A Decent, but Not Great, Second Half of the Year Expected for U.S. Economy

WASHINGTON, Oct. 18, 2016

"Recent economic data have been a mixed bag – the good, the bad, and the steady," said Fannie Mae Chief Economist Doug Duncan. "On the upside, the third print of second quarter GDP showed that the economy grew three-tenths higher than in the second estimate, with an encouraging upward revision in nonresidential fixed investment. The steady news comes from the labor market, with relatively decent conditions overall. The biggest doses of bad news come from consumer spending, the linchpin of economic growth, and residential investment, which appears to have posted a second consecutive sizable drop in the third quarter."

"Emerging signs of improving homeownership demand among young adults have been encouraging. However, housing activity has lost momentum in recent months," said Duncan. "Existing home sales, new home sales, single-family housing starts, and single-family construction spending declined in August. In addition, pending home sales and purchase mortgage applications weakened during the month, suggesting continued weakness in existing home sales in the near term amid very lean supply."

Visit the Economic & Strategic Research site at www.fanniemae.com to read the full October 2016 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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