WASHINGTON – Oct. 27, 2014 – Real economic growth in the U.S. appears ready to exceed 3.0 percent for the second half of the year, providing a sound basis for growth in 2015, according to mortgage giant Fannie Mae's Economic & Strategic Research (ESR) Group.
According to Fannie Mae, momentum in the private sector expanded in the first part of this year as the government pulled back intervention programs and investors started to feel more secure about the economy.
However, Fannie says there are some factors currently slowing growth on a global scale, and that may discourage the Federal Reserve Board from making any changes in interest rate policy until the third quarter of 2015. Still, it says the global economic slowdown has had little negative impact on the fundamentals of the U.S. economy so far.
"Given the expected strengthening economic activity in the U.S. in the second half of the year, we continue to expect to finish just above 2 percent growth for all of 2014," says Fannie Mae Chief Economist Doug Duncan. "The risks are tilted to the downside due to current geopolitical events in Russia, Ukraine, Hong Kong and the Middle East, as well as the economic slowdown in the Eurozone, China, and Japan. However, recent data suggest these factors have not significantly swayed American consumers."
According to Duncan, "Real consumer spending is poised to pick up in the second half of 2014 from the first half, due in large part to improving labor market conditions, continued declines in gasoline prices and a subdued pace of inflation."
Housing market
"From a housing perspective, we anticipate that overall home sales will be weaker in 2014 than in 2013," Duncan says. "For 2015, we expect only a moderate pickup in total home sales but enough to post the best performance since 2007."
Duncan says Fannie Mae is "cautiously optimistic that ongoing labor market improvements, low mortgage rates, rising inventories and some easing of lending standards will boost home sales by roughly 5.0 percent" in 2015. He still sees the housing recovery as an "upward grind" rather than a predicting a "breakout year."
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