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ECONOMIC
IMPROVEMENT
PREDICTED FOR THE
REST OF 2015 DESPITE
MARKET VOLATILITY
Despite recent market volatility, economic
growth in the second half of the year is ex-
pected to improve, according to data released
by Fannie Mae.
Fannie Mae's Economic and Strategic
Research (ESR) Group found that consumer
spending and other solid domestic fundamen-
tals are predicted to be key drivers of the rest
of the year economic growth.
"Our forecast for the year is largely
unchanged despite recent market volatil-
ity. Fundamentals are positive, suggesting
potential for some improvement in the fourth
quarter," said Doug Duncan, Fannie Mae's
chief economist.
Various data reports over the last month
reveal positive economic activity despite stock
market volatility, Fannie Mae explained.
According to the research and the Bureau of
Labor Statistics job report, consumer spend-
ing rose in July and August, while full-time
employment exceeded its pre-recession peak.
"On balance, growth in the second half of
the year is expected to come in higher, albeit
modestly, than the first half," the report said.
Housing market strength was also highly
unbothered by the volatile stock market, per-
forming strongly in a number of areas.
"Continued strong performance of year-
to-date home sales and modestly weaken-
ing leading indicators confirms that our
prior forecast of existing home sales this year
remains valid. However, lower actual and
projected cash sales led us to revise slightly
higher purchase mortgage originations," Dun-
can noted.
However, sub-par single-family construc-
tion was a little disappointing, causing Fannie
Mae to lower its projected single-family
starts projection for 2016. e research group
expects that total mortgage originations will
increase by about 25 percent for all of 2015, to-
tal production volume to fall about 18 percent,
and the refinance share to decline about 15
percentage points.
"Overall, we anticipate economic growth
of 2.4 percent for 2015, up slightly from 2.1
percent in the prior forecast," Duncan said.
"Consumer and government spending as well
as nonresidential and residential investment
are expected to contribute to growth while net
exports and inventory investment will likely
pose headwinds."
