Fannie Mae Releases Economic Projections

Fannie Mae recently looked into its crystal ball to forecast where we might be headed in this economic crisis. The really good news is that GDP is projected to start climbing into positive territory beginning in 3Q09 with 0.8% growth. Contrast this with a negative 5.5% decline in 1Q09. This growth continues throughout 2010 reaching 3.3% GDP by 4Q10.

Expect unemployment to stabilize, albeit at a high level, at around 9.8%, through 2010. Despite all the dollars being pumped into the economy, expect inflation to be at a modest 1.5%. Business inventories continue to get leaner, until 4Q10, when some growth is seen at that time showing 5.5% growth.

An encouraging sign is the growth of business fixed investment which starts to increase as soon as 3Q09.

Expect the Fed Funds rate to remain low at around 24bps throughout 2010.