Intelligent Investment

Economic Watch: GDP Growth Slows to 2.0% in Q3

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Executive Summary

  • U.S. GDP grew by 2.0% on an annualized basis in Q3 2021, below the consensus estimate of 2.8%.
  • A confluence of factors led to slower growth, including supply-chain disruptions and an uptick in COVID infections from the delta variant.
  • Growth was driven primarily by consumer spending on services and business spending on inventories and equipment.
  • The commercial real estate industry recovery is well underway and should remain on track as growth picks up in the coming quarters.

Commercial Real Estate Highlights


Amid a broader slowdown in growth, office demand drivers such as intellectual property products and financial services continued to show resilience. This will support office demand as companies weigh a broader return to the office following the latest downturn in COVID infections.


Consumer spending growth slowed to 1.6% in Q3. Supply-chain disruptions should ease significantly next year. Combined with an improving public health outlook, this will bode well for retail sector fundamentals.


Economic growth and COVID-related disruptions have put supply chains under tremendous strain, leading to more demand from producers for industrial & logistics space to increase inventories and diversify production amid continued consumer spending. The sector’s outlook remains very favorable.


Demand for multifamily properties should remain strong thanks to an improving job market and rising home prices. However, supply-chain disruptions to the construction sector may limit near-term supply growth.


Accommodation & food services contributed to GDP growth in Q3, fueled by a strong job market and robust personal savings rates. CBRE expects continued recovery for the sector as economic growth continues and the delta variant subsides.

The Bottom Line

U.S. GDP growth slowed to 2.0% in Q3 2021, below expectations of 2.8%. Supply chain disruptions weighed heavily on certain sectors of the economy. This was particularly evident by a 42% drop in motor vehicle production, which alone subtracted 2.4% from GDP growth.

CBRE forecasts GDP growth of 4.6% in 2022, leading to stronger real estate fundamentals across the board. We also expect that supply-chain disruptions will ease significantly over the next several quarters. The potential for additional government spending on infrastructure could also provide a near-term boost while also improving longer term growth prospects.

This outlook bodes well for already firming office demand. Industrial & logistics markets will remain fueled by the need for increased capacity to keep up with consumer demand. Retail and hotels will benefit from an improving public health environment, though recovery in these sectors will be somewhat uneven. Furthermore, we see less risk of COVID-related disruptions in 2022 due rising vaccination levels, new therapeutics and greater awareness of how to limit the spread of the virus.