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Fannie: U.S. economy will start to slow

 Fannie Mae says the economy likely peaked in the second quarter, and gross domestic product [GDP] growth will likely slow to around 2.3 percent next year from a predicted 3 percent for the full-year 2018.

“In the second quarter, we marked the ninth anniversary of the current economic expansion; however, it’s also likely that we marked its high point,” Fannie Mae Chief Economist Doug Duncan said.

“On the whole, macroeconomic fundamentals remain strong, but signs increasingly point to a softening of third quarter real GDP growth as trade resumes its role as a drag on GDP, and consumer and business demand growth retreat from previous highs.”

Duncan said that inflation was rising annually at near the Federal Reserve’s 2 percent target range, and employment remained solid. Fannie expects two additional rate increases from the Fed this year.

“We expect housing to be a drag once again this quarter,” Duncan said. “But in a welcome development, some construction material prices have softened, which should help builders to continue to build smaller or less expensive homes most in demand from potential first-time homebuyers. Additionally, the crunch on for-sale inventories of existing homes has eased slightly, hopefully setting up an improvement in the housing market next year.”

Fannie is forecasting that overall single-family origination volume this year will be down about 8.5 percent compared to 2017, falling to around $1.67 trillion. 


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