February 22, 2019
Fannie Mae expects GDP growth of 2.2% this year, down from 3.1% in 2018. The GSE’s Economic and Strategic Research Group is also predicting just one hike by the Federal Reserve to the federal funds rate during 2019.
In its February forecast update, Fannie Mae cites a smaller boost from previously-enacted federal fiscal policies, moderating business investment growth, and a widening of the trade deficit as key drivers behind the expected year-over-year decrease in headline growth.
First-quarter growth projections were revised downward to 1.7%, while housing sales are expected to be flat. Slowing global economic growth and trade uncertainty remain downside risks.
“We reduced Q1 growth expectations slightly, but our forecast for full-year 2019 growth remains unchanged,” said Fannie’s chief economist, Doug Duncan. “The labor market is strong, unemployment is at a very low level historically, and wages are rising modestly, enticing workers to come off the sidelines.”
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