Fannie Mae Upgrades Economic Outlook

The Fannie Mae Economic and Strategic Research Group revised upward its full-year 2018 economic growth forecast to 3.0 percent Y from 2.8 percent in the prior forecast Y on expectations that third and fourth quarter inventory restocking will outweigh slowing consumer spending growth and a decline in net exports, according to its August 2018 Economic and Housing Outlook. 

YBreakneck headline growth in the second quarter disguised a detail largely responsible for the latest upward revision to our full-year growth forecast: a need to restock declining business inventories, which we expect will support greater growth amid weakness elsewhere,Y said Fannie Mae Chief Economist Doug Duncan.

Duncan went on to say, “While meaningful wage growth remains elusive, the labor market is strong and inflation appears to be gaining additional steam, making a Fed rate hike in September highly likely. Assuming consumer and business confidence can steer clear of escalating trade tensions, we expect the Fed to raise rates two more times in 2018, including next month.Y

Source: Fannie Mae 2018 Growth Forecast and Housing Outook