Macroeconomics Forecast

Macroeconomics Forecast

Macroeconomic Forecasts:
Federal Reserve
Mortgage Bankers Association
– Total Consumption
– Business Investment

A. Federal Reserve
Total Consumption
In the year 2002, the year drew to a close with the likelihood of the U.S. engaging in war with Iraq, businesses responded by holding off on making spending decisions. The U.S. economy (measured as gross domestic product, or GDP) expanded by a meager 1.3% in the fourth quarter of 2002 and 2.0% in the first quarter of 2003. With the announcement of the conclusion of major fighting in Iraq in April, the delayed business decisions were exercised; the economy expanded by a decent 3.1% in the second quarter and then surged to 8.2% in the third quarter, the strongest rate of growth in nearly 20 years. The U.S. economy continued its solid performance in the fourth quarter of 2003 and the first quarter of 2004, growing 4.1% and 3.9%, respectively. Real GDP in the first quarter of this year was 4.8% higher than a year earlier. Employment suffered three straight years
of declines, losing nearly 1.8 million jobs in 2001, 563,000 jobs in 2002, and Consumer spending is predicted to be a robust 4.0% this year and a solid 3.5% next year. This will contribute to light-vehicle sales rising to 16.8

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