Despite the slight Q3 bump, growth is still expected to be down 2.5% for the year.

Fannie Mae increased its full-year 2020 growth forecast by one-tenth to a still-negative 2.5 percent. Q3 real gross domestic product (GDP) growth came in somewhat above expectations (33.1 percent versus 31.6 percent annualized). However, they downgraded their forecast for Q4 2020 and the first half of next year in light of resurging COVID-19 cases. Fannie now forecasts growth in 2021 to be 3.3 percent, down two-tenths from last month’s forecast. Looking ahead to 2022, they expect GDP to rise 3.0 percent. Fannie Mae continues to believe that the ingredients for further recovery in the near-term are present, even in the absence of an additional stimulus bill. An elevated savings rate, rising asset prices, and an improving labor market should provide ample fuel for consumers to drive continued growth. However, they believe the response of consumers and policy makers to COVID-19 cases and hospitalizations hitting new highs both here in the U.S. and abroad will likely determine whether further improvement is realized, and this uncertainty represents heightened risk to the forecast.

Source: Fannie Mae