California and New York Flounder Under Poor Leadership


Steve Witkoff, a notable real estate investor, didn’t mince words in a recent interview, blasting the economic management of California and New York. These states, he argues, are on the brink due to a clear lack of competent leadership. The commercial real estate sectors in these regions are particularly hard-hit, struggling under rising interest rates and the growing popularity of remote work. This isn’t just a localized issue. It’s a ticking time bomb for the national economy. As per Witkoff’s assessment, the progression of the situation appears dire without substantial alterations in governance strategies and leadership, both at the state and federal levels.

Steve Witkoff, a real estate investor and longtime friend of Donald Trump, has seen the ins and outs of the former president’s re-election campaign. In an exclusive FOX Business interview on Thursday, Trump’s confidant claimed two blue states could be in "trouble" without adequate leadership.

"There's a big problem in this country. California, it's a disaster for New York as well," the Witkoff Group chairman and CEO told Maria Bartiromo on "Mornings with Maria." "California's in trouble."

"People are referring to the office buildings where there is a problem, but there's a problem in the multifamily sector," he expanded. "So many of these large funds bought multifamily when rates were 1% and 2%, and they were financing them with positive leverage. And now rates have outstripped those internal returns."

Higher interest rates and a cultural shift to remote or hybrid work models have caused the U.S. commercial real estate (CRE) sector to crack. Data provider ATTOM reported there were 625 CRE foreclosures in March, up 6% from February and 117% from the same time last year.

Additionally, a Bank of America survey from February found that fund managers are growing more worried over the CRE foreclosures triggering a credit crisis.

Steve Witkoff on blue state economies

Witkoff Group Chairman and CEO Steve Witkoff said New York and California economies are "in trouble" on "Mornings with Maria." (Getty Images)

About 16% of participants in the global fund manager survey identified a "systemic credit event" as the top risk to markets, compared with just 11% the prior month. It marked the third-largest tail risk for markets, behind sticky inflation and geopolitics.

Unsure whether the Federal Reserve will cut or raise rates amid the volatility, as "everything’s political these days," Witkoff believes the solution rests in former President Trump’s policies.

"I think the [former] president is intent on strong economics. He is intent on opening up, creating, engendering, again, an independent energy policy. Those are all disinflationary things," Witkoff said.

"And he's intent on paying down the national debt. We had a long discussion about it the other day. But you hear none of that from this current administration," he continued. "The [former] president is so strong on economics. He understands it very well."

The Witkoff Group founder is reportedly hosting a New York City-based fundraiser for Trump later this week, and helped initiate the recent meeting between the 45th president and former 2024 candidate Florida Gov. Ron DeSantis.

He also feels confident that Trump will flip New York red in the November general election.

"I have a home in Kentucky. I travel a lot. The groundswell I'm referring to is outside of New York, outside of the bubble. You just hear people are pro-Trump from all stripes," Witkoff said. "All my friends call me now, they all want to know what they can do."

This article originally appeared on Fox Business

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