FANNIE MAE: ECONOMY ON
PATH TO NORMAL GROWTH
Elizabeth Ells, Operations Manager
Grady Ingle, Managing Partner
While fiscal headwinds have held back
economic growth in the first half of 2013,
Fannie Mae's Economic & Strategic Research
Group maintains in its mid-June Economic and
Housing Outlook that the recovery should pick
up the pace heading into the year's second half.
Based on data for Q1 and predicted numbers
for Q2, Fannie Mae expects gross domestic
product (GDP) to grow at an average 1.8 percent
for the first half of the year (2.4 percent growth
for the first quarter and 1.2 percent for the
second).
As fiscal drags wane, however, growth
"should continue to move in the positive
direction amid an ongoing recovery in housing,
rising household wealth, and expanded energy
production."
"At the outset of the year, we forecasted that
2013 would witness sustainable but below-par
growth as the economy begins its transition to
more normal levels. Halfway through the year,
our view is little changed," said Doug Duncan,
chief economist for Fannie Mae.
Duncan continued, "We expect
approximately 2.1 percent growth over the course
of 2013, up from the anemic pace of 1.7 percent
in 2012. This is consistent with the incremental
improvement seen over the past few years but
still below the economy's potential."
GDP growth is expected to push past 2.5
percent in 2014, "boosted largely by tailwinds
from the strengthening housing market,"
Duncan added.
As far as housing goes, recent indicators
(such as home prices, home sales, and
homebuilding activity) show signs of a longterm improvement toward normal levels, Fannie
Mae said. In addition, while rising mortgage
rates have impacted originations, "affordability
conditions remain high and [rates] should
not present a significant obstacle to potential
homebuyers."
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$70.3 Trillion
Household net worth
in Q1 2013, a recordhigh arising from a
combination of fewer
liabilities, improving
equity, and gains in
home values.
Source: Federal Reserve Flow of Funds Report
