Yelena Maleyev, senior economist at KPMG, sat down for a video interview at Nareit's REITwise: 2025 Law, Accounting & Finance Conference® in San Antonio, Texas.
Maleyev shared her economic outlook for 2025 and beyond, emphasizing continued uncertainty as a major risk factor. She explained that persistent uncertainty acts like a "tax" on the economy, discouraging consumer spending and business investments. If this uncertainty continues, Malev warns the economy could slow further, potentially leading to a deflationary environment with weak growth and stubbornly high inflation—though that is not KPMG’s current base case.
Turning to tariffs and trade wars, Malev noted that while targeted tariffs may not necessarily cause inflation, the broader uncertainty around trade policies and retaliation from other countries could disrupt supply chains. This would particularly impact the real estate and construction sectors, as key materials like steel, aluminum, and lumber could become more expensive, fueling inflation and complicating the Federal Reserve's ability to manage interest rates.
Malev also discussed consumer sentiment and inflation expectations, highlighting that despite job stability, consumers remain cautious due to ongoing high prices and negative news cycles. If this cautiousness escalates into reduced spending, it could significantly slow economic growth, given that consumer spending makes up two-thirds of the U.S. economy. Additionally, if inflation expectations rise, consumer behavior could further accelerate inflation, compounding economic challenges.