Fannie Mae-No Politics (FNMA)

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Fannie Mae See U.S. Growth at 2.1% for 2013

U.S. economic growth is expected to slowly but consistently strengthen into 2014, as fiscal headwinds continue to wane, Fannie Mae (FNMA) said in a recent report.

Still, those fiscal headwinds should keep growth to below 2% for the first half of 2013. Growth should continue to move positively amid an ongoing recovery in housing, rising household wealth and expanded energy production, the mortgage-finance company said.

"At the outset of the year, we forecasted that 2013 would witness sustainable but below-par growth as the economy begins its transition to more normal levels. Halfway through the year, our view is little changed, " said Fannie Mae Chief Economist Doug Duncan.

He added that the economy is on course to grow 2.1% this year--unchanged from its March estimate and up from the anemic pace of 1.7% in 2012. The rise is consistent with the incremental improvement seen in the past few years but still below the economy's potential, Mr. Duncan said.

Fannie Mae's forecast calls for 2.5% growth in 2014, helped largely by the strengthening housing market.

Housing was largely positive entering the spring/summer season, with indicators such as home prices, home sales, and homebuilding activity showing signs of long-term improvement toward normal levels. Despite rising mortgage rates during the past month, which have affected refinancing originations, potential home buyers are still able to find affordable markets, Fannie Mae said.

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