As many of President Trumps cabinet picks, including
Ben Carson for Department of Housing and Urban Development and
Wilbur Ross for Department of Commerce, await a confirmation
vote, Fannie Mae released today its monthly economic and
housing outlook with tepid growth expectations due to
uncertainty from the Trump administration.
Fannie Maes Economic & Strategic Research Group
holds its full-year economic growth expectations at 2 percent
for 2017, little changed from 1.9 percent last year, citing
risks to growth from President Trumps trade and
immigration policies. The administrations rejection of
the Trans Pacific Partnership could shut the U.S. out of trade
benefits if the TPP countries successfully form trade
agreements, the report says.
While some expect the Federal Reserve to raise rates three
times this year with the first hike in March, Fannie Mae
expects just two quarter-point rate increases with the first in
June, given the uncertainty about the administrations
What may prop up economic growth is consumer spending, as
two measures of consumer confidence the Conference Board
consumer confidence index and the University of Michigan
preliminary sentiment index remain elevated. Job growth
will also contribute, with average monthly gain of new jobs
over the past three months picking up to the fastest pace since
October, according to the report.
Despite a low level of housing inventory keeping home prices
high, leading indicators such as pending home sales were up in
December. Mortgage applications continue to hold up
well relative to the number of homeowners applying to
refinance their borrowing agreements, according to the report.
The expectation of higher interest rates may have pushed home
buyers to take the plunge before any additional hikes, and
the negative impact of rising rates will be felt with a
lag, Fannie Mae says in the report.
Fannie Mae says its too early to factor President
Trumps immigration policy and trade executive orders into
its forecasts. With President Trump naming Alexander Acosta
today as his new nominee to lead the Department of Labor, it
will be easier to judge the impact of the new administration
once the Senate votes are in.