The US economy will enter a “mild” recession in 2023 with negative growth of 0.6%: Fannie Mae

December 19, 2022

According to a December 2022 commentary by the Fannie Mae Economic and Strategy Research Group, US gross domestic product is expected to grow 0.4% this year before entering a “mild” recession in 2023.

The ESR Group reported that it views the current rate of private consumption growth as unsustainable given the combination of a low personal savings rate and an elevated ratio of consumer debt to personal disposable income. With many cyclical indicators continuing to point to an economic contraction – including an inverted yield curve – ESR Group forecasts GDP growth of minus 0.5% in 2023, an improvement on last month’s forecast of minus 0.6%.

In 2024, the group expects the US economy to expand again with annual growth of 2.2%.

“The economy caught its breath in the second half of 2022, but that doesn’t change our expectation that it will be flattened by a mild recession in early 2023,” said Doug Duncan, senior VP and chief economist at Fannie Mae. “While uncertainty remains, a growing array of signs, including an inverted yield curve, weakness in the Conference Board’s Leading Economic Index and a slowdown in manufacturing activity, support our ongoing assertion that the economy is likely to contract next year.”