Fannie Mae Says COVID-19 Surge Won’t Impact Growth. Probably.

Fannie Mae’s economists provided a mixed forecast this month. The baseline view of the company’s Economic and Strategic Research (ESR) group is for the recent virus surge to drag modestly on consumers’ services consumption in the near term and modestly worsen supply chain disruptions abroad, but they don’t think it will prevent solid growth in the current quarter. They do note early signs of modest behavioral changes on the part of consumers and companies. For example, a high frequency measure of restaurant reservations has recently pulled back slightly, and several airlines are reporting an uptick in customer flight cancellations. The most recent measure of the University of Michigan Consumer Confidence survey also declined dramatically, suggesting the COVID upswing is weighing on sentiment. Anecdotally, reports of employers delaying reentry to office work and cancelling in-person events and conferences are growing.