The economy has been set free (for now)
WASHINGTON – Jan. 13, 2014 – According to Fannie Mae’s Economic & Strategic Research Group, less economic uncertainty about U.S. fiscal and monetary issues lays the foundation for improved private sector activity and accelerated economic growth in 2014.
With growing economic momentum – a notable rebound in consumer sentiment following a dip associated with the government shutdown last fall, as well as labor market improvements that support income growth – the group forecasts an increase in consumer and business spending that boosts economic growth throughout the year. For all of 2014, growth is expected to accelerate to 2.9 percent from an estimated 2.6 percent in 2013.
“Our full-year 2014 economic forecast accounts for three key growth drivers: an acceleration in spending activity from private sector forces, waning fiscal drag from the federal government, and continued improvement in the housing market,” says Fannie Mae Chief Economist Doug Duncan.
“Much of the policy uncertainty we saw in 2013 has cleared to some degree … We expect the contribution from consumer spending to rise to about 2 percentage points, up from an estimated 1.6 percentage points last year. In addition, as consumer demand climbs, business confidence should improve and add to growth in the form of stronger hiring and capital investment.”
“Despite the rise in mortgage rates since the spring, many housing indicators posted strong gains at the end of 2013, and consumer housing attitudes are strengthening, all of which bodes well for continued but measured housing recovery in 2014,” says Duncan. “Overall, although we don’t expect growth to break the 3 percent barrier this year, we believe the economy is on a sustainable path for continued growth with upside potential.”