You’ve probably noticed the headlines piling up: slower job growth, revised payroll numbers, softening service activity, and mixed GDP performance. The latest
CoStar Economy report by Christine Cooper and Chuck McShane confirms what many of us in CRE have felt on the ground — the U.S. economy is definitely decelerating.
Let’s unpack it without sounding the alarm bells just yet.
Job Growth Is Slowing Down
July added only 73,000 new jobs — well below expectations — and revisions to May and June show we were too optimistic before. Those two months were revised down by a combined 258,000 jobs, bringing the 3-month average to just 35,000. That's the lowest since the height of COVID in 2020. Some sectors like healthcare and education are still hiring, but professional services and manufacturing are cooling.
GDP Is Wobbling Too
While Q2 GDP showed 3% growth, it was mainly due to one-off trade factors. When averaged with Q1, the U.S. economy grew just 1.2% in the first half of 2025 — down from 2.8% in the back half of last year.
Business Activity Is Softening
Both manufacturing and service sector activity declined in July. The service sector is just barely above contraction territory (ISM index at 50.1), while manufacturers continue to deal with sliding new orders and labor cuts. Tariff-related input costs aren’t helping either.
So, Are We Heading Into a Recession?
Not yet. We’re still seeing positive job growth and unemployment remains low at 4.2%. But the signs are stacking up. As always, the consumer is key — and recent data shows inflation-adjusted income and spending are both declining.
What This Means for CRE
If you’re in commercial real estate, you know slower growth means fewer expansions, longer decision cycles, and more caution around capex. But it also means opportunities — as sellers adjust pricing expectations and investors get choosier, the need for smart, informed advisors is more critical than ever.
Things are softening, yes. But this isn’t 2008. It’s a reminder that CRE — like the economy — is cyclical. And those who keep their eyes on the data and their clients' long-term goals will come out ahead.
