New economic growth predictions now at 1.5%, down from projected 2.1%.

Fannie Mae's Economic and Strategic Research Group (ESR) predicts full-year 2019 and 2020 U.S. economic growth of 1.5%, down from Fannie Mae’s previous prediction of 2.1%. The GSE cites expected weakness in business fixed investment and softening global economic conditions for the decline. “This month, escalating trade tensions and concerns about weakening global growth led us to revise lower our full-year 2019 and 2020 forecasts of real GDP growth to 2.1 percent and 1.5 percent, respectively,” said Fannie Mae SVP and Chief Economist Doug Duncan. “Despite a strong start to the year, we expect growth to slow beginning in the second quarter as macro-level uncertainty disincentivizes business fixed investment and starts to weigh on consumer spending. In order to sustain the longest expansion in more than 70 years, we expect the Fed to once again begin easing monetary policy and to cut its interest rate target by 25 basis points in September.” Fannie notes that prices may rise as international trade tensions rise, which may also impact the job market. “We expect housing to add to growth for the foreseeable future, and our projection of a 1.0 percent year-over-year increase in home sales in 2019 remains unchanged,” Duncan continued. 

Source: DS News