US economy on track to slow in 2019, Fannie Mae says
The U.S. economy remains on track to cool slightly in 2019, according to mortgage giant Fannie Mae.
That’s largely a result of the fading fiscal stimulus from the $1.5 trillion Tax Cuts and Jobs Act passed by the Republicans in late 2017, which only temporarily boosted consumer spending and business investment.
Fannie said in a news release it’s forecasting economic growth for 2019 at 2.2 percent, down from about 3.0 percent in 2018.
GDPNow, an up-to-date tracker published by the Federal Reserve Bank of Atlanta, is currently predicting 2.4 percent for the first-quarter of 2019. That reading on April 26 will reveal the effects of the longest government shutdown in history on the U.S. economy.
But as the effects of that shutdown, which lasted for 34 days begin to wane, and if the Federal Reserve refrains from raising interest rates again for the rest of this year, the economy could see stronger growth in the latter half of 2019.
“The predominant downside risks – the U.S.-China trade dispute and slowing global growth – are expected to ease later this year, which should help bolster growth in the second half,” Fannie Mae chief economist Doug Duncan said in a statement. Despite its self-described ‘patience,’ we still expect the Fed to raise its key policy rate at the end of the year due to stronger second-half growth.”
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