2020 Interest Rate and Economic Forecast

Typically, the Federal Reserve is cautious about cutting interest rates in an election year, to avoid looking like it's favoring one candidate over another, unless there is an economic situation so severe, it's forced to act.

UBS, is predicting that because of the economic damage from the trade war with China, interest rates will be lowered three times this year, beginning in March. The recently signed Phase One trade deal with China gives partial relief for about a third of the existing tariffs, but didn't touch some of the more severe ones. According to the Federal Reserve, these are the ones that are costing the average U.S. household $831 per year. For that reason, the Federal Reserve is predicting GDP growth will drop to 2% from 2.2% in 2019.

These predictions by UBS are at variance with other forecasters that are predicting no change or just one rate cut this year. Either way, continued low interest rates will have a positive impact on the real estate market in 2020. Appreciation will likely continue, but at a lower rate than the past few years.

- Jeff Jorgensen

Photo by Katie Harp on Unsplash