Q4 2021 Economic & Market Overview

The new Omicron variant has spread across the country at an even higher pace than the Delta variant this same time last year.  The back-to-back holidays of Thanksgiving, Christmas, and New Year’s, combined with the heightened transmissibility of the Omicron variant, have resulted in a contraction rate of close to 120,000 cases per day at its peak across the country. There also seems to be a large number of break-through cases, especially among those that have been vaccinated twice or fewer.  Nonetheless, however contagious the Omicron variant seems to be, the rate of hospitalization and serious symptoms seem to be much lower.  Many medical experts believe that this will quickly become the predominant strain in the U.S. Many companies have once again temporarily closed their offices or sent employees home to work remotely.

Despite the presence of Omicron, the U.S. economy grew at an astounding 6.9% annualized rate in Q4, compared to the 2.3% rate in Q3.  The economy expanded 5.7% for the year 2021, recording its strongest annual growth since 1984.  Unemployment rate fell to 3.9% in December, the lowest level since February 2020, when unemployment rate was 3.5% immediately before the impact of the pandemic began.

The U.S. stock markets rose in Q4, with solid gains across the board, despite a weaker November which was impacted by fears over rising cases of the Omicron variant and the speed of the Federal Reserve’s pullback on federal stimulus.  By year-end, these worries had largely subsided, and prevailing data continued to suggest that the economy was stable and corporate earnings were robust. The technology sector, one of the strongest drivers of U.S. economic growth, was one of the best performing sectors during Q4, as many employees in technology companies were already working remotely even prior to the pandemic and were generally less impacted by the virus.  Especially noteworthy were the U.S. semiconductor manufacturers, which posted record profits amidst the global chip shortage.  The real estate market as a whole also performed well in Q4, as housing shortage fueled tremendous growth for the residential and multifamily sectors.  Commercial real estate, particularly industrials, has experienced excessive demand due to the increase in online shopping and e-commerce, which demand outweighed the contraction in the demand for retail sector.

Data Sources：CBRE Research, CBRE Econometric Advisors, CoStar Realty Information Inc., Bloomberg, Zillow Group, Redfin

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