WASHINGTON, March 20, 2014 /PRNewswire/ -- Despite a
deterioration in economic activity at the end of 2013 that has
continued through the first quarter of this year, growth is
expected to pick up in the second quarter and build throughout the
summer, firming to approximately 2.7 percent for all of 2014,
according to Fannie Mae's (OTC Bulletin Board: FNMA) Economic &
Strategic Research Group. The near-term outlook remains somewhat
clouded due in part to an unsustainable build-up in inventory in
the second half of last year and as downside effects from the
winter have yet to fully materialize. However, the return of
weather to seasonal norms should help boost growth in the second
quarter, supported by consumer spending, business investment, and
housing starts.
"For our March forecast, we expect economic and housing growth
to emerge from the tough winter weather and gain momentum into the
spring and summer seasons," said Fannie Mae Chief Economist
Doug Duncan. "Fiscal and monetary
policy jitters appear to have waned and the most recent employment
numbers came in at reasonable levels, helping to ease concerns of a
significant slowdown or risk of recession. In addition, we have
seen some improvement for consumers as house prices and equity
valuations have continued to make incremental additions to
household wealth. However, we also see that consumers are still
rebuilding their wealth following the crisis and perhaps taking on
a more conservative consumption pattern, so our forecast is likely
below consensus. Our expectation is that first quarter real growth
will come in at about 2.0 percent on an annualized basis, due
somewhat to the weather and in particular to the high level of
inventory build-up in the business community, which will have to be
worked off."
"With regard to housing, we continue to anticipate that the rise
in house prices and mortgage rates will take a toll on home sales
and homebuilding activity this year, although some modest gains are
expected overall," said Duncan. "Housing starts are expected to
rise nearly 20 percent to 1.1 million units this year. In
particular, we believe new home sales will continue to perform well
as the new home market faces less competition from foreclosures and
distressed properties. In addition, supply remains low and time on
the market is below the long-term average, which are positive signs
for new home sales activity."
For an audio synopsis of the March
2014 Economic Outlook, listen to the podcast on the Economic
& Strategic Research site at www.fanniemae.com. Visit the site
to read the full March 2014 Economic
Outlook, including the Economic Developments Commentary, Economic
Forecast, Housing Forecast, and Multifamily Market Commentary.
Opinions, analyses, estimates, forecasts, and other views of
Fannie Mae's Economic & Strategic Research (ESR) Group included
in these materials should not be construed as indicating Fannie
Mae's business prospects or expected results, are based on a number
of assumptions, and are subject to change without notice. How this
information affects Fannie Mae will depend on many factors.
Although the ESR Group bases its opinions, analyses, estimates,
forecasts, and other views on information it considers reliable, it
does not guarantee that the information provided in these materials
is accurate, current, or suitable for any particular purpose.
Changes in the assumptions or the information underlying these
views could produce materially different results. The analyses,
opinions, estimates, forecasts, and other views published by the
ESR Group represent the views of that group as of the date
indicated and do not necessarily represent the views of Fannie Mae
or its management.
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SOURCE Fannie Mae