Market Outlook: Key Trends to Watch in the Third Quarter of 2025—with a Focus on Memphis and the Mid-South

As the third quarter of 2025 begins, the national conversation about the economy is dominated by themes such as persistent inflation, shifting Federal Reserve policies, and the impact of tariffs. But what do these trends mean for Memphis and the broader Mid-South? Let’s take a closer look at how the region fits into the bigger picture—and where local opportunities such as the booming tech sector and risks like the potential overvaluation of the housing market may arise.

Economic Growth and Inflation: Local Impact

Nationally, economic growth is slowing, and inflation remains stubborn. This is being felt in the Mid-South, where the Consumer Price Index rose 2.4% over the past year, matching the national average. Key drivers of local inflation include rising rents (up 5.3% for owners’ equivalent rent and primary residences) and higher medical costs. While food prices are up slightly, grocery prices dipped in April, offering some relief for Memphis households. However, with tariffs expected to push up prices on a range of goods, local businesses and consumers alike should prepare for potential cost increases in the months ahead.

For Memphis, this means household budgets are being squeezed, especially by rent and healthcare costs. If tariffs continue to drive up prices, local retailers and manufacturers—essential sectors for the region—may face higher input costs, which could eventually be passed on to consumers. Economic uncertainty may also slow business investment and hiring, particularly in manufacturing and logistics, which are central to the Memphis economy.

https://www.dwassetmgmt.com/blog/inflation-surprises-what-it-means-for-investors-and-the-mid-south

Memphis Real Estate: A Beacon of Resilience and Opportunity

Despite national concerns about housing slowdowns, Memphis’s real estate market remains strong. Home prices continue to rise, with forecasts predicting a 3.3% increase by the end of 2025. While this growth is more modest than in other Tennessee cities, it indicates a stable and sustainable market. Inventory remains tight, which supports prices and keeps the market competitive for buyers and investors alike. Rental demand is also robust, with Memphis boasting some of the highest occupancy rates in the state and steady increases in rental prices.

https://www.noradarealestate.com/blog/invest-in-memphis-real-estate/

https://www.reedyandcompany.com/blog/the-2025-memphis-real-estate-market-trends-you-need-to-know/

On the multifamily side, construction activity has slowed, which is expected to tighten occupancy rates and drive-up rents, particularly in urban core neighborhoods such as Midtown and Northeast Memphis. Outlying areas, such as Collierville and Tipton County, are also experiencing strong performance, with occupancy projected to rise above 94% this year.

https://mmgrea.com/2025-memphis-forecast/2/

Industrial and Tech Sectors: Memphis on the Move

The biggest story for Memphis in 2025 is its emergence as an industrial powerhouse, a beacon of hope for the future. The city leads the nation in industrial construction activity, with 12.5 million square feet of space underway, driven by megaprojects like Ford’s BlueOval City EV and battery facility. This $11.4 billion investment is expected to create 11,000 jobs and anchor the region’s role in the electric vehicle supply chain. Investor interest is surging, with industrial sales volume nearly doubling year-over-year in the first quarter of 2025. Memphis’s competitive rents and affordable real estate continue to attract logistics operators and manufacturers, even as vacancy rates tick up slightly.

https://www.credaily.com/briefs/memphis-industrial-boom-leads-us-in-construction-activity/

https://www.credaily.com/newsletters/memphis-industrial-market-rides-manufacturing-boom/

The tech sector is also booming. Major players, including Nvidia, Dell, and Supermicro, are establishing operations in Memphis, creating nearly 1,000 new jobs. Elon Musk’s xAI is building one of the world’s largest supercomputers here, and established giants like FedEx and St. Jude continue to push the envelope in logistics and healthcare innovation. The city’s affordable living and expanding infrastructure are making it a magnet for tech professionals and startups.

https://www.nucamp.co/blog/coding-bootcamp-memphis-tn-top-10-tech-companies-to-work-for-in-memphis-in-2025

https://rei-ink.com/memphis-tennessee/

Risks and Cautions

Despite these strengths, there are warning signs. The Milken Institute recently ranked Memphis near the bottom of its 2025 Best-Performing Cities index, citing concerns about job creation, wage growth, and economic equality. Some analysts warn that the local housing market could be overvalued, and the stalling of megaprojects like BlueOval City could slow momentum if delays persist, potentially affecting job creation and economic growth. Outbound migration of young professionals remains a challenge; however, recent investments in technology and infrastructure may help reverse this trend.

https://www.smartcitymemphis.com/2025/06/milken-institute-says-memphis-msa-economy-is-in-trouble/

https://rei-ink.com/memphis-tennessee/

What to Watch in Q3 2025—Memphis and the Mid-South

•               Inflation and Tariffs: Watch for further price increases on consumer goods and their impact on local businesses and household budgets.

•               Industrial Growth: Continued expansion in logistics, EV manufacturing, and tech could drive job growth and attract new residents.

•               Real Estate: Tight inventory and strong demand should support home prices and rents, but monitor for any signs of overvaluation or a slowdown in new construction.

•               Policy Shifts: Federal Reserve decisions and tariff adjustments could quickly change the landscape for Memphis investors and residents.

Memphis and the Mid-South are navigating national headwinds with a mix of resilience and opportunity. For investors and residents alike, staying informed and diversified will be key to making the most of what’s ahead, empowering you to make the best decisions for your future.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation. Please consult a qualified financial advisor before making any investment decisions. This material is not intended to serve as personalized tax, legal and/or investment advice since the availability and effectiveness of any strategy is dependent upon your individual facts and circumstances. Duncan Williams Asset Management is not a legal or accounting firm. Please consult with your legal or tax professional regarding your specific tax situation when determining if any of the mentioned strategies are right for you.

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