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Press Release

Second Half Growth Expected to Outweigh Recent Market Volatility

September 16, 2015

Katie Penote


WASHINGTON, DC – Continued positive consumer spending and other solid domestic fundamentals are expected to offset recent market volatility and support modest improvement in U.S. economic growth in the second half of the year, according to Fannie Mae’s (FNMA/OTC) Economic & Strategic Research (ESR) Group. Data released throughout the past month generally showed improving economic activity despite heightened anxiety on Wall Street. Real consumer spending ticked up in July and the August jobs report was solid. Full-time employment surpassed its pre-recession peak, and both average hourly earnings and the average workweek saw an increase, indicating a strong gain in personal incomes that should support continued consumer spending. On balance, growth in the second half of the year is expected to come in higher, albeit modestly, than the first half.

“Our forecast for the year is largely unchanged despite recent market volatility. Fundamentals are positive, suggesting potential for some improvement in the fourth quarter,” said Fannie Mae Chief Economist Doug Duncan. “While core personal consumption expenditures experienced their weakest gain in more than four years in July, real consumer spending rebounded during the month and August auto sales were stronger than they have been in a decade. Consumers may get an added boost during the year from subdued inflation given the stronger dollar and low oil prices. Overall, we anticipate economic growth of 2.4 percent for 2015, up slightly from 2.1 percent in the prior forecast. Consumer and government spending as well as nonresidential and residential investment are expected to contribute to growth while net exports and inventory investment will likely pose headwinds.”

“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. However, lower actual and projected cash sales led us to revise slightly higher purchase mortgage originations,” said Duncan. “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.”

Visit the Economic & Strategic Research site at to read the full September 2015 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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