April 20, 2015Q1 Economic Growth Measures Downsized, but Expected to Spring Forward
Full-Year Growth Forecast Unchanged at 2.8 Percent
WASHINGTON, DC – Economic activity was suppressed in the first-quarter due largely to the West Coast port disruptions and difficult weather patterns across the Northeast, but the economy is expected to gain momentum throughout the spring and reach previously anticipated levels by year-end, according to Fannie Mae’s (FNMA/OTC) Economic & Strategic Research (ESR) Group. While they have adjusted downward first-quarter growth from the prior forecast, the ESR Group’s full-year 2015 growth projection remains unchanged at 2.8 percent. Risks remain tilted to the downside, however, as consumer spending may be weaker than anticipated and the financial markets are likely to experience some volatility leading up to the Fed’s first expected rate hike in the coming months.
"We have downsized our first-quarter economic growth expectations in light of several transitory factors that weighed on consumption, but our outlook is largely the same as what we forecasted in March," said Fannie Mae Chief Economist Doug Duncan. "Although some momentum was lost in the first quarter as consumers remained cautious in their spending, perhaps putting an emphasis on repairing their personal balance sheets and replenishing savings, we expect that consumer spending will catch up during the second quarter and continue in subsequent months, supporting our forecast of 2.8 percent growth for the year. We believe this momentum will carry over into the housing market, as well, particularly if strong consumer income growth continues."
Visit the Economic & Strategic Research site at www.fanniemae.com to read the full April 2015 Economic Outlook, including the Economic Developments Commentary, Economic Forecast, Housing Forecast, and Multifamily Market Commentary. To receive e-mail updates with other housing market research from Fannie Mae's Economic & Strategic Research Group, please click here.
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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