Key Highlights

  • US economic activity has been resilient despite high interest rates. 
  • Oversupply in multifamily and certain segments of industrials should correct within the next year. 
  • Bifurcation in performance (based on quality) will become noticeably wider, particularly for offices.

United States economic outlook


The US economy looks likely to avoid recession. Activity has been remarkably resilient in the face of high interest rates, strong consumer and corporate balance sheets, positive supply shocks, and looser fiscal policy. These tailwinds are likely to fade in 2024, so we think growth will moderate to a below-trend 1.1% annualised for much of this year. Indeed, consumer spending is slowing already. But easing financial conditions should prevent a more disruptive drop-off in activity. This should set the scene for a reacceleration of activity in 2025 towards trend-like growth.


Personal consumption expenditure (PCE) and consumer price index inflation were hot in January, raising fears that the last stage of inflation may prove difficult. In part, this reflected seasonal distortions; but services inflation is running hot, and price growth is often more persistent in these components. Falling goods prices should partly mask this stickiness and services inflation should gradually slow, given weaker shelter price growth (housing costs) and moderating wages. We forecast core PCE inflation to fall to 2.5% year on year, by the summer. But progress might stall during the rest of the year as base effects prove less beneficial. 


The Federal Reserve (Fed) played down recent inflation upsets at its March meeting, arguing that these bumps didn’t change the disinflation story. These signals leave the door open for a cut in June, assuming no further nasty inflation surprises in the coming months. Thereafter, we expect three further 25 basis-point (bp) cuts this year. This is more than indicated by the Fed and is based on our forecasts for slower growth. Indeed, rates are expected to fall more than the Fed and the market are forecasting in 2025 and 2026. In part, this reflects our view that equilibrium interest rates remain low.  

United States economic outlook

(%) 2023 2024 2025 2026
GDP 2.5 2.2 1.4 2.1
CPI 4.1 2.9 2.2 2.2
Deposit rate 5.375 4.375 3.125 2.625
Source: abrdn March 2024
Forecasts are a guide only and actual outcomes could be significantly different.

North American real estate market overview 

We expect prices to fall as much as 6% in the weaker multifamily markets. However, new developments have dramatically reduced and, given the long construction lead times, we could see a strong recovery as early as the end of 2025.

Prices should remain flat in industrials. New federal grants amounting to $3.3 billion have also kick-started infrastructure improvements to road networks along the Midwest, the East Coast, and the Gulf-Coast states. This should prove to be an additional tailwind for the industrial and logistics sector.

Office prices are close to stabilisation, although we still expect prices to fall 7-10% this year. We then expect an extremely wide bifurcation in performance between better assets and secondary assets.

In the retail sector, weak supply numbers for strip retail are creating some positivity and unemployment numbers remain low. But dwindling savings and higher credit card debt remain a threat to spending.

Outlook for risk and performance

We are bearish on US offices, as occupiers struggle to get employees back into the office. Weekly physical occupancy seems to have plateaued at around 50% nationally. Effective rental growth will be weak as the availability of sub-leases forces landlords to entice occupiers with increasingly large concessions. While short-sale transactions have become more prominent, we think the market is near to stabilising. That said, the shape of the recovery will be drastically different from previous cycles. The bifurcation between class A/trophy assets and secondary properties will widen.

We prefer established East-Coast population hubs in the multifamily sector. Despite the large national volume of deliveries, supply in the East Coast is expected to remain limited. Multifamily assets in Washington DC could also perform well, given strong rental demand amid the uncertain political background. Pockets of forced sales may become more prominent for the Sunbelt and even the East-Coast markets. This is more likely for properties that were financed during 2020-2022 by small multifamily syndicators. These assets could provide attractive buying opportunities. 

We like strip retail, lifestyle centres and standalone retail, particularly grocery or discount-store-anchored properties in the Sunbelt, Midwest, and the East Coast. These areas should benefit from higher population growth and a limited supply pipeline but may face headwinds if economic conditions severely deteriorate.

We are bullish about industrial and logistics markets surrounding the Gulf and East-Coast ports. We think these ports should be primed to capture more shipping volumes as friendshoring becomes more prominent. Recent infrastructure upgrades to the ports of Savannah and New Jersey, and to road networks on the East and Gulf Coast, should allow more logistics demand to flow through the regions. Land border traffic is expected to grow because of nearshoring, which is expected to boost markets with established intermodal terminals, such as Chicago and Dallas.

North America three and five-year forecast returns