WASHINGTON (4/21/15)--While the economy largely stalled in the first quarter, Fannie Mae maintains that the final nine months of the year will be marked by strong economic activity, and thus has decided not to alter its economic forecast for 2015.
The government-sponsored secondary mortgage giant attributed the weak growth in 1Q to West Coast port disruptions and challenging weather in the Northeast.
These factors led Fannie Mae to adjust its first-quarter growth performance but not its annual estimate of 2.8% growth.
Several months of weak consumer spending could force Fannie Mae to readjust those expectations as well, however.
"We have downsized our first-quarter economic growth expectations in light of several transitory factors that weighed on consumption, but our outlook is largely the same as what we forecasted in March," said Doug Duncan, Fannie Mae chief economist.
"Although some momentum was lost in the first quarter as consumers remained cautious in their spending, perhaps putting an emphasis on repairing their personal balance sheets and replenishing savings, we expect that consumer spending will catch up during the second quarter and continue in subsequent months," Duncan added.
The uptick in consumer spending will support Fannie Mae's forecast for 2.8% growth in 2015, Duncan said.
"We believe this momentum will carry over into the housing market as well, particularly if strong consumer income growth continues," he said.