July 15, 2020
A faster-than-expected pace of recovery in the second quarter contributed to a modest improvement in expectations for full-year 2020 economic growth, the Fannie Mae Economic and Strategic Research (ESR) Group said Tuesday.
Despite the recent resurgence in COVID-19 cases – and the potential for localized measures that may slow otherwise re-opening economies – the ESR Group upgraded its forecast for 2020 annual growth to negative 4.2%, compared to negative 5.4% last month.
Incoming data suggest that May’s recovery in consumer spending was stronger than anticipated and that the momentum carried into June. The ESR Group also said housing continues to show remarkable strength.
“Our base scenario for the economy improved but did not shift dramatically from last month; we now expect full-year 2020 GDP to decline 4.2% before growing in 2021 by 4%,” said Doug Duncan, chief economist at Fannie Mae. “Incoming data have improved, but coronavirus infections have spiked as well.”
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