First Republic Bank Chief Investment Officer Economic Comments

We attended an event last week hosted by First Republic Bank with a presentation from Christopher Wolfe, their Chief Investment Officer.

Christopher shared a wealth of data, and here are some of key points we'd like to share with you:

1.  Current economic conditions may continue into 2024/2025, with stability increasing in 2025/2026.

2. The Fed historically stops raising rates when the fed fund rate is higher than the inflation rate. (That conflicts with Chairman's Powell's recent comments, but we'll be watching)

3.  U.S. recession probability is now at 75%. 

4. Consumer inflation forecast for 2022 is 7.9%, 2023 is 3.7%, and 2024 is 2.2%.

5. Unemployment is forecast for 2022 is 3.7%, 2023 is 4.4%, and 2024 is 4.5%.

6. Does not see a Bay Area real estate collapse.

7. Bay Area real estate is suffering from a lack of new housing stock. 

8.  Rent costs will to continue to go up.

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