The U.S. economy will contract next year, federally backed housing giant Fannie Mae forecasts. While Fannie Mae only modestly cut its 2022 GDP outlook by 0.2 points, to 2.1%,it slashed its 2023 GDP forecast to negative 0.1% from a previous estimate of 2.2% growth. “Our updated forecast includes an expectation of a modest recession in the latter half of 2023 as we see a contraction in economic activity as the most likely path to meet the Federal Reserve’s inflation objective given the current rate of wage growth and inflation,” the firm says. It now expects housing sales to drop 7.4% this year and by 9.7% in 2023. House price growth will slow from 20% in the first quarter to 3.2% by the fourth quarter of 2023.
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