WASHINGTON, April 21, 2014 /PRNewswire/ -- A slow growth
pattern dominated the first quarter of the year, but the economy is
expected to gain momentum in the second quarter amid an increase in
government spending and diminishing drag from a slowdown in
inventory stockpiling, according to Fannie Mae's (OTC Bulletin
Board: FNMA) Economic & Strategic Research Group. Factors
including consumer and business capital spending, relief from
fiscal policy concerns, and improvements in the housing sector also
may contribute to growth. Although economic activity in the first
quarter likely slowed more than expected in the prior forecast, the
group continues to forecast 2.7 percent growth for all of 2014,
comparable to the 2.6 percent pace in 2013.
"The April economic forecast is similar to February and March,
where slow growth has been the common denominator, but we expect to
see a slight pickup beginning this quarter," said Fannie Mae Chief
Economist Doug Duncan. "A slower
pace of inventory accumulation is likely to weigh on GDP in the
first half of 2014 but loosen its hold in the second half of the
year as businesses increase production. Government spending is
expected to contribute to growth for the first time in five years,
and the lack of additional broad-based tax increases combined with
less uncertainty over fiscal policy should enable some
strengthening in the private sector. Consumer confidence will
likely trend up throughout the year, supported by improving
financial market conditions and household net worth. However, the
long-term effects of new healthcare rules and related costs on real
consumer spending will need to be monitored in the coming months.
Overall, we expect real consumer spending to accelerate to 2.8
percent in 2014, a 0.5 percentage point increase from 2013."
"We have downgraded our housing forecast slightly due to a
lackluster sales picture, but the recent loss of momentum is likely
a temporary one," said Duncan. "Overall, we expect housing to add
0.3 percentage points to economic growth this year. While existing
home sales have remained essentially flat, we continue to believe
that new home sales will increase at a double-digit pace. Housing
starts are expected to rise to about 1.05 million units in 2014, up
from 925,000 in 2013 but approximately 50,000 fewer than we
expected at the beginning of the year due to builders' credit and
labor constraints."
For an audio synopsis of the April
2014 Economic Outlook, listen to the podcast on the Economic
& Strategic Research site at www.fanniemae.com. Visit the site
to read the full April 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