JLL PROPERTY CLOCK Real GDP ($ trillions) Employment shortfall (%) Y-o-Y change (%) GDP growth outpacing other major economies Job growth slowing but remains positive U.S. ECONOMY OVERVIEW The macroeconomic landscape improved considerably over the course of 2024 but is beginning to experience heightened volatility in the wake of the presidential election results. Inflation progress has temporarily stalled, with both the CPI and PCE showing increases for the past two monthly readings, and 10-year treasuries have risen 74 basis points over the past three months. Labor markets are softer than recent years but remain resilient: office-using industries added 104,000 jobs in the past quarter and have grown by 615,000 during 2024, down somewhat from 763,000 jobs added in 2023. Growth has been concentrated in the Government sector in 2024, with more than 75% of job gains occurring within Government. Corporate earnings have been strong throughout the year, with growth accelerating at year-end: Q4 2024 marked the sixth consecutive quarter of year-over-year earnings growth in the S&P 500, with the Q4 2024 growth rate of 11.7% representing the highest YoY growth since Q4 2021. After the results of the November presidential election, federal policy is now anticipated to shift in several consequential ways. The new administration has signaled a desire to require federal workers to return to offices, potentially spurring more activity in Washington, DC and other federal government enclaves. Potential tax cuts or removal of regulatory burdens is expected to drive faster growth generally. However, policies surrounding tariffs and immigration have the potential to undercut growth and drive inflation if implemented to their full extent. These expectations have already impacted the interest rate outlook: three months ago, investors were expecting three additional rate cuts in 2024 and four in 2025; after 50 bps of cuts in the last two months, investors now expect only two additional cuts in 2025. February 2020 2022 2021 2023 2024 $26 $24 $22 $20 $18 $16 $14 $12 8% 4% 0% -4% -8% -12% -16% 15% 10% 5% 0% -5% -10% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Real GDP Year-over-year (YoY) change Peaking phase Rising phase Falling phase Bottoming phase Minneapolis, Portland Baltimore, Detroit Chicago, Washington, DC Los Angeles, Sacramento Austin, Boston, Houston Denver, Orange County, Phoenix New Jersey, Northern VA, San Francisco New York, Silicon Valley Dallas, Nashville Atlanta, Charlotte Miami INDEPENDENT MARKET REPORT By JLL as at 31 December 2024 40 | MANULIFE US REIT
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