"U Can't Touch This" by MC Hammer is an iconic anthem and a timeless classic. As millennials are now reaching middle age, we may be in for a wave of 90s nostalgia.
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While reminiscing about Hammer Time and growing up in the 90s, there's a parallel drawn to today's economy. The economy grew at a rate of 3.3% in the fourth quarter, following 4.9% annualized real growth in the previous quarter. Wages are growing at 5%, with manageable inflation, so while some worry about a replay of the 70s, the current situation mirrors the economic landscape of the 90s and should share the same euphoria as we did then.
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The current consumer data and job market health support a soft landing in the economy, potentially causing headwinds for equity investments, notably in lower cap rate assets, like multifamily and industrial. In contrast, hotels stand to gain from the persistent imbalance between new supply and demand. Additionally, repricing risk is significantly reduced as the current risk premium spreads are within historical norms versus other low-cap rate assets.
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Hotels are also benefiting from the ongoing boom of the travel industry, which is projected to grow into a $15 trillion industry in the coming decade. Millennials are shaping this industry. They are traveling at higher rates than other age groups and, along with Gen Zs, are more likely to spend money on experience than consumer goods, according to American Express Travel's 2023 Globel Travel Trends Report.
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Let's enjoy the memories of the 90s, both in music and the economy, and trust the Fed will keep the economic engine going so we can party like it’s 1999!
American Express Peachtree Group Peachtree Group Credit Peachtree Group Hospitality Management Jatin Desai Brian Waldman Brent LeBlanc Michael Ritz Jared Schlosser Daniel Siegel Michael Harper Mitul Patel Wealth of Common Sense
#90s #travelindustry #hotels #federalreserve #economicoutlook #americanexpress #invesment
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