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Fannie Mae: “Modest Recession” in the Forecast for 2023
Tightening monetary policy and elevated inflation remain the primary causes of a stagnating economy despite strong job growth, Fannie Mae’s Economic and Strategic Research (ESR) Group said Monday. The ESR Group’s latest forecast of real gross domestic product (GDP) growth for full-year 2022 and 2023 remained essentially flat compared to last month at 0.0% and negative 0.4%, respectively.
The ESR Group expects total home sales to decrease 16.2% in 2022. This decline represents a further downward revision from last month’s forecast.
“The economy is progressing largely as we’d previously forecast,” said Doug Duncan, Fannie Mae chief economist. Although lower gas prices and lower interest rates will support “modest economic growth” in 2022’s second half, “we maintain the view that a modest recession is likely to emerge in the new year as the labor market softens and the effects of tighter monetary policy are more acutely felt.”
- ◦Financing
- ◦Economy
