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Fannie Mae: Budding economic growth expected as harsh winter fades

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Fannie Mae: Budding economic growth expected as harsh winter fades

Consumer spending, business investment, and housing likely to drive momentum.

Despite a deterioration in economic activity at the end of 2013 that has continued through the first quarter of this year, growth is expected to pick up in the second quarter and build throughout the summer, firming to approximately 2.7% for all of 2014, according to Fannie Mae's Economic & Strategic Research Group.

The near-term outlook remains somewhat clouded, due in part to an unsustainable build-up in inventory in the second half of last year and as downside effects from the winter have yet to fully materialize. However, the return of weather to seasonal norms should help boost growth in the second quarter, supported by consumer spending, business investment, and housing starts.

"The near-term outlook remains somewhat clouded, due in part to an unsustainable build-up in inventory in the second half of last year and as downside effects from the winter have yet to fully materialize.""For our March forecast, we expect economic and housing growth to emerge from the tough winter weather and gain momentum into the spring and summer seasons," said Fannie Mae Chief Economist Doug Duncan. "Fiscal and monetary policy jitters appear to have waned and the most recent employment numbers came in at reasonable levels, helping to ease concerns of a significant slowdown or risk of recession. In addition, we have seen some improvement for consumers as house prices and equity valuations have continued to make incremental additions to household wealth.”

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