Economy to Weather Turbulence in Second Half of Year

Analysts anticipate the economy will weather turbulence expected in the second half of the year, according to Fannie Mae’s Economic & Strategic Research (ESR) Group’s recently released Economic and Housing Outlook for August 2017. The Outlook maintains the economy will grow 2.0 percent over the course of the year, even with possible setbacks on the horizon.

“We are keeping our full-year economic growth outlook at 2.0 percent, as risks to our forecast are roughly balanced,” says Doug Duncan, chief economist at Fannie Mae. “On the upside, consumer spending growth might not moderate as much as we have accounted for in our forecast. A build-up in inventory also should be positive for growth this quarter and nonresidential investment in structures will likely continue to improve as oil prices stabilize. In addition, the decline in the dollar and a pick-up in global growth should support manufacturing and exports, although the outlook for the trade sector is clouded by uncertainty surrounding trade policy.”

An impending government shutdown and political unrest could hinder economic growth, Duncan says, but not enough to slow its present momentum.

“Headwinds include tax policy uncertainty that could delay business investment, the risk of a partial government shutdown this fall if Congress fails to pass spending appropriations, a technical default if the debt ceiling isn’t raised, and an increase in global political unease,” says Duncan. “However, we believe these headwinds and tailwinds essentially net out overall, and we stand by our view that economic growth will remain on track for 2.0 percent in 2017.”

Consumers expect their spending to rise 2.82 percent over the next year, a forecast slightly lower than what they projected in June, according to the Federal Reserve Bank of New York’s Survey of Consumer Expectations (SCE) for July.

Experts recently surveyed by Zillow, in addition, expect a “geopolitical crisis” to act as a catalyst for the next recession, to happen by 2020.

The economy expanded 1.9 percent during the first half of the year, the ESR reports, moderately below expectations.

Source: Fannie Mae

Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com.

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