Like many of you, I wonder where we are headed. Housing inventory is tight. No one is sure what the economy will hold. Building materials are up in cost for builders. Now there is the possibility of a trade war. How will that play on the economy? It sure would be great to have a big crystal ball right about now! I read this article in today’s DS News. I know I’m not the only one with these questions.
Predicting Housing and Economy’s Path in 2019
Economic growth is estimated to have picked up strongly in the second quarter. This is despite rising trade tensions, according to Fannie Mae’s July 2018 Economic and Housing Outlook.
That spells a full-year real GDP growth of 2.8 percent, which is slightly higher than Fannie predicted in June ‘s report, but not likely to last. Per the report, Fannie Mae “believes the second quarter’s estimated 4.2 percent annualized growth pace is unsustainable for the balance of the year, as the contribution from trade was likely temporary.”
Fannie said the effects of fiscal policy look to fade in the second half of 2019 and the GSE expects full-year 2019 growth to moderate to 2.2 percent.
“As we celebrate the ninth anniversary of the economic expansion with what’s likely to be a robust second quarter, we’re also examining whether last quarter’s headline growth will mark a high point for the remainder of the cycle,” said Doug Duncan, Chief Economist, Fannie Mae. “Along with ongoing tightening of monetary policy, we expect fiscal stimulus, which has supported consumer, business, and government spending, to weaken as we move into 2019. And while trade provided a meaningful lift last quarter – owing in part to overseas firms pulling forward their imports from the U.S. ahead of the announced tariffs – we expect trade will likely once again be a drag on growth moving forward.”
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