GDP decreases two consecutive quarters, but other economic indicators are positive. 

The U.S. economy will experience two consecutive quarters of negative growth this year — one definition of a recession — but the declines will be relatively mild, according to the latest forecast from the Mortgage Bankers Association (MBA). In its monthly update, the MBA said it expects the real gross domestic product (GDP) to decline by 0.6% in the second quarter and by 0.4% in the third quarter of this year. Both rates are reduced from the organization’s forecast in April, when it predicted a 1.2% decline in the second quarter and a 0.5% decline in the third quarter. While the real GDP declined in two straight quarters in the first two months of 2022 — falling by 1.6% in the first quarter and 0.6% in the second quarter — other economic indicators, including the strong job market, led many economists to say the U.S. economy was not in a recession at that time. The latest MBA forecast also projects that, despite the efforts of the Federal Reserve to bring annual inflation down to its 2% goal, the rate won’t get close until the consumer price index hits 2.2% YOY in 2025. There is a sliver of more positive news for the housing industry in the report, in which the MBA revised slightly upward its expectations for mortgage originations for the year. It now projects the total volume of originations for 1- to 4-family homes in 2023 at just under $1.808 trillion, 0.1% more than the $1.806 trillion it projected in April’s forecast. The forecast, however, is still below the $1.89 trillion it projected at the start of the year. 

Source: National Mortgage Professional