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Predicting Economic Growth

Despite an uncertain political climate and lower-than-projected growth the first half of the year, the U.S. economy is still poised for 2 percent growth by the close of 2017, according to the August 2017 Economic and Housing Outlook released today.

Published by the Fannie Mae Economic & Strategic Research Group, the outlook predicts strong economic growth in the second half of the year, something Fannie Mae Chief Economist Doug Duncan attributes to improved consumer spending and residential investments.

“On the upside, consumer spending growth might not moderate as much as we have accounted for in our forecast,” Duncan said. “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.”

Still, potential policy changes in Washington could throw a wrench in the matter, according to Duncan.

“The decline in the dollar and a pickup in global growth should support manufacturing and exports, although the outlook for the trade sector is clouded by uncertainty surrounding trade policy,” Duncan said. “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.”

In spite of this political ambiguity, Duncan says Fannie Mae is keeping its original projection for year-end economic growth.

“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 percent in 2017,” Duncan said. “We are keeping our full-year economic growth outlook at 2 percent as risks to our forecast are roughly balanced.”

During the first two quarters of 2017, the U.S. economy grew at an annualized rate of 1.9 percent—slightly under the originally projected 2.1 percent.

View the full forecast at FannieMae.com.

About Author: Aly J. Yale

Aly J. Yale is a longtime writer and editor from Texas. Her resume boasts positions with The Dallas Morning News, NBC, PBS, and various other regional and national publications. She has also worked with both the Five Star Institute and REO Red Book, as well as various other mortgage industry clients on content strategy, blogging, marketing, and more.

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