Arcan Capital Multifamily Update: The New Normal

Much to the dismay of all Americans, the COVID-19 pandemic has continued throughout the summer months. The case count in the United States has climbed to over 5 million before the end of summer and the ongoing nature of the disease is beginning to make the crisis feel more like a new normal than a temporary crisis. This new normal is also being felt in the multifamily business. Social distancing remains in place and nearly all properties have adopted a new way to operate which minimizes in-person interaction where possible and includes new signage and rules for amenities and common areas. While property operations have successfully made the ”COVID” adjustment, the capital markets have not. An enormous amount of capital remains on the sidelines as sellers and buyers are waiting for signs that jumping back in and transacting are the right move. While there is no consensus on exactly where we are and where we go from here, things are beginning to take shape. 

Transactions

Transaction volume across the country collapsed in the second quarter of 2020. By way of example, the Atlanta market had $2.6 billion in transactions in the fourth quarter of 2019. There were less than $500 million in transactions in the second quarter of 2020[1]. This represents the lowest transaction volume since the first quarter of 2012. Transaction volume bounced back in August of 2020 but Q3 volume is still on pace to be the slowest third quarter since 2014. Much of this was anticipated as the pandemic forced shutdowns across the country. In many respects, it is not possible to acquire apartments when shut down. There is simply no way to adequately perform physical diligence on a real estate asset without physically inspecting the property and that was almost impossible in the second quarter of 2020. A complex single question remains: how will the pandemic affect multifamily?

Valuation

The primary question Arcan is contemplating is: what are assets worth in today’s environment? In a normal market there are scores of sales one can use as competitive points for reference (“comps”). These sales essentially inform the value of other, similar properties. While every investor has a proprietary financial model they use to analyze a property, the basis for valuation, appraisal, and lending is competitive sales. When there are no comps, most people, investors, appraisers, and brokers included, are guessing. For professional investors, it is an educated guess based on lending rates and returns, but it is a guess, nonetheless. Thus far, investors are still willing to be aggressive but there is a tangible gap between what sellers want to receive and what buyers want to pay. 

Collections

Another key component of valuation is collections. If properties cannot collect rents and other charges, valuations will suffer as underwriting gets more conservative. Thus far, collections at apartment assets have been very good, all things considered. Nationally, collections increased in June and July (95.9% and 95.7%) from April and May (94.6% and 95.1%). The April to June 2020 average of 95.3% is below the 2019 figure of 96.7%[2], however. While the pandemic is the cause, the eviction moratorium is just as likely to blame and will likely has been extended beyond the initial August end date through the end of 2020. The Arcan portfolio remains approximately 95% collected throughout the pandemic, though the rates on certain properties are falling slightly each month. Non-paying tenants cannot be removed via eviction and there is now a backlog. Every month you have a few more tenants who are unwilling to pay rent and they now cannot be removed. In prior years, the non-paying tenants would be replaced by another with a far better likelihood of payment.

The Market

There are other metrics to consider in determining valuations, such as market factors that can dramatically change valuations. The first is rent growth. In the Atlanta market, rents fell dramatically in the initial stages of the pandemic. Arcan believes this was a mix of panic and lower traffic as properties fearfully tried to stay full during the uncertainty. While growth has been slow, market rents have recovered to pre-pandemic levels. Annual rent growth now stands at 3.3% in Atlanta since March and other markets have showed strength as well. Rents in Birmingham, Charlotte, Raleigh-Durham and almost every other major market in the Southeast that Arcan tracks are above those of one year ago[3]. That is an enormously powerful statistic, if it holds. Lenders are also back in the game even if less aggressive. While bridge loans are still slowly coming back, the agencies are very much helping the market with substantially lower rates. In many instances, Agency pricing is 100 Bps below rates from 1 year ago, often coming in at well below 3%. Even if prices remain the same, initial yields on investments will go up. This is a major factor in investors ability to keep paying all-time high prices.

The Way Forward

The final results of the pandemic are simply not in. The federal government is pumping money into the system via multiple rescue packages, so it is hard to know what will happen when the flow of free money stops. To date, renters have been paying (even if less than in prior years) and performance of multifamily assets has been good. It may turn out that multifamily assets are the ideal asset to hold given the current environment. Unlike other real estate like retail, hotel and office assets, people still need a place to sleep every night and apartments fill that need. However, cracks are beginning to form in collections. In markets Arcan tracks closely, a clear distinction can be made between properties that collect nearly all their revenue and others that struggle.

Investors are now jumping back in and new transactions are beginning to take shape. This will inform pricing as we move towards the end of 2020. As deals come to market, pricing expectations are all over the board. We do see some good opportunities, but others seem shockingly overpriced. For Arcan, the key to success is underwriting and experience. Some forget that the definition of value is not only what a buyer will pay, but also the present value of all future cash flows. Those whose expectations of rent and expenses are aggressive will ultimately pay the price with cash flow and an asset worth less than they planned. The days of underwriting a blanket collection loss for all assets are over for now as delinquency should be a key component of every acquisition. Arcan is very cautiously approaching investments as it does not feel as though the pain of the pandemic has been fully felt. While there are good investments out there, we feel more are coming and only time will reveal them to us.

[1] Multi-Family Capital Markets Report, Atlanta - GA - CoStar

[2] National Multifamily Housing Council, NMHC Rent Payment Tracker

[3] CoStar Market Analytics

The Pandemic-Era Labor Market and Its Effects on the Multifamily Real Estate Market

Since the onset of the COVID-19 pandemic, the labor market has been a hot topic amongst economists, policymakers, business owners and, of course, workers themselves. Seemingly overnight, the virus and subsequent public health response transformed one of the best labor markets in U.S. history into one of the worst. U.S. unemployment declined to 3.5% in February 2020. By April, it had peaked at 14.7% (i). Starting in mid-March, many workers, particularly those in hospitality and travel, lost their jobs as consumers dramatically pulled back spending amidst the lockdowns. By August, the unemployment numbers had improved to 8.4% (ii). While this is clearly an improvement, the job market still must recover millions of jobs to return to its pre-pandemic level.

As the labor market situation continues to unfold, clear trends have begun to emerge. While the initial economic recovery outpaced expectations, it has begun to slow down in recent weeks. The same is true of the labor market, as weekly new unemployment claims remain stubbornly above 850,000 (iii). There is also now a clearer picture of which industries and workers have suffered the most. Due to the dramatically uneven recovery, the state of the labor market has significant implications for multifamily real estate operators and investors.

Sectors and Workers are Becoming Increasingly Stratified

Upon examination of the data, it immediately becomes clear that certain sectors have been hit substantially harder than others. For example, from March-August 2020, leisure and hospitality has shed over 4.1 million jobs, or 24.5% of the total in that sector. The financial sector, on the other hand, lost only 191,000 jobs, or 2.2% of the total over that same time period (iv). Overall, it has become apparent that higher-wage workers who are able to effectively work from home have a significantly better employment outlook than those in service industries who rely on in-person interactions to do their jobs. Moreover, those in professional positions tend to out-earn their service industry peers (v).

This phenomenon is leading to an increasingly divergent outcome for workers in different parts of the economy. This is amply demonstrated by looking at employment data for college graduates vs. those with a high school degree only. As of January 2020, the unemployment rate for college graduates was 2% and for high school only it was 3.8%. By August 2020, the unemployment rate for college graduates had risen to 5.3%, but the high school only rate was a whopping 9.8% (vi). Thus, the unemployment differential between the two groups rose from 1.8% to 4.5% in eight short months.

As the recovery continues, this divergence in fortunes will persist until the public health situation improves and consumers feel more comfortable travelling, eating out, and engaging in other activities that require interpersonal interaction. That is likely to be months, if not a few years. Many non-college graduates work in the service sector where job creation will likely remain subdued for the foreseeable future. Moreover, many employers and economists had expected the job losses to be temporary as the general expectation was that COVID-19 would recede fairly quickly. As the public health threat and slower-than-hoped-for economic recovery have continued throughout the summer, however, some of those job losses previously thought to be temporary have become permanent. This will further hamper the recovery for lower-wage workers.

The Labor Market Divergence Has Meaningful Implications for Real Estate

As it pertains to multifamily properties, these diverging fortunes in employment directly affect a tenant’s ability to pay in-place rents, as well as his/her tolerance for rent increases. In the Southeast, which is Arcan Capital’s region of focus, we believe that most Class A and many upper-level Class B properties have tenants with professional occupations. With a few exceptions, they should continue to have the financial resources to remain current on their rents. Therefore, we would expect collections on these types of properties to remain relatively stable or decrease slightly. This is particularly true of well-located properties with a diverse tenant base. Higher quality assets in Arcan’s portfolio have remained quite durable and some of them did not have a single delinquency in August.

As for rent increases, we believe that the slowing economic recovery and, to some degree, the recent, dramatic increase in home sales will have a downward effect on rents. Rather than see continued rent increases, most properties and markets should see flat or slightly declining rents over the next 12 months. There are some interesting outliers, however, as we believe that certain well-located Class B assets could continue to see selective rent increases as cost-conscious tenants move down from Class A properties. Indeed, some markets, such as Atlanta, have seen rent increases on Class B properties during the pandemic (vii).

Overall, the labor market is telling a much more complex story than the headlines might suggest. While certain segments of the population are feeling tremendous pain, others appear to be somewhat insulated. For multifamily owners and operators, this means that success will hinge on tight investment selection criteria, careful underwriting, intensive management, and paying close attention to data and labor market trends.

(i) Kochhar, Rahesh. “Unemployment rose higher in three months of COVID-19 than it did in two years of the Great Recession”, June 11, 2020, Pew Research Center https://www.pewresearch.org/fact-tank/2020/06/11/unemployment-rose-higher-in-three-months-of-covid-19-than-it-did-in-two-years-of-the-great-recession/#:~:text=The%20Great%20Recession%2C%20which%20officially,Center%20analysis%20of%20government%20data.

(ii) U.S. Bureau of Labor Statistics https://www.bls.gov/charts/employment-situation/civilian-unemployment-rate.htm

(iii) Ip, Greg. “A Surprisingly Durable Economy Faces Tougher Tests,” The Wall Street Journal. September 9, 2020. https://www.wsj.com/articles/a-surprisingly-durable-recovery-faces-tougher-tests-11599662594

(iv) U.S. Bureau of Labor Statistics https://www.bls.gov/charts/employment-situation/employment-by-industry-monthly-changes.htm

(v) U.S. Bureau of Labor Statistics https://www.bls.gov/oes/current/oes_nat.htm#00-0000

(vi) U.S. Bureau of Labor Statistics https://www.bls.gov/web/empsit/cpseea05.pdf

(vii) Tenenbaum, Sam; Kahn, David. “Workforce Housing Withstands the Worst of the Pandemic”, September 2, 2020, CoStar Insights https://product.costar.com/home/news/shared/383663251?utm_source=newsletter&utm_medium=email&utm_campaign=personalized&utm_content=p5

Arcan Capital Update: Early April Results and the COVID-19 Effect on Our Properties

The COVID-19 pandemic continues to wreak havoc on our way of life in the United States and around the world. As the novel coronavirus makes its way through a locked-down populace, the U.S. has experienced a sharp reduction in economic activity, with many economists projecting a 30-35% drop in GDP in Q2 alone. Moreover, over 10 million new jobless claims have been filed since mid-March. While the total impact of the pandemic will not be known for months, there has been widespread concern regarding the performance of apartment properties as of April 1st due to the dramatically higher unemployment numbers. As such, we wanted to share with you the initial results from our properties. Over the past few days, Arcan Capital has compiled the collections results from its assets and compared them to the previous months prior to COVID-19. The results are different than what you might expect.

Collections

With regard to collections, Arcan took a proactive approach and moved to incentivize early payments in the wake of the pandemic. Among the steps we took was to offer discounted rent for tenants who paid early. The results have been quite positive. Collections across our properties through the end of the day on April 5th remained ahead of the same period for March and February by 13% and 28%, respectively. As of this writing, Arcan has collected over 70% of total rent due for the month of April.

Leasing and Move-in Activity

Leasing and move-in activity across our portfolio have also been better than expected, though it is down from 2019. For the year-over-year period from March 1 through April 5, move-ins and applications are down by 13.6% and 12.9%, respectively. Move-ins during this period represent an annualized tenant replacement of over 46%. Historically, that is enough to replace all move outs in normal market conditions. While traffic is down 19.9%, we see this as a big victory considering these extraordinary circumstances; it would not be unreasonable to see this metric fall by 50% or more. It is also pertinent to note that our unit count changed during this period, but we adjusted our metrics to ensure that the analysis is statistically accurate.

Looking Forward

In our view, the story of April collections was always going to be about how challenging it would be to collect the last dollar, not the first. The reason for this is that at every property there is a solid base of residents who predictably pay rent on-time, every month. In our portfolio, we believe that percentage is about 75% of our residents. The remaining 25% struggle every month to make their rent payments and the real question is: what percentage of the challenged 25% eventually pay? The next few weeks will tell this important story.

Conclusion

While many were predicting collections and traffic in the apartment business would fall precipitously in early April, that has not been the case so far for Arcan. Activity has certainly slowed, but we can clearly see that people are still actively leasing and paying their rent. While the economic environment has clearly deteriorated due to the COVID-19 pandemic, we are encouraged by these early results. It is important to note, however, that each property and portfolio is different. Arcan Capital owns and manages assets that would rank between a high C and low A on the quality scale. A portfolio entirely composed of C-quality assets is likely to have worse results. A portfolio of entirely A class assets would likely have performed better. While our numbers are obviously preliminary, the results from our properties so far give us hope that overall performance in April will be better than many predicted.

THE IMPACT OF COVID-19 ON MULTIFAMILY REAL ESTATE

Dear Arcan Investors, Partners and Friends,

Earlier this month, life as we know it changed immeasurably. The worldwide spread of COVID-19 and its full effect on our nation and the world remains uncertain, as does its effect on our business. As the principals of Arcan Capital, we wanted to take this time to discuss the current situation and the steps we are taking to confront these new challenges with our investors, partners and friends. Arcan Capital’s mission is: create exceptional returns for investors by providing exceptional homes for residents. Now, more than ever, we take that mission seriously as the pandemic creates uncertainty for our investors and makes homes, our residents’ private refuge, even more valuable than ever.

As the virus made its way into our markets, we quickly adjusted our operations. As a manager of people’s homes, however, we cannot simply close-up shop as some other firms are doing. Prior to the recent CDC guidance, we had already begun planning for how to best respect social distancing while also maintaining our day-to-day operations.  We now require residents, staff and vendors to communicate virtually whenever possible. Work orders and payments can be submitted online and unit tours can be done without a single in-person interaction. These online systems were already in place and were once viewed as a trendy modern amenity; now they keep our business fully functional.

We are adjusting our collections methods to make it even easier for people to pay rent online without person-to-person interaction. We are also adjusting our renewal process, making it easier for current tenants to renew leases and stay in their homes. The President recently announced his recommendation to suspend evictions and foreclosures through the end of April. Many of the markets in which we operate had already taken this step. We anticipate that these delays could last even longer as people get back on their feet and local governments remain reluctant to remove tenants due to non-payment. This is our greatest exposure and it has the potential to make the enforcement of collections difficult. We are responding by finding creative ways to incentivize and work with our residents like we never have before. Heading into the next few weeks, our goal is to maintain and increase occupancy and avoid move-outs whenever we can.  In this regard, we are closely monitoring rental rates and conditions in every submarket and we are making quick decisions about whether and how much to adjust rates. 

Despite the economic impact from COVID-19, our long-term belief in real estate investing is unchanged. Real estate has been and remains a great investment. One of the many reasons we prefer it over other assets is the tangible nature of the investment. While equities and fixed income investments are viewed on a screen, ownership of apartment properties includes the literal dirt and everything permanently affixed to it. You can see it and touch it. We remind ourselves that each piece of real estate is, by definition, unique. When the financial markets fluctuate, we are secure in knowing that we own land and buildings that are people’s homes.  As the population continues to grow, and as the meaning of home becomes even more important, we believe that our investments will remain stable assets that generate positive cash flow over the long-term. Historically, multifamily real estate has been a great asset to own in turbulent economic times and we think it will be now as well.

As uncertain as the near-term future may be, we want to remind everyone of the ability of the United States to bounce back. It was only 12 years ago that we feared the entire system was crumbling beneath our feet. There will be many doomsday pundits scaring investors with talk of 25% vacant properties and remaining residents unable or unwilling to pay their rent. It’s instructive to remember that we have been in challenging economic periods before and made it through. Indeed, we can look to the actual results of the last recession to illustrate our point. During the Great Recession of 2008, average rents in Atlanta fell from a high of $948 to $896, a total drop of only 5.5% (average Atlanta rent is $1,267 today). Vacancy climbed from 8.5% to a maximum of 10.6% (8.9% today). These figures represent arguably the worst downturn of a generation. Moreover, that financial crisis was in large part caused by real estate. We therefore believe that it’s easy to overestimate the downside of our current predicament. It is critical to remember that the real pain of the Great Recession was overleveraging and the subsequent instability of the foundation of financial markets. The financial industry, as a whole, is far healthier and more stable today. Additionally, the fundamentals behind our business were strong headed into this pandemic and we expect them to be strong coming out of it as well.

While the precise black swan event of a worldwide pandemic was a surprise to us all, for over a year now Arcan has repeatedly predicted that distress would befall the markets in 2020. As such, we have been actively planning and preparing for a recession and corresponding market correction. We want to remind everyone that although unfortunate, market distress creates opportunity. Indeed, this is precisely why we have been raising a fund to help investors capitalize on a pullback or correction in the market. While it is much easier said than done, on the investment side, we try to act as Warren Buffett advises and to “be greedy only when others are fearful.” As fear takes hold in the market, Arcan will remain ready to take advantage of opportunities. On the personal side, Arcan is doing everything it can to help our residents, employees and others during these difficult times. We will remain a calm employer, investor, manager and advisor. Our only advice to our friends is to do the same. We will continue to closely monitor every aspect of the market and report back as events unfold and the near-term future becomes more clear.

As always, if you have any thoughts, questions or ideas, please feel free to contact any or all of us. We wish you and your families the best.

In good health,

The Principals of Arcan Capital:

Steve O’Brien, Jeremy Lantz, Shauna Lantz, Carrie O’Brien & Andrew Lorber

ARCAN CAPITAL MARKET UPDATE

Macroeconomic Outlook

Overall, 2019 was a good – but not great – year for worldwide economic performance. While the U.S. continued to grow, headwinds in Europe and Asia led to near-recession in the former and significantly slower growth in the latter. Europe, and particularly Germany, flirted with recession throughout the year, as the Eurozone grew only 0.2%.[i] Manufacturing on the continent has been in a recession for nearly all of 2019 as the European consumer continues to keep the Eurozone economy afloat. We believe that there is a strong possibility that the Eurozone will fall into recession in 2020.

In China, growth has been more subdued than forecast at 6.1%[ii] with weakening manufacturing, auto sales and U.S. tariffs holding back the economy.[iii] We suspect that these trends are likely to continue as China’s growth continues to slow more[iv] than expected due to both endogenous factors as well as exogenous, particularly the new Wuhan coronavirus. Indeed, the longer China contends with the fallout from this novel virus, the more it will impact the global economy, including the U.S. A weakening economy in China will have a direct impact in direct investment in the U.S. as well as potentially upending existing manufacturing supply chains of U.S firms.

In contrast to the rest of the world, the U.S. economy continues to defy expectations and has continued its resilient, consumer-driven expansion. Nearly 130 months have passed since the 2009 recession and as of January 2020, the U.S. unemployment rate is near an all-time low with nearly 1,000,000 more job openings than job seekers.[v] The good news is that the consumer has proven to be a quite resilient and wages are finally starting to pick up for the average worker. Indeed, the consumer is going strong and driving nearly all growth in the U.S. There are serious concerns going forward, however, as many consumers are relying on debt to fund their consumption. As of the end of 2019, consumer credit card debt was at its highest number ever – $930 billion – and delinquency rates are rising to levels not seen since just after the 2008 financial crisis.[vi] Additionally, the job opening to job seeker mismatch could potentially have a detrimental effect on business expansion as firms have a harder time finding workers.

Headwinds on the Horizon

Trade is an issue

One sign of potential worry for 2020 is that worldwide trade volume has declined significantly as China and the Eurozone slow and the U.S. continues to impose tariffs on goods from a number of other countries. This has the effect of further dampening economic growth in the U.S. as well as increasing costs to both American businesses and consumers.[i] 

Business investment is a major economic drag

Declining trade is certainly an economic headwind, but it is compounded when business investment declines as well. Moreover, it is likely that the decline in business spending in 2019 is directly linked to decreased international trade flows.[i]

If we look at capital spending from another perspective: the IHS Market index reveals that the U.S. purchasing managers outlook is actually improving slightly, especially relative to other major economies:

Digging deeper, however, it becomes clear that there is a significant divergence between the  manufacturing and nonmanufacturing outlook. This is particularly concerning, as manufacturing tends to produce durable goods designed to increase long-term productivity of businesses. Our concern is that a decline in manufacturing could affect medium-term productivity and ultimately the growth of U.S. firms. This would likely put downward pressure on wages.  

Indeed, we can see this decrease in manufacturing activity and slowing of global trade has likely already had a tangible effect on the profits of U.S.-based firms.

Concerns in the credit markets

We are also begin to have concerns in the debt financing markets, as we watched the repo market seize twice in 2019. While the repo market has a negligible effect on commercial real estate, it was one of the first markets to experience major issues leading into the financial crisis.[i] As such, we regard it as an important bellweather as to the health of the U.S. financial system. Indeed, prolonged distress in the repo market often drives up U.S. government borrowing costs, which will very much affect other rates as well, particularly the 10-year treasury yield that is so closely tied to most commercial real estate debt. While the Federal Reserve is focused on preserving liquidity in this market, we will be watching it closely.   

Multifamily Market

Within the Southeastern mulitfamily property market, Arcan remains concerned about rent growth and value appreciation in the short-term. As the U.S. economy cools, we expect to see this cycle’s torrid rent growth flatten considerably. This would have real effects on revenue and net income and is likely to substantially affect property values. For long-term owners, this may reduce their IRR and real income slightly, but most should weather a downturn relatively unscathed. For those investors who have bet heavily on continued rent growth and ever-increasing asset values, we think that many will begin to see some distress in 2020 as their modeled increases fail to materialize and cap rates either stagnate or rise slightly as the balance between buyers and sellers shifts.

As many observers have noted, rent growth in the region has dramatically surpassed wage growth. According to CoStar, Atlanta rents have grown nearly 35% since the 2008 financial crisis.[ii]  Wages, however, have not grown commensurately. As shown in the chart below from the Federal Reserve Bank of Atlanta, wage growth has gotten stronger in recent years but it still lags its pre-financial crisis pace. Given the wide delta between rent and wage growth, we are deeply suspicious that rent growth can continue at the pace that we have seen since 2010.

Conclusion

Headed into 2020, we are increasingly concerned that global economic headwinds, particularly those in trade, manufacturing and business investment will have a deleterious effect on the U.S. economy. While many forecasters believe that the U.S. will grow at a relatively subdued pace, 1.8%[i], we believe that the economic situation could start to decline as early as Q3 of this year. This should further impact wage growth and the ability of multifamily tenants to pay increasing rents. As rent grow abates and the economy cools, we strongly believe that we will see the beginning of distress in 2020. For short-term investors, especially those in the value-add space, this will likely present a major problem as they will not hit their target IRR’s and their equity will be displeased, forcing many operators to sell. At Arcan, we believe this will present an excellent opportunity to acquire good assets as better prices than today. We are patient, long-term investors and believe that a correction could do the multifamily market some good.

[1] Dr. Boersch, Alexander. “Eurozone Economic Outlook.” Deloitte Insights, November 18, 2019. https://www2.deloitte.com/us/en/insights/economy/emea/eurozone-economic-outlook.html [1] Elegant, Naomi Xu. “The U.S. Trade War Slowed China’s 2019 Economic Growth to its Weakest Pace in Nearly 30 Years.” Fortune, January 17, 2020 https://fortune.com/2020/01/17/china-gdp-growth-2019-weakest-30-years-trade-war/ [1] Bradsher, Keith. “China’s Economic Growth Slows as Challenges Mount.” The New York Times, October 17, 2019 https://www.nytimes.com/2019/10/17/business/china-economic-growth.html [1] Tan, Huileng. “China Says It’s Economy Grew 6% in the Third Quarter, Slower Than Expected. CBNC. October 17, 2019 https://www.cnbc.com/2019/10/18/china-q3-gdp-beijing-posts-economic-data-amid-trade-war-with-us.html [1] Henderson, Tim. “Help Wanted: Too Many Jobs and Not Enough Workers in Most States.” Pew Charitable Trust. October 14, 2019 https://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2019/10/14/help-wanted-too-many-jobs-and-not-enough-workers-in-most-states [1] Hayashi, Yuka “Credit-Card Debt in U.S. Rises to Record $930 Billion.” The Wall Street Journal, February 12, 2020 https://www.wsj.com/articles/credit-card-debt-in-u-s-rises-to-record-930-billion-11581442140 [1] “New Acosta Report Spotlights the Costly Effect of Tariffs on Consumers, Manufacturers and Retailers.” PR Newswire, December 10, 2019. https://www.prnewswire.com/news-releases/new-acosta-report-spotlights-the-costly-effects-of-tariffs-on-consumers-manufacturers-and-retailers-300972407.html [1] Francis, Theo and Gryta, Thomas. “U.S. Firms Pull Back on Investment.” The Wall Street Journal, November 24, 2019 https://www.wsj.com/articles/u-s-firms-pull-back-on-investment-11574591400 [1] Barrett, Emily and Hamilton, Jesse “Why the U.S. Repo Market Blew Up and How to Fix It.” Bloomberg, January 6, 2020 https://www.bloomberg.com/news/articles/2020-01-06/why-the-u-s-repo-market-blew-up-and-how-to-fix-it-quicktake [1] CoStar Market Report January 2020 [1] Kliesen, Kevin L.  “Forecasters See Lower U.S. GDP Growth in 2020 as Headwinds Continue.” Federal Reserve Bank of St. Louis, November 21, 2019 https://www.stlouisfed.org/publications/regional-economist/fourth-quarter-2019/forecasters-see-lower-gdp-growth-2020