March 2020 Newsletter

Testing the Resilience of U.S. Economy

Article from Grand Strand CEO

According to the latest commentary from the Fannie Mae (OTCQB: FNMA) Economic and Strategic
Research (ESR) Group, the COVID-19 (coronavirus) outbreak and sharp decline in oil prices are likely
to result in decreased economic growth. Assuming the outbreak is relatively short-lived, the ESR Group
is currently forecasting 1.8 percent full-year 2020 growth, down from its prior month forecast of 2.2
percent. Real GDP growth is now forecast to approach zero in the second quarter before an expected
recovery in the second half of the year. However, if the crisis worsens considerably or lasts longer than
a few months, a more substantial slowdown or contraction in the global economy is possible. In
response, the ESR Group expects the Federal Reserve to maintain its accommodating posture and
reduce the federal funds rate by an additional 50 basis points at its next meeting. In early 2021,
assuming greater economic stability, the ESR Group expects the Fed to begin raising rates.