Fannie Mae researchers predict economic gains in the second half of this year, due to positive consumer spending and job growth, which will likely offset recent market volatility and heightened anxiety on Wall Street.
Full-time employment has now surpassed its pre-recession peak and average hourly earnings have posted recent gains -- increases that should support stronger consumer spending in the months to come, according to Fannie Mae's Economic & Strategic Research Group.
Full-time employment has now surpassed its pre-recession peak and average hourly earnings have posted recent gains -- increases that should support stronger consumer spending in the months to come, according to Fannie Mae's Economic & Strategic Research Group.
A stronger economy should aid the housing market's recovery as well.
"Continued strong performance of year-to-date home sales and modestly weakening leading indicators confirm that our prior forecast of existing home sales this year remains valid," says Doug Duncan, Fannie Mae's chief economist. "Sub-par single-family new home construction, however, has been somewhat disappointing, and as a result, we have lowered our projected single-family starts projection for 2016. We anticipate total mortgage originations to increase approximately 25 percent for all of 2015, and total production volume to decrease somewhere in the area of 18 percent in 2016, with the refinance share falling about 15 percentage points."
Overall, Fannie Mae is projecting economic growth of 2.4 percent for 2015 – up slightly from 2.1 percent in its prior forecast.
"Consumers may get an added boost during the year from subdued inflation given the stronger dollar and low oil prices," Duncan says.
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