Inflation Pressures Are Easing but Rate Cut Forecast Remains Uncertain

The New Year is beginning where the old one ended -- with uncertainty about when – or whether – the Federal Reserve will begin cutting interest rates.

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Although the employment numbers for March fell below expectations, disappointing many analysts, the Fed isn’t expected to alter its plan to boost interest rates at least twice and maybe three more times this year.

Year-end housing reports reflect two competing narratives. The first: Soaring prices and strong sales producing the best housing market performance in more than a decade. The second: Higher prices, rising interest rates and skimpy inventories combining with troubling signs that millennials are losing faith in the desirability of home ownership and/or the possibility of achieving it.

Concerns about rising interest rates and shrinking inventories, bubbling beneath the surface of real estate discussions for much of last year, have boiled over, dominating recent news reports and raising questions about the outlook for this year.

New Year’s resolutions are always frustrating, so we thought we’d compile some New Year’s forecasts instead. If resolutions fall by the wayside, you blame yourself; if economic forecasts don’t bear out, you won’t blame yourself, because they aren’t your predictions, and you won’t hold the forecasters responsible, either, because you won’t remember what they said.