The rise of the Delta variant and the impact that is having on consumer spending and supply chains will hinder economic activity in the second half of the year more than previously thought, according to Fannie Mae’s August 2021 commentary…(Fannie Mae)
- The Economic and Strategic Research Group now expects GDP in 2021 to drop from 7.0% to 6.3% on a fourth quarter-over-fourth quarter (Q4/Q4) basis.
- The ESR group also downgraded their forecast for single-family home sales projected from 6.71 million to 6.66 million. However, that is still a 3.1% increase compared to 2020
The ESR Group wasn’t alone in their downgrade of GDP growth
- BOA predicts annual growth will slip to 5.9% this year.
- Goldman Sachs lowered their estimate from 9% to 5.5% for the third quarter.
Mark Palim, Fannie Mae Vice President and Deputy Chief Economist, said COVID was impacting the economy but nothing close to what we saw last year..
- “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,”
WASN’T ALL BAD: The ESR Group upgraded their growth forecast from 2.8% to 3.2% in 2022. Goldman Sachs also raised their forecast for the first three quarters of 2022 as well.