04/09/2021 | Press release | Distributed by Public on 04/09/2021 13:07
Key Takeaways:
February data continued to be affected by the severe weather seen across much of the country during that month, while March data continued to show strength. The March jump in service sector activity and the increase in February consumer revolving credit highlights the extent of recovering consumer demand, though March service sector activity was likely bolstered in part by the rollout of the $1.9 trillion March stimulus legislation. Regardless, these data support our expectation of an acceleration in consumer spending. Growing consumer demand coupled with comparative weakness abroad is affecting trade, leading to imports outweighing exports and a widening of the trade deficit. Therefore, we expect that net exports will likely drag on Q1 GDP growth. Producer prices continued to climb in March, with headline PPI recording the fastest pace of annual growth since September 2011. Despite the large PPI growth, the Fed is unlikely to change its current accommodative stance, as its stated position is to wait for data to match its expectations for both employment and a long-run inflation average of two percent. The February JOLTS survey does reflect improvement in the labor market, with job openings reaching the highest level in just over two years, though employment levels still remain considerably below the pre-COVID peak.
Ricky Goyette
Economic and Strategic Research Group
April 9, 2021
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 affects Fannie Mae will depend on many factors. Although the ESR group bases its opinions, analyses, estimates, forecasts and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current or suitable for any particular purpose. Changes in the assumptions or the 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.