May 2012 Economic and Housing Outlook

by Sabrina I. Pacifici on May 23, 2012

News release: “Housing activity indicated a promising start for the first quarter of 2012 that substantially outpaced performance during the same period last year. However, the monthly pattern suggests some loss of momentum late in the quarter. According to Fannie Mae’s (FNMA/OTC) Economic & Strategic Research Group, a slowdown in momentum may be mirroring many economic indicators and may partly be the result of unusually warm weather at the start of the year that pulled some activity forward. Economic growth slowed in the first quarter of 2012 to 2.2 percent at an annualized rate, down from 3.0 percent in the fourth quarter of 2011. While still modest, the recent pace of growth is stronger than the same time last year and accompanied by a better balance of upside and downside risks compared to a year ago. Consumer spending was the primary driver of growth, posting the best showing since the end of 2010. However, while the strength in consumer spending is encouraging, it will likely be unsustainable going into the current quarter due to the lack of income support. Overall, incoming data suggest that growth will continue to be sluggish in the current quarter, and the pace of activity should firm just slightly in the second half of the year. For all of 2012, we expect growth to come in at 2.3 percent—little changed from the view we have held since the beginning of the year.”

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