The article discusses the economic landscape in early 2023, highlighting the Federal Reserve's interest rate increases aimed at curbing inflation. Despite a looming recession, the housing market showed signs of rebound due to low mortgage rates and a solid labor market during the pandemic. Divounguy forecasts that while 2025 will see home sales volume increase compared to previous years, a frozen labor market poses risks, with hiring rates at a decade low. Consumer spending, fueled by housing wealth, has been key in driving economic activity.
"We expect rates will continue to ease. But we'll remain above 6% in 2025, unless there are big surprises on the policy front in D.C."
"Our baseline scenario is that we will probably not go into a recession this year. But I am concerned about the labor market being frozen."
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