Economic growth is expected to pick up in the second quarter and through the second half of 2015, but continued financial conservatism among consumers suggests modest growth for the year, according to Fannie Mae’s Economic & Strategic Research Group.
The economy is projected to grow 2.3 percent for all of 2015—a downgrade of 0.5 percentage points from the prior forecast and similar to the modest pace seen in 2014. Housing is one sector that appears to be building momentum, with leading indicators suggesting the market will experience a strong spring season.
“Last year we saw a strong second quarter rebound from a weak first quarter. We expect the same pattern this year, but a more muted bounceback,” said Fannie Mae Chief Economist Doug Duncan.
“The drop in oil prices has led to a reduction in business fixed investment, particularly in the mining and energy extraction space, the reduced oil prices haven’t yet translated to a significant increase in personal spending, with consumers remaining financially conservative and choosing to ramp up their savings or pay down their debt,” Duncan said, but he added that data point to some increased consumption for the second quarter.