There’s An Overlooked Way Biden’s Economy Is Taking An Axe To Americans’ Retirement Accounts

Government pensions that invested in commercial real estate are being hit hard by the ongoing crisis in the sector, which is threatening average Americans’ retirement plans, The Wall Street Journal reported Friday.

Large U.S. public pensions lost 6% in the last 12 months on real estate investments, the largest loss since the COVID-19 pandemic, according to data from Wilshire Trust Universe Comparison Service acquired by the WSJ. The losses are part of a broader crisis hitting commercial real estate due to a lack of demand and prohibitively high interest rates brought on by measures used to combat stubbornly high inflation under President Joe Biden.

“Folks are allocating less dollars, trying to understand what they have in their portfolio,” Shawn Quinn, managing director of Wilshire, told the WSJ. “Institutional investors are not quite sure if we’ve hit the bottom yet.”

The California State Teachers’ Retirement System lost around 9% on its $333 billion real estate portfolio in 2023 amid the downturn in commercial real estate, according to the WSJ. High rates spurred by the uptick in inflation under Biden have contributed largely to falling commercial property values.

Inflation peaked under Biden at 9% in June 2022, since decelerating to 3.4% as of April, far higher than the Federal Reserve’s goal of 2%. In response to high inflation, the Fed has raised its federal funds rate to a range of 5.25% and 5.50%, increasing the cost of credit on which developers rely.

Commercial real estate properties are also losing value due to a fall in demand for offices, which has failed to recover from the spike in work-from-home policies put in place during the COVID-19 pandemic. The number of office buildings