Skip to main content

GDP to Turn Negative Again in Q4, New Fannie ESR Group Forecast Predicts

11/22/2022 CUToday

WASHINGTON—After rebounding at a 2.6% annualized rate in Q3 2022 on the strength of net exports, real gross domestic product (GDP) is projected to turn negative again in the fourth quarter as the temporary boost from international trade moderates, according to the November 2022 commentary from the Fannie Mae Economic and Strategic Research (ESR) Group.

The ESR Group said it also expects declines in residential fixed and business investment, as well as slowing personal consumption growth, to contribute to negative growth in Q4 2022, and it continues to expect the economy to tip into a modest recession in the first quarter of 2023.

thumbnail_ESR Group Chart 1

“Full-year 2022 GDP growth is now expected to be 0.0%, an upgrade of one-tenth from the previous forecast, while forecasted 2023 GDP was downgraded by one-tenth to a 0.6% contraction,” the ESR Group said.

Rebound Forecast

Additionally, the ESR Group’s inaugural forecast for 2024 shows economic growth rebounding to 2.0% on a Q4/Q4 basis, reflecting the beginning of an expected economic recovery.

“Finally, although inflation showed signs of cooling in October, the possibility of a strong labor market contributing to more persistent wage pressures in the future suggests to the ESR Group that the Federal Open Market Committee (FOMC) will once again raise the federal funds rate at its next meeting, and it forecasts the federal funds rate topping out at approximately 5.0% in early 2023,” the ESR Group said.
According to the ESR Group, it made only modest updates to its forecast of total single-family home sales in 2022 and 2023, which are projected to be 5.67 million and 4.42 million, respectively.

“In 2024, single-family home sales are expected to rebound 18.6% from the year prior to 5.25 million, reflecting an anticipated modest pullback in mortgage rates, the broader economic recovery, and a continued lack of housing supply that should support new home construction,” the forecast states. “A significant contributor to the ESR Group’s pessimistic home sales path remains the so-called ‘lock-in effect,’ in which homeowners have a significant financial disincentive to move because they hold mortgages well below current market rates.

The ESR Group said it is estimating that as of October month-end, more than 80% of borrowers had a mortgage rate at least 200 basis points below current market rates, by far the largest share in decades.”

thumbnail_ESR Group Chart 2

‘Continued Slide’

“The economy continues to slide toward a modest recession, which we anticipate will begin in the new year, with housing leading the slowdown,” said Doug Duncan, senior vice president and chief economist, Fannie Mae. “Higher interest rates have ignited the typical reduction in residential fixed investment, which historically has led into either an economic slowdown or recession. From our perspective, the good news is that demographics remain favorable for housing, so the sector appears well-positioned to help lead the economy out of what we expect will be a brief recession.”

Comments

Popular posts from this blog

NCOFCU Newsletter

The Bucket Coach is a financial advice book designed by Fire Services Credit Union, Tronto, Canada. and written exclusively for Fire Fighters It's a practical guide for household financial management, including investments, credit and mortgages, and retirement. Developed with contributions from Fire Fighters," NCOFCU Newsletter : " Kevin Connolly Chief Executive Officer    Fire Services Credit Union Phone: 416-440-1294 ext 301  Toll Free: 1-866-833-3285 E-mail:  kevin@firecreditunion.ca 1997 Avenue Rd Toronto, ON M5M 4A3 

Sunday Reading - What is the Dow Jones?

    What is the Dow Jones? Created in 1896, the Dow Jones Industrial Average is one of the world’s oldest and most widely recognized stock indexes—a measure tracking the stock performance of a selected group of companies ( see most recent data ). Originally designed to track America’s leading industrial firms, the Dow has evolved into a cultural and financial shorthand for the health of the US economy. As of 2025, it measures 30 major companies —like McDonald's, Boeing, and Nike—across sectors such as technology, healthcare, finance, and consumer goods.  Unlike most modern indexes, which are weighted by the total value of a company’s shares, the DJIA uses a price-weighted formula —meaning stocks with higher share prices exert more influence, regardless of company size. The DJIA has been updated 59 times since its creation to reflect changes in the US economy ( see ch...

New from AutoLink

New from AutoLink

Powell Rejects Any Plan for Fed to Intervene in Secondary Market to Bring Down Rates

  Frank Diekmann October 20, 2025 2:22 am No Comments PHILADELPHIA–Federal Reserve Chair Jerome Powell said there are no plans for the central bank to directly intervene in secondary mortgage markets in an attempt to help bring down mortgage rates, an idea some have proposed as a means of addressing the affordability crisis In housing. Jerome Powell Speaking at the  National Association for Business Economics  conference in Philadelphia, Powell spoke to the Fed’s progress with “quantitative tightening,” that is, its work to reduce the more than $6 trillion of securities it holds on its  balance sheet . Read more about the Balance Sheet HERE Those holdings include approximately $2 trillion in mortgage-backed securities (MBS), which are bundles of home loans that are packaged together and sold to investors, usually by middlemen  Fannie Mae and Freddie Mac , noted Realtor.com. Rolling Off Balance Sheet As the report noted, the Fed dramatically increased M...

The Role and Hazards of an Interim Executive

  The Role and Hazards of an Interim Executive Leadership transitions are rarely smooth. A change at the top can trigger uncertainty, speculation, and anxiety. Staff worry about their jobs, members wonder about continuity, and boards feel the weight of stewarding the organization through uncertain change. The utilization of an interim executive director is meant to stabilize the organization and allow the board enough space and capacity to find the right successor leader. Here’s a catch: if an interim executive is also a candidate for the successor role, the very purpose of an interim engagement is compromised. With an Interim, there’s always a second wave of anxiety Every leadership transition comes with some anxiety. The staff sometimes don’t know what’s going on. The board is worried about continuity, and members may be worried about joining. One task of an interim is to absorb some of that anxiety and provide reassurance that things are moving forward. But there is al...