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Fannie Mae Says Strong Economic Data Leads to Upward Revisions in Growth Forecast
Strength in labor markets and consumer spending, both of which are expected to lead to further improvement in business fixed investment, contributed to upward revisions of fourth quarter 2019 and full-year 2020 real GDP growth forecasts, according to the latest research from the Fannie Mae Economic and Strategic Research (ESR) Group. Housing-related elements of the ESR Group’s forecast also strengthened considerably, including expected increases in residential fixed investment driven by a significant uptick in the ESR Group’s forecast for new single-family housing starts and sales.
The ESR Group now projects fourth quarter 2019 headline growth of 1.8% and full-year 2020 growth of 2.1%, each a two-tenths improvement compared to the prior forecast. The ESR Group also expects strong consumer spending to translate into positive business fixed investment in the fourth quarter and moving into 2020.
Residential fixed investment, which includes housing starts and other aspects of the housing sector, increased more substantially this month than other components of GDP. Owing to this expectation of economic strength, as well as comments from the FOMC indicating an unlikeliness to ease rates further, the ESR Group removed its prediction of one rate cut in early 2020, and now expects no moves from the Fed at all next year.
Fannie Mae Senior Vice President and Chief Economist Doug Duncan says, “Housing appears poised to take a leading role in real GDP growth over the forecast horizon for the first time in years, further bolstering our modest-but-solid growth forecasts through 2021.”
For comments, questions or concerns, please contact Dennis Kaiser
- ◦Economy
