Miami Real Estate Podcast

Today we’re bringing you the latest Economic Insights by Dr. Marci Rossell, chief economic for Leading Real Estate Companies of the World. This interview features Miami Real Estate Podcast correspondent Jessica Edgerton together with Dr. Rossell delivering her top 5 economic insights of December 2023, including:

Federal Reserve Activity

The Federal Reserve indicated in December that it was likely to make at least three rate cuts in 2024. With CPI inflation at 3% mid-month, just shy of the Fed’s 2% target rate, Dr. Rossell anticipates that Fed cuts are likely to begin in the second quarter of 2024, if not sooner. The December markets rallied in response to the Fed’s announcement, with bank stocks hitting gains not seen since before the March banking crisis.

U.S. Spring Market Predictions

In mid-December mortgage rates fell below 7% for the first time since August, and consumers responded accordingly, with refis up 2% and year-over-year listings up 7%. Dr. Rossell believes the market will continue to stabilize during 2024, with a notable inflection point for the better coinciding with the Fed’s first anticipated rate cut in the spring. Nonetheless, Dr. Rossell cautions against comparisons to past market patterns. “Sellers may think it’s 2020, and buyers may think it’s 2008. It’s a new year. This will be 2024, and it’s going to be its own thing.” She also cautions us to take economic news during the first quarter with a grain of salt, as markets will likely be lurching through a “two steps forward, one step back” pattern through the end of March.

U.K. Update

The overall outlook for the U.K.’s housing market improved in November, with sales up for the first time since November 2022. While market analysts were keeping a close eye on a steeper-than-usual decline in U.K. home prices in December, Dr. Rossell does not anticipate massive disruptions to their housing market in 2024. She notes that the country’s years-long adjustment to Brexit is coming to a close, and “we’re far enough into the new economic reality that the shockwaves are diminishing as long-term stability – both economic and political – sets in.”

2023 U.S. Labor Market in Review

When asked what surprised her the most about the 2023 economic climate, Dr. Rossell responded: “The ongoing strength of labor markets. We raised rates from 0% to over 5%, and while inflation came down accordingly, we saw no meaningful impact to the labor market. Folks not only kept their jobs, but we saw 200K new jobs created every month.” She attributes the strength of the jobs market in 2023 in part to online professional networks creating less lag- time for individuals between jobs, as people tap into their networks and avoid longer-term unemployment.

All Eyes on AI in 2024

When asked about uncertainties of particular concern to her in 2024, Dr. Rossell stated that AI regulation should be a priority for legislators in the coming year, as the technology’s impact on markets and the economy will continue to grow exponentially. “I’m concerned we can’t seem to get it together enough to pass simple things like a farm bill,” she said. Given the significant implications of

AI, Dr. Rossell believes reasonable AI-focused lawmaking will be necessary to prevent potential unintended consequences to the economy in 2024.

Host: Omar De Windt

Guest: Dr. Marci Rossell

Producers: Omar De Windt; Veronica Aizpurua

Art: Alberto Arevalo

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