The chatter of a looming recession continues, and the latest warning says it could happen this year.
In a press release on Friday, government-sponsored mortgage agency Fannie Mae warned that a “modest rescission” is “expected” in the second half of 2023, according to the agency’s Economic and Strategic Research Group.
Fannie Mae noted that unsustainably high consumer spending and a slowing housing market are the likely culprits that foreshadow a looming recession.
As home sales have slowed over the past year, the agency predicts continued declines throughout the year due to a tight inventory and lack of affordability.
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However, despite the current housing market being one of the main indicators of an upcoming recession, the sector has been relatively resilient, and could also be the driving force of the country’s exit from a recession.
“Housing remains exhibit number one for why we expect the recession to be modest,” Doug Duncan, senior vice president and chief economist at Fannie Mae said in the release. “It continues to outperform our expectations, and we expect that its relative strength will help kickstart the economy into expanding again in 2024.”