FANNIE MAE: CURRENT ECONOMIC FOOTING IS BETTER THAN PREDICTED. The Economic and Strategic Research Group improved its economic outlook for 2024 and 2025 following some recent stronger signs.

The economy is looking stronger than what was previously predicted, due to signs like stronger payroll growth and revisions in national accounts, according to the October 2024 commentary from the Fannie Mae Economic and Strategic Research (ESR) Group. 

While the ESR Group stated it still expects economic growth to slow from the robust 3.2% pace recorded in 2023, the degree of expected slowing is smaller. Specifically, growth in 2024 and 2025 is now expected to be 2.3% and 2%, respectively, near the long-run trend growth rate. 

The ESR Group stated that this improved economic outlook stems in large part from significant upward revisions to recent personal income data. Previously, the ESR Group said it expected consumption growth to retrench, as it had grown unsustainably relative to incomes, but revised data now show the relationship between income and consumption to be closer to historical levels. As such, the ESR Group stated it believes the economy can maintain growth closer to its long-run potential through its forecast horizon, barring an unforeseen shock to consumer or business confidence from an adverse exogenous event.