Trump’s mandate to return to work is a soft layoff of government workers. After working from home for five years lots of people will just get a new job or retire instead of coming back to the office.
Not a single major US government agency is occupying even 50% of their office space. As a result, the Trump Administration is reportedly considering selling TWO-THIRDS of US government office buildings, per WSJ. To whom and at what price?
There are a number of huge government office buildings with miniscule occupation.
Small banks currently holds 70% of the loan exposure to these CRE properties. These are the same small banks that almost collapsed in March 2023. Commercial banks’ exposure to commercial real estate loans remains at all-time highs, at over $3 trillion.
The demand for office buildings is at all time lows. The national office vacancy rate hit a record 20.4% last quarter, surpassing the previous high of ~19.0% in the 1991 recession.
A mass liquidation of US government office buildings would flood the already weak commercial real estate sector with more supply. Conversion to residential is an expensive uneconomical process.
The US apartment vacancy rate in large cities jumped to 6.1% in Q4 2024, the highest in 13 years. The apartment vacancy rate has risen for the last 8 years and accelerated in 2023 and 2024. Furthermore, the multifamily vacancy rate hit 6.1% in Q4, 40 bps higher than in 2023 and the highest level on record since 2011, according to Moody’s.
Apartment vacancies will surge further as the millions of economic migrants are sent home.
Tariffs are likely to be inflationary, particularly if levied on Canada and Mexico. If the 25% tariffs on Canada and Mexico result in a 50% pass-through, PCE inflation would rise 80 bps, according to DB.
BREAKING: President Trump says he’s considering 10% tariff on China beginning as soon as February 1st, per CNBC.
Russ, What are your thoughts on “Allegory of the Cave” by Plato? Basically, Plato says, when the nation is systemically corrupt, it is better to walk out of the nation rather than try to convince people of the systemic corruption and its consequence. Because majority of the middle class is doing much better (probably because the money printing is over compensating the cost of systemic corruption), majority of the middle class prefer to accommodate the corrupt bureaucrats and politicians instead of upsetting their own well being by voting for honest govt (hence systemic corruption). Plato said, ultimately, the cost of corruption will cook the frogs in the kettle (probably when printing of money stops compensating for the corruption) – and only then, the middle class (which would have become the new poor class by then) will vote for a change. Is this what you expect? Basically, Plato said, you can not convince majority of the population of the systemic corruption because their living depends on not understanding it. In Atlas shrugged, Ayn Rand explains the tyranny, as originally explained by Aristotle, in that, majority of the people support govt in preventing John Galts from escaping their poverty — instead of supporting the John Galts from being persecuted by the govt. Is this what is awaiting — A tyranny to pillage those who tried to save themselves from the systemic corruption? I would assume this is what Assange must have learnt. What about you? Appreciate your thoughts on this.
Couldn’t state it much differently.
Plato was right, this is why I packed my bags and left the USA in 2012. Unfortunately, my mother and brother have passed away and I need to return to take care of my niece and switch careers. I plan to save my money then buy property overseas once my business in America is handled.
In the long run it won’t matter because the NWO is a worldwide phenomenon but in the meantime moving your assets offshore and learning to be self sufficient wherever you live is the best course of action IMO.
AI Vinnie Vega. The world outside is a very funny place
Stephan, I think entire G7 and developing countries are corrupt. Are you thinking of a scandinavian country? Of late, even they seem to be corrupt – maybe they have red lines they wont cross?
If the 100’s of thousands federal bureaucrats don’t want to leave their cushy houses, let them find different jobs & decrease the number of nominal ‘experts’ & red tape pushers. The buildings can be sold for scrap.