This week, the Federal Reserve's Federal Open Market Committee (FOMC) will be holding its January meeting, the first of 2020. The FOMC's meeting will include an overview on economic indicators across the country, including GDP shifts and employment data.
Economic growth, the Fannie Mae Economic and Strategic Research (ESR) Group notes, has been largely propped up by housing. The ESR Group's latest housing outlook indicated that the economy is expected to see growth of of 2.1% throughout 2020.
“While we believe the strength and resilience of the American consumer is the lynchpin of near-trend GDP growth, this year we expect consumer demand to re-establish housing construction as a significant contributor to economic growth—hence our theme for the year: A resilient economy overcomes risks to drive housing,” said Fannie Mae SVP and Chief Economist Doug Duncan. “Strong labor markets, rising wages, and improved household balance sheets offer consumer spending upside potential, including the ability to withstand minor economic disruptions.”
Fannie Mae expects the growing economic strength from housing that emerged in 2019 to carry into the rest of 2020, including solid growth in single-family construction spending and low mortgage rates.
While housing remains the bright spot in economic growth, the Fannie Mae ESR Group also identified which factors may cause a trend to the downside, including geopolitical tensions. For example, as analysis from First American Financial Corporation notes, global uncertainty—such as the conflict between the U.S. and Iran—impacts not only geopolitical relations but also the U.S. housing market. However, Duncan noted what is offering “greater balance” in the latest ESR Group forecast.
Here's what else is happening in The Week Ahead:
New Home Sales (January 27)
Case-Schiller Home Prices (January 28)
Pending Home Sales Index (January 29)