Fannie Mae Revises GDP Forecast Down for 2021, Up for 2022

Article originally posted on HERE on August 20, 2021

Fannie Mae’s Economic and Research Group on Thursday said its full-year 2021 real GDP growth forecast was revised modestly downward. That’s due partly to the expectation that COVID-related disruptions to consumer spending and supply chains will more greatly hinder economic activity in the year’s second half than previously forecast.

Accordingly, the full-year growth forecast was lowered to 6.3% from July’s prediction of 7%. However, the downgrade was offset partially by an upgraded 2022 growth forecast from 2.8% to 3.2%.

“While the recent surge of COVID-19 cases appears to be affecting consumer behavior, the economic response so far has been modest compared to last year’s outbreak, and its impact on our latest forecast is similarly slight, albeit to the downside,” said Mark Palim, Fannie Mae deputy chief economist.

He added that in the single-family home market, lack of inventory and supply-chain bottlenecks for homebuilders remain the primary constraints on sale activity.