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October 19, 2020 Comments Off on Fannie Mae Continues to Expect 2.6% Shrinkage in GDP Views: 873 National News, Top National

Fannie Mae Continues to Expect 2.6% Shrinkage in GDP

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Despite marginal adjustments in third- and fourth-quarter estimates, full-year 2020 economic output is still expected to contract 2.6%, according to the latest commentary from the Fannie Mae Economic and Strategic Research (ESR) Group.

As in prior months, risks to the forecast remain weighted to the downside. Chief among them are potential acceleration of COVID-19 case rates and the subsequent re-imposition of widespread social and economic restrictions. However, housing continues to be highly supportive of economic growth and is expected to remain so over the forecast horizon.

“The economy continues to recover, albeit at a slowing pace,” said chief economist Doug Duncan. “Our view is that the combined decline of GDP in 2020 will likely be regained in 2021 for net zero growth over the two-year period. This suggests that if the labor force grows as expected, then the unemployment rate must also end 2021 higher than pre-crisis levels.”

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