TAG Industrial Watch: April 22, 2023

The rapid rise in the cost of living has confounded top economists simply because they have overlooked the biggest driving force behind it, government deficits. Prices took off in 2021 because of the record $4.2 trillion budget deficit in 2020 that was primarily financed by the Federal Reserve inflating the money supply by an unprecedented 25%.

While the “experts” have cheered the recent downtrend in the Consumer Price Index they are overlooking the explosion in this year’s budget deficit. Even in absence of government stimulus programs, the federal government ran a $1.1 trillion deficit in just the first half of this fiscal year, rising 64% year-over-year. Just as we observed in the Industrial Watch magazine published in January, the primary factors are a slowdown in tax receipts and soaring interest payments on the national debt. Given that foreigners are losing their appetite for U.S. Treasuries, the Fed will have to abandon the fight against inflation to keep Washington afloat.

Eventually, the CPI will make an about-face. But, before the financial community wakes up to this reality and changes its long-term inflation expectations, industrial owner-users can take advantage of the current expectations by securing sale-leasebacks with minimum rent escalations. Meanwhile, private investors can begin inflation-proofing their portfolios with commodity-related specialized properties.


I N D U S T R I A L   N E W S

Federal Budget Deficit Hits $1.1 Trillion In First Half
Of Fiscal 2023, $430 Billion Higher Than Last Year

Fox Business – April 10, 2023
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Forecasting Inflation Is A Difficult Task
WealthManagement.com – April 18, 2023
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Deal Activity Shrank 56% in Q1 As
Cap Rates Rose 30 Basis Points

Globe St. – April 20, 2023
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Industrial Space Demand Drops Sharply In
Q1 As Tenants Reconsider Inventory Needs

Connect CRE – April 19, 2023
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More Investors Park Dollars In Industrial Outdoor Storage
CoStar – April 12, 2023
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R E G I O N A L   N E W S

Texas-Sized Tax Break May Get New Life
Connect CRE – April 17, 2023
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Denver Industrial Leasing Falls 55% During Market ‘Normalization’
Bisnow – April 18, 2023
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Westcore Pays $52M For Salt Lake City Industrial Asset
Commercial Property Executive – March 23, 2023
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5 Emerging Markets For Industrial Development
Globe St. – April 17, 2023
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Ports Accelerate Houston Industrial Growth
The Real Deal – April 12, 2023
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