The Atlanta Fed’s GDPNow model recently made headlines for its forecast (made on March 3, 2025) of -2.8% annualized GDP growth for the first quarter of 2025, marking a drastic downward revision from its February estimate of +3.9% growth for the quarter (the GDPNow model has since revised its estimate to -1.8% first quarter growth). For context, the U.S. economy hasn’t experienced negative quarterly growth (contraction) since 1Q 2022.
The impact a recession would have on the apartment industry ultimately depends on its severity.
The Great Recession, for example, was especially severe and drawn out, spanning from December 2007 to June 2009. During this time, U.S. real GDP declined by more than 4%, while the unemployment rate rose from 4.7% in November 2007 to a peak of 10.0% in October 2009.
This sharp pullback in economic activity translated to increasing apartment vacancy rates, negative rent growth, and negative returns to apartment investors (see Figure 1 and 2 below).
