WASHINGTON, July 23, 2014 /PRNewswire/ -- Economic growth
during the second half of 2014 likely won't be strong enough to
offset the weak activity from the first two quarters of the year,
according to Fannie Mae's (OTC Bulletin Board: FNMA) Economic &
Strategic Research (ESR) Group. The economy experienced the worst
performance in five years during the first quarter of 2014, due in
large part to a significant downward revision in healthcare
spending, and incoming data suggest only a moderate pickup in
growth for the second quarter – likely resulting in an essentially
flat first half of the year. In the third and fourth quarters,
economic activity is expected to accelerate, driven largely by
consumer spending and, to a lesser degree, business capital
investment and residential investment. Additionally, government
spending is expected to contribute to growth for the first time in
five years while inventory investment and net exports are expected
to subtract from growth this year. On balance, the ESR Group has
revised their full-year 2014 GDP forecast to real growth of
approximately 1.5 percent, down from 2.1 percent in the prior
forecast.
"Our findings in the July forecast suggest that full-year growth
in 2014 likely will be weaker than 2013," said Fannie Mae Chief
Economist Doug Duncan. "We expect
the economy to grow approximately 3.0 percent in the second half of
the year, although there is an element of uncertainty given
government statisticians' difficulty in assessing the full scope of
healthcare expenditures. Overall, our forecast calls for growth to
come in at around 1.5 percent for the year, which would be the
worst performance of Q4-over-Q4 growth in the current economic
expansion. On the bright side, real personal income grew for the
fifth consecutive month in May and hiring has continued on an
upward trajectory, which should help boost consumer spending during
the remainder of 2014."
"Housing data point to a continued but modest rebound in the
housing market, in line with our prior forecast," said Duncan.
"Recent housing activity picked up seasonally as we expected, yet
many indicators remain near or below the levels for the same period
last year. For all of 2014, we continue to expect total home sales
to decline about 2.0 percent and total mortgage originations to
decline approximately 41.0 percent. We also expect total
single-family mortgage debt outstanding to rise slightly this year
before strengthening further in 2015."
For an audio synopsis of the July
2014 Economic Outlook, listen to the podcast on the Economic
& Strategic Research site at www.fanniemae.com. Visit the site
to read the full July 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