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Fannie Mae Forecasts Slowdown in Growth for Remainder of 2014

Despite an anticipated pickup in economic growth and housing recovery in the second half of this year,Fannie Mae expects the economy to grow at just 1.5 percent overall this year. Fannie revised its previous estimate of 2.1 percent growth for 2014 after a disappointing start to the year. The first quarter of this year measured "the worst performance in five years;" and if Fannie's 1.5 percent prediction pans out, it would be "the worst performance of Q4-over-Q4 growth in the current economic expansion," according to Doug Duncan, chief economist at Fannie Mae. Lower-than-expected healthcare spending was the culprit in first-quarter economic woes; but consumer spending, business capital investment, and residential investment should all contribute to more robust growth in the second half of this year, according to Fannie Mae's economists. Job growth and real personal income are growing, which Fannie expects to translate to a rise in consumer spending over the second half of the year. "We expect the economy to grow approximately 3.0 percent in the second half of the year, although there is an element of uncertainty given government statisticians' difficulty in assessing the full scope of healthcare expenditures," Duncan said. The housing market is continuing to recover, contributing positively to the economy, but Fannie Mae anticipates a 2.0 percent decline in home sales and a 41.0 percent decline in mortgage originations over the year this year. On the other hand, single-family mortgage debt outstanding should increase "slightly," according to Fannie Mae.

About Author: Krista Franks Brock

Krista Franks Brock is a professional writer and editor who has covered the mortgage banking and default servicing sectors since 2011. Previously, she served as managing editor of DS News and Southern Distinction, a regional lifestyle publication. Her work has appeared in a variety of print and online publications, including Consumers Digest, Dallas Style and Design, DS News and DSNews.com, MReport and theMReport.com. She holds degrees in journalism and art from the University of Georgia.

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