Federal National Mortgage Association: Incoming data suggests a return to modest growth in the third quarter


Key points to remember:

  • The ISM services index rose two-tenths of a point to 56.9 in August, its second consecutive monthly increase. The business activity index rose 1.0 points to 60.9, its highest level since December 2021, and the new orders index rose 1.9 points to 61.8, also its highest level. highest level since December 2021. The employment index is back above the expansionary threshold of 50 after a rise from 1.1 to 50.2. Supply chain issues continued to ease, with the supplier deliveries index falling 3.3 points to 54.5, its lowest level since the start of the pandemic. The price index fell 0.8 points to 71.5 after falling 7.8 points in July.
  • Outstanding consumer credit (non-mortgage) rose by $23.8 billion in July, according to the Federal Reserve Board. Revolving credit (mostly credit cards) grew by $10.9 billion and is now above its pre-pandemic level of $36 billion. Non-revolving loans (mainly student loans and car loans) increased by $12.9 billion.
  • Sale of light vehicles fell 0.8% in August to a seasonally adjusted annualized rate of 13.4 million, according to Autodata. The sell rate is more than 20% lower than the sell rate of August 2019.
  • The U.S. Real Goods Trade Deficit shrunk by $10.4 billion in July, according to the Census Bureau. Real exports rose 3.2%, their fourth increase in the past five months, partly on higher energy exports. Real imports fell 2.1%, their fourth straight monthly decline, likely in part due to supply chain disruptions stemming from ongoing shutdowns in several of China’s major manufacturing hubs.

Expected impact:

The slight increase in the ISM services index supports our view that the economy returned to modest growth in the third quarter. In addition, somewhat larger increases in the business activity and new orders sub-components provide further evidence that consumers are gradually shifting their consumption from goods to services. This dynamic should support our forecast of falling prices for some goods, particularly durable goods, until the end of the year and could help explain the fourth consecutive monthly drop in imports of real goods. Nevertheless, we consider the drop in imports to be a sign that demand could cool down in general. Admittedly, however, this data could also have been affected by further shutdowns in parts of China, which we believe will likely begin to weigh on the US economy in the coming months and add to uncertainty at the global level. ‘coming.

Revolving consumer credit has again grown at a rate that is likely unsustainable in the long term. Although consumers saw some relief from inflation in July with lower gasoline prices, the cumulative effect of price increases to date likely continues to strain the finances of some consumers. Nonetheless, as commodity prices continue to decline, we continue to expect personal consumption to grow at a faster pace in the second half of the year before declining slightly in 2023.

Nathanael Drake
Economic and Strategic Research Group
September 9, 2022

The opinions, analyses, estimates, forecasts and other views of Fannie Mae’s Economic and Strategic Research (ESR) group included in these materials should not be construed as indicating Fannie Mae’s business prospects or expected results, are based on a number of assumptions and are subject to change without notice. How this information will affect Fannie Mae will depend on many factors. Although the ESR group bases its opinions, analyses, estimates, forecasts and other points of view on information which it considers reliable, it does not guarantee that the information provided in these documents is accurate, up-to-date or suitable for a particular purpose. . Changes in the assumptions or information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts and other views published by the ESR Group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.


Fannie Mae – National Federal Mortgage Association published this content on September 09, 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unmodified, on September 09, 2022 17:19:02 UTC.


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