He pointed to the possibility of growth easing the path for an infrastructure programme and climate investments. “The pandemic seems likely to get worse before it gets better, but expectations for fourth-quarter GDP in the US continue to reflect moderate growth, ” SA ContributorJames Picerno writes. WisdomTree on Seeking Alpha wrote, “Based on GDP data, the U. S. economy could be on the verge of coming all the way back to pre-pandemic numbers much sooner than expected. ” As per Goldman Sachs, the U. S. economy will recover faster than expected in part because the sectors most susceptible to the most recent coronavirus spread aren’t taking as severe a hit.
The higher mortgage rates combined with higher home prices and persistently low inventory are likely to hurt home affordability next year. The survey forecasts that housing starts will be 1. 50M, dipping from 1. 53M in 2020 before rising to 1. 59M in 2022. While slowing, the price increases still outpace the expected inflation rate of 1. 7% in 2021, which is up from 1. 2% in 2020, the latest available data for 2020; inflation is expected to reach 2. 0% in 2022. More than 20 economic and housing experts surveyed by the National Association of Realtors see annual median home price growth slowing to 8. 0% in 2021 and 5. 5% in 2022, down from the 15. 5% increase posted in 2020. The integration of technology with the financial sector will continue as a key theme in 2021. More fintech firms will come to market through IPOs, insurance companies and banks will purchase fintech, consumers will continue the shift to virtual financial service delivery, they said. They see continued low rates with no rate hikes through at least 2022 and bond yields staying below 1. 5%.
However, if fiscal stimulus doesn’t develop or is too modest, a recession could occur in H1, limiting momentum for an H2 recovery. “If that occurs, financial stocks would be at risk for higher credit costs, limited capital return, and even lower bond yields, ” they wrote. Median expected household income growth was unchanged at 2 . 1% in November, below its 2019 average of 2. 8%. That contrasts with the October survey that expected spending to slow along with income growth. In addition, financial markets aren’t showing distress signals and “are very well accommodated by the Fed. ” Of expectations for the next 12 months, a full 89% expect stronger economic growth in 2021.
Atlanta Fed’s GDPNow model estimates Q4 growth at 11. 2% (unchanged from Dec. 4 after rounding) driven by today’s wholesale trade reportwhich indicate a gain higher than expected. 5-year Treasury-indexed hybrid adjustable rate mortgage averages 2. 79% vs. 2. 86% in the prior week and 3. 36% a year ago. Even with the weekly improvement in active forbearance numbers, forbearance volumes are up 21K M/M, marking the first monthly increase since the recovery started in late May/early June. And the current circumstances of increasing inflation expectations and modest growth through the recovery is when TIPS tends to perform well. In terms of regional trends, Dallas-Forth Worth, Atlanta, Phoenix, Indianapolis, and Provo-Orem, UT, are expected to join five other metro areas to make up NAR’s top 10 real estate markets next year. In commercial real estate, the NAR panel sees small declines in office and hotel vacancy rates and a slight increase in retail vacancies next year.
The additional money, which must be approved by Congress, is intended to accelerate the vaccine roll-out, reopen schools and reduce the child poverty rate to a historic low. “If the economy is improving substantially by spring or early summer, that might actually help Biden get more of his agenda done … because success can beget success, ” said Jason Furman, who was top economist for the Obama administration.
Wells Fargo forecasts growth of 4. 6 percent this year, which would be the best since 1999. The potential for a boom reflects in large part the roughly $4 trillion approved so far in federal aid, with Biden last week proposing $1. 9 trillion more, an unprecedented level of stimulus.
Wells Fargo said in October defaults had already peaked, but are reassessing that given increasing infection rates and a delay in stimulus funds. Property price growth was also mixed, with prices rising in 12 markets, dropping in 11 and almost no change in three.
The University of Michigan reported Friday that its index of consumer expectations among Republicans plunged from a reading of 96 in October to 53 in January. That could dampen their willingness to spend and encourage Republican lawmakers to blame Democrats for any economic ills. Helped by supportive Federal Reserve policies, low interest rates make it easier to keep financing a stimulus and repay added debt. That would be the strongest gain since 1984, when a several. 2 percent increase in the gross domestic product helped carry Republican President Ronald Reagan to a second term in a landslide.