TAG Industrial Watch: March 21, 2026

Earlier this month, the February jobs report showed an unexpected loss of 92,000 jobs with additional downward revisions to previous months. Based on gross domestic product (GDP), economic activity during Q4 2025 underwent a sharp downward revision, falling from the initially reported 1.4% to an annualized rate of 0.7%. Wholesale prices, measured by the producer price index (PPI), jumped by 70 basis points in February (before the war-related surge in oil prices), equating to an 8.5% annual rate. Despite the ongoing war and signs of recession, inflation concerns kept the Federal Reserve from cutting interest rates. Nonetheless, the Fed quietly continues to inflate the money supply to buy U.S. Treasuries, adding $163 billion worth of bonds since it resumed purchases in mid-December. Regardless, the interest rate on the key 10-year Treasury note is up 30 basis points to 4.26% since the start of the war.

Ever since inflation proved not to be “transitory”, TAG has warned industrial investors of stagflation. With economic activity slowing sharply, job losses piling up, prices accelerating, interest rates on the move, and the Fed inflating the money supply, stagflation is at the economy’s doorstep. The conundrum that is quickly unfolding for industrial investors is how to raise rents to keep pace with price inflation (which protects the underlying value of the property) in a market environment with falling rent growth and rising vacancy rates. The solution can be found within the properties that actually benefit from stagflation. In January, merchandise exports continued to outperform, rising 13% year-over-year, as imports dropped 18% from unusually elevated levels due to tariff frontloading earlier last year. If stagflation continues to infiltrate the economy, putting pressure on the dollar’s exchange value, exports and the specialized industrial properties that produce these goods can emerge as the new darlings of the industrial market.