Economic Activity Continues to Underperform Despite Third Quarter Spike

The accelerated pace of economic activity seen in the third quarter has ebbed, revealing a continued sluggish recovery in the fourth quarter, according to Fannie Mae’s Economic & Strategic Research Group.

Washington, D.C.—The accelerated pace of economic activity seen in the third quarter has ebbed, revealing a continued sluggish recovery in the fourth quarter, according to Fannie Mae’s Economic & Strategic Research Group. Full data regarding the disruptions from Hurricane Sandy and the effect on consumer and business confidence due to fiscal cliff uncertainties are not yet available, but both are likely to restrain growth in the current quarter and near term. Other factors including the Euro zone recession, sovereign debt crisis, and tensions in the Middle East also continue to pose potential risks to future growth. However, despite an expected 1.2 percentage point drag due to fiscal tightening, modest economic growth of sub-2 percent remains forecasted through early 2013 with a pickup in activity beginning in the second half of the year.

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