Is the US economy going into recession? What the data actually shows in 2026

What the media keep saying: Recession incoming. Tariffs crushing trade. Market chaos. If you're following US economic news right now, the sentiment is bad.

However, the headlines and the reality don't seem to match up. As 2026 starts, the US economy just posted its strongest quarterly growth in two years. Industrial real estate demand is improving. And warehouse leasing remains resilient.

So, something else is going on. Industrial real estate doesn't move like stocks. And once you understand why, a lot of the noise starts making a lot less sense.

Headlines vs Reality

The headline: US heading into recession

Reality: The US economy expanded at an annual rate of 4.3% in Q3 2025, the strongest growth in two years. Consumer spending jumped. Exports surged 7.4%.

The headline: Tariffs will crash everything

Reality: Industrial demand improved for the second consecutive quarter. US industrial net absorption reached 45.1 million square feet in Q3 2025, increasing 33% on the year.

The headline: US real estate is collapsing

Reality: New warehouses being built and finalized hit an 8-year low in Q3 2025, while the national vacancy rate stayed at 7.1%. This means supply is severely limited while demand continues to grow.

While the stock market reacts to sentiment. Industrial real estate responds to fundamentals. And right now, those facts are telling a completely different story than the one dominating your feed.

Warehouses are separate from stock markets

A warehouse holds goods moving from point A to point B. That's it. It stores products, enables distribution, makes e-commerce possible, keeps supply chains running.

These activities don't stop when the S&P drops 10% or consumer confidence polls look bad.

What happened during the last crisis, the pandemic?

Stock markets crashed, everyone panicked.

Meanwhile e-commerce exploded and warehouse demand surged. Why? People still needed stuff, they just wanted it delivered instead of shopping in person.

Inflation spikes in 2022?

Warehouse rents kept climbing, occupancy stayed tight. Why? Inflation doesn't eliminate the need to move products around.

Tariffs disrupting trade in 2025?

Headlines predicted disaster. Industrial leasing improved 32.3% year-over-year. Because companies responded by bringing production closer to home, which requires even more domestic warehouse space.

Here's the key insight: industrial real estate provides essential infrastructure for the world's largest economy.

The warehouse shortage

Even if you think US demand is delicate, the supply side just shifted in a massive way.

352.9 million square feet of industrial space is currently under construction nationally, equivalent to just 1.7% of current stock. Construction started in 2025 totaled 217.7 million square feet, well below recent highs.

Construction costs have remained stable, but the pipeline of new warehouses decreased.

This creates an important buffer.

Do the math: if demand decreases but supply has already shrunk significantly, landlords still have pricing power. Occupancy might tick down slightly but not dramatically.

Small warehouses (under 100,000 square feet) demonstrate this perfectly. These facilities are critical for last-mile delivery and urban logistics. Current vacancy: just 4.6%. Why? You literally can't build new ones in the urban areas where they're most needed.

Two trends that don't reverse when markets are uncertain

E-commerce keeps taking market share

Online shopping now accounts for 16.4% of total US retail sales. That's up 5.1% on the year. Doesn't sound like much? However, e-commerce needs 3-5x more warehouse space than traditional retail.

Even in a downturn, people don't stop buying online. They might buy less overall, but the percentage happening digitally keeps climbing. Every point of retail that shifts online requires more warehouse capacity.

Nearshoring isn't reversing

Mexico remained the US’ largest trading partner in 2025. Trade tensions and supply chain disruptions pushed companies to relocate production closer to North America. Companies that spent billions moving manufacturing aren't moving it back because of one bad quarter.

This creates permanent demand for warehouses at border crossings, ports and distribution hubs. Goods coming from Monterrey, Mexico, still need storage in Dallas, distribution through Memphis, and delivery from facilities in major cities.

These aren't temporary needs tied to GDP growth. They're infrastructure requirements that persist.

How this asset class actually works

If you're used to residential property or office buildings, industrial requires a different approach. Here's what matters:

Location constraints beat economic growth: Coastal markets with port access, population centers and transportation infrastructure have hard supply limits. You can't just create more industrial-zoned land near major ports, no matter how strong demand gets. This creates pricing power that persists across economic cycles.

Tenant diversity is built-in protection: Unlike an office building with one or two major tenants, industrial portfolios spread risk across dozens of companies in different sectors: logistics, manufacturing, food distribution, healthcare, e-commerce. One struggles? The other 99 keep operating.

Long leases mean predictable income: Industrial tenants sign multi-year leases because relocating warehouse operations is expensive and disruptive. This creates more stable cash flow compared to assets with high turnover.

Replacement cost sets a floor: When construction costs are high and financing is expensive, the cost to build a new facility puts a floor under existing values. If you can't build new for less than what existing warehouses trade for, prices stay supported.

"Will the US economy crash?" vs “Do goods still need to move?"

Goods move in recessions and in expansions. They move when the stock market hits all-time highs and when it drops unexpectedly. They move when consumer confidence is strong and when everyone's nervous.

What changes during downturns is the growth rate. Maybe rent growth drops,but the fundamental demand stays because the infrastructure requirement doesn't vanish.

This is why institutional investors often increase industrial allocations during uncertainty. They understand the difference between cyclical bets and structural infrastructure.

What makes the current setup interesting heading in 2026

You don't see these market fundamentals often:

• Demand growing
• Supply severely limited
• Vacancy stable
• Positive market drivers intact (e-commerce growing, nearshoring accelerating)
• GDP growth strong

Strong fundamentals meeting mixed sentiment. Institutional investors with long time horizons pay attention to this setup. Not because they're smarter, but because they're looking at different data than retail investors watching stock tickers.

If you're evaluating US opportunities from abroad

Here's the key insight: don't conflate stock market volatility with US assets.

American industrial real estate runs on different drivers than equities. Less correlated to sentiment, more tied to structural trends, protected by supply constraints that limit downside even when things get rough.

Does that make it risk-free? Obviously not. But the risk profile is completely different from betting on US stock market growth or speculating on economic expansion.

You're not investing in American optimism. You're accessing infrastructure that makes the economy function, whether it's booming or just grinding along.

Right now, as we head into 2026, that infrastructure is seeing improving demand, stable vacancy, and facing supply constraints that protect existing values.

The numbers don't match the headlines.

Want to explore US industrial real estate? View on the Stake app.

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