the second quarter will paint a much different picture, with recent indicators
suggesting that the economy will pick back up in the second quarter.
According to the latest Fannie Mae housing report, March
and April presented strong reports for consumers, paving the way for a strong
“We have downgraded our May forecast slightly from April following a very
weak first quarter, but we anticipate economic growth to gain momentum in the
second quarter and remain firm throughout the rest of this year,” said Fannie
Mae chief economist Doug Duncan.
But even with these indicators, Duncan noted, "The housing picture remains
more worrisome, with existing home sales, new home sales, housing starts, and
multifamily housing all experiencing year-over-year declines."
“We believe this year will likely be a bump in the long-term road back toward
normal levels, which we continue to expect sometime in late 2016,” he added.
March recorded positive consumer spending in both goods and services, while
April auto sales marked the second consecutive month of at least 16 million
annualized units – the first time since 2007.
Meanwhile, business capital also improved, with core capital goods orders
increasing 3.5% in March to the highest nominal reading on record.
The April jobs report also helped show a jump in hiring at the fastest pace
in more than two years.
“Reduced drag both from government spending and fiscal policy uncertainty as
well as improving financial and labor market conditions should contribute to a
rebound, but the sizable down draft from the first quarter likely will keep
full-year growth subdued,” Duncan said. “Overall, we expect economic growth to
accelerate to just over 3% on an annualized basis in the current quarter, and to
come in at 2.4 percent for all of 2014.”