Predicting Housing and Economy’s Path in 2019
Economic growth is expected to pick up sharply in the second quarter, despite growing trade tensions Fannie Mae July 2018 Economic and housing prospects.
This means that real GDP growth for the whole year-round growth period is 2.8%, slightly higher than predicted by Fannie in June, but is unlikely to continue. By report Fannie Mae “estimates that the 4.2% growth expected in the second quarter is unsustainable for the year’s balance sheet, as the trade contribution is likely to be temporary.”
Fannie said the effects of fiscal policy seem gradually in the second half of 2019, and GSE expects the 2019 growth to slow down to 2.2%.
“While we are celebrating the ninth anniversary of economic expansion with what is likely to be a stable second quarter, we are also exploring whether growth in the last quarter will mark a high point for the rest of the cycle,” said Doug Duncan, Chief Economist Fannie Mae. “Together with the ongoing tightening of monetary policy, we expect fiscal stimuli that helped consumer, business and government spending to weaken when we move in 2019. And while trade secured significant equalization in the last quarter – partly because of the kidnapping of foreign firms to redirect its imports from the US before the announced tariffs – we expect trade to be once again dragging forward. ”
Fanny said growth in consumer and government spending, inventory investment and a weaker commodity deficit helped boost GDP in the second quarter. However, the report states, “while fiscal stimuli should continue to support these costs in the second half of 2018, strengthening the dollar and the possibility of a wider range of tariffs could turn trade into a significant denial of growth” .
GSE is also nervous about how “commercial wars” will play between the US and other nations.
“The deterioration in rhetoric and trade policy uncertainty has the potential to have a negative impact on business moods and investment costs and hiring,” Fannie Mae said.
Best of all, things in the housing market, however, must be stable as it will play the next year and a half, although the inventory is likely to remain a constraint. “In terms of housing, the same inventory constraints continue to drive accessibility and sales as demand exceeds supply, and house prices continue to grow with a quick clip,” Duncan said.
According to the report, Fannie Mae expects to see the end of 2018 with about 18.4 million homes in general, then build up to 19.4 million by the end of 2019. Average house prices also have to stay in the middle of $ 300,000 in the next 12 months, while mortgage rates are up 4.6% by the end of next year, Fannie Mae said.
Fannie Mae, however, expects two additional interest increases this year, given “the stability of inflation and the Fed signaling that it is willing to tolerate the reverse yield curve.” Most likely, pedestrian crossings will occur in September and December. Economic Jun June has also improved. Fanny called this news “stimulating” the growth of consumer spending.
Learn what Fannie Mae said about economy and housing in May: Fannie judges economic and housing impulses