National CRE News In Your Inbox.
Sign up for Connect emails to stay informed with CRE stories that are 150 words or less.
Consumers Expected to Trim Sails on Spending: Fannie Mae
The compounding effects of elevated inflation and higher interest rates are expected to further weigh on economic growth and home sales as the year progresses, according to the Fannie Mae Economic and Strategic Research (ESR) Group.
While consumers’ resilience to the predicted financial stress remains an open question, the ESR Group now forecasts personal consumption growth to slow from 4.2% in the second quarter to 1.9% and 1.3% respectively, in Q3 and Q4. Residential fixed investment, driven in part by an even further reduced home sales forecast, is projected to decline 8.6% in 2022 and 6.5% in 2023.
“The market’s expectations of the necessary Federal Reserve response to persistent broad-based inflation continue to adjust,” said Doug Duncan, Fannie Mae’s chief economist. “Tightening financial conditions are slowing economic activity, and consumers are drawing down savings and increasingly relying on credit cards as they seek to maintain current levels of consumption.”
- ◦Economy
