Main Street Report Q4 Highlights - Business Chat
- Professional economist who specializes in the analysis of the economy’s impact on housing, personal finance, consumer credit, and public policy
- Cristian has over 25 years of experience in managing risk and building consumer credit performance models, and thus, is named on 2 U.S. patents for credit modeling
- Writes economic commentary for Moody’s Analytics ‘Economic View’ website which covers a wide range of economic and financial market developments and policy issues
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Cristian deRitis is the deputy chief economist at Moody’s Analytics where he specializes in the analysis of current and future economic conditions, housing markets, and consumer credit. He publishes his analysis regularly on the Economic View website and is often quoted in publications such as The Wall Street Journal for his views on the economy. Cris is a certified risk management professional and writes a monthly column on risk management issues for the Global Association of Risk Professionals. Before joining Moody’s Analytics, Cris worked for Fannie Mae where he developed default, prepayment, and loss severity models for mortgage portfolios. He holds a PhD in economics from Johns Hopkins University and is a certified business economist. In addition to his published research, Cris is named on two U.S. patents for credit modeling techniques.
Slowcession 2023. The U.S. economy will struggle in 2023 with halting growth and higher unemployment. Recession is a serious threat, but the Moody’s Analytics baseline forecast—the most-likely outlook—holds that the economy will avoid a downturn.
U.S. Housing Outlook 2023: Going Nowhere Fast
- Under pressure from a variety of forces the housing market continues to retreat.
- Key to preventing a more significant housing decline will be the strength of the labor market and disposable incomes.
- A bright spot for homebuilders is the multifamily market, where demand for apartment buildings remains robust.
- The primary short-term risks to the housing market are the availability and cost of mortgages.
The housing market roared into 2022 fueled by historically low mortgage rates and a near-record number of young adults in their thirties looking to buy or rent homes. House prices continued to defy gravity in the first half of the year only to reverse course as inflation ate into family budgets and interest rates soared to their highest levels in decades. Year-on-year growth in house prices ended 2022 in the high single digits as both home sales and single-family construction starts fell below pre-pandemic levels with few signs of bottoming soon. This session will take stock of current trends in sales and construction and provide banks and other lenders with guidance into the future trajectory of home prices to facilitate origination and loss mitigation decisions.
Climate Risk Stress Testing and the Role of Central Banks. Proponents and detractors have already weighed in on the Federal Reserve’s news climate scenario analysis exercise, which is designed to help banks assess the physical and transition risks of climate change. How, exactly, will the Fed’s exercise work, and should central banks play a part in projecting the impact of these risks – not only for individual banks but for the financial system as a whole?
Risk and Resiliency in the U.S. Economy
- Persistent inflation is the primary concern of consumers, businesses and policymakers.
- The pandemic shock has been replaced by energy and food price shocks caused by Russia’s invasion of Ukraine.
- Businesses face a number of challenges affecting both demand and their input costs.
Just as it looked like the U.S. economy was moving beyond the pandemic recession, Russia’s invasion of Ukraine has further scrambled supply chains and propelled inflation rates even higher. In this session, deRitis summarizes the factors driving inflation to its highest level in more than forty years and the actions that the Federal Reserve will take to bring prices down. We highlight other potential risks to the economy and review the Moody’s Analytics economic baseline and alternative scenarios. We conclude the session with a summary of the actions business leaders and risk managers can take now to navigate through future volatility.
Housing’s Next Act
- Home price growth during the pandemic has been extraordinary in terms of its magnitude and depth.
- A sharp correction in prices would have negative consequences for property owners and the broader economy.
- New data on valuations and speculative activity allow us to identify markets that are at a higher risk of correction.
Home prices increased during the pandemic as ultra-low mortgage rates stoked demand. Now that rates are rapidly reversing course, homeowners and regulators are rightfully concerned that prices could sharply decline, triggering a wave of foreclosures and higher unemployment. In this session, we will summarize the factors supporting home values as well as the risks to prices in the short term. Using newly developed databases to better measure valuations and speculative activity within local housing markets, we will identify areas with higher and lower likelihoods of experiencing a home price decline within the next few years. We conclude the session with a summary of the Moody’s Analytics home price forecast under the baseline and alternative scenarios.
5 Risk Predictions for 2023. In the coming year, we can expect a slowdown in worldwide economies, an increased emphasis on operational resilience, a shift toward simpler and more flexible models, a stronger demand for qualified risk professionals, and new risks and opportunities fueled by shifting demographics.
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