WASHINGTON–Modest economic growth for 2017 is being forecast by Fannie Mae’s Economic & Strategic Research (ESR) Group.
In its November 2016 Economic and Housing Outlook, Fannie Mae said the slowdown in job growth and business investment suggests the economic expansion has transitioned to a late-cycle phase, in which growth tends to moderate and, in turn, makes the economy more vulnerable to shocks.
Although increased market volatility may occur in the medium term as policy developments take shape, the ESR Group said it continues to expect economic growth to pick up in the second half of 2016, averaging 2.4%, following 1.1% growth during the first half. The full-year 2016 growth forecast remains at 1.8%, with a similar pace of growth expected for 2017.
“We haven’t changed the general tone of our forecast at this time, but we will incorporate new policy assumptions as they become more concrete. Given campaign themes, we may see some changes in policies regarding corporate and individual tax rates, infrastructure investment, government spending, healthcare, and immigration,” said Fannie Mae Chief Economist Doug Duncan in a statement. “Depending on the incoming President’s policy priorities, our forecast for 2017 is subject to both upside and downside risks. For example, we expect near-term growth would get a boost from any tax cuts and spending increases that are made, but if new policies result in sharply higher tariffs on China and Mexico, rethinking the Trans-Pacific Partnership, and renegotiating the North American Free Trade Agreement, it would likely drag on growth.”