US Economy Off to Surprisingly Strong Start in 2023, But It’s Not Expected to Last

Fannie Mae
February 21, 2023
Category: Finance & Economics
Region: United States

WASHINGTON, DC – Due to economic headwinds from unsustainably high consumer spending relative to income, significant declines in monetary aggregates, an increasingly inverted yield curve, and stickier-than-expected inflationary pressures, the Fannie Mae Research Group continues to expect the economy to fall into a modest recession… in the second quarter of 2023. …While some of the recently reported economic strength is probably a side effect of abnormal seasonal consumption and hiring/layoff patterns overstating the true strength of the economy, these data releases were consistent with an easing in financial market conditions to start the year. Importantly, it raises the possibility of the Federal Reserve pushing its federal funds rate target higher. …Housing also started 2023 on a relative high note given a roughly 100 basis point pullback in mortgage rates since November; although the ESR Group expects this, too, to likely prove temporary. 

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