Stagflation Risk Alarms CRE

Stagflation Concerns Intensify

Globe St reports that economists, including those at Moody’s Analytics and Marcus & Millichap, are sounding alarms over stagflation risk as global instability and rising energy costs pressure the US economy. Gas prices have surged past $4 per gallon. Persistent inflation and slowing job creation have heightened uncertainty for commercial real estate stakeholders.

CRE Impact in Focus

In a prolonged stagflation scenario, multifamily and retail assets are likely to experience heightened stress as consumer budgets shrink. At the same time, capital markets tied to real estate are already showing signs of strain, with sentiment weakening as investors reassess risk in a higher-cost, tariff-sensitive environment. While retail and industrial assets may see some demand softening, their typically longer lease terms give a measure of insulation. Economist forecasts suggest a 20% to 40% probability of stagflation if global tensions, especially related to the war in Iran, do not resolve soon.

Fed and Policy Response

Federal Reserve Chair Jerome Powell has signaled “very, very careful” inflation monitoring. This suggests the Fed is weighing persistent inflation risks against rising unemployment. Powell and other experts caution that congressional overspending is unsustainable without stronger economic growth, underscoring a difficult policy environment. Ongoing volatility and skepticism about a quick resolution mean stagflation concerns will remain prominent in CRE discussions as 2026 unfolds.