Fannie Mae Anticipates Short but Painful Downturn
Fannie Mae Predicts Short But Excruciating Downturn
Fannie Mae’s Economic and Strategic Research Group has reduced its outlook for economic growth over the entire year from 2.2% to 1.8%. They now expect it to contract by 3.1%. Much of the negative impact from the pandemic is expected in the current (2nd) quarter, a reduction of 25.3% on top of a projected loss of 3.3% in the 1st Quarter. This is being based on an end to the social distancing orders in late May and a gradual resumption of business activity in June. There will be above average growth in the remaining two quarters, 7.6% and 13.6% respectively. Growth for 2021 is projected at 4.8 percent. They expect the biggest hits in the second quarter will be to personal consumption -34.2%, fixed residential investment -36.2%, and fixed business investment -31.9%. Fannie Mae expects the unemployment rate to average nearly 12% in the 2nd Qtr., but to ease back to around 7% by year’s end.
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