Recent consumer spending data has been revised upwards, leading Fannie Mae’s Economic and Strategic Research (ESR) Group to forecast stronger first-quarter GDP growth. Despite this, the ESR Group maintains its belief that economic momentum is running out of steam. The banking turmoil in March occurred during an already-tightening credit cycle and the additional tightening due to financial fallout will likely contribute to a modest recession beginning in 2023’s second half.
Doug Duncan, chief economist at Fannie Mae commented: “The economic slowdown has resumed – whether it results in a mild recession or just a soft landing remains unanswered – although we continue expecting the former since April last year when we made our 2023 recession call.”
