Macro Economic Outlook Shows More Bumps In The Road

A new forecast released August 22 by Fannie Mae shows that there won't be a double-dip recession in August, but whether or not the United States will endure another one in the rest of 2011 is unclear, according to a press release. Economic growth for the year is expected to hit 1.4 percent this year, down from 3.1 percent in 2010. Growth in 2012 should increase to about 2 percent, down from the 3.1 percent that was forecast in July.

Revised gross domestic product data, European financial turmoil and the U.S. debt ceiling arguments have negatively affected consumer confidence, Fannie Mae Chief Economist Doug Duncan said. Those macro economic factors have replaced housing as the biggest general economic concern, he added.

"Our July data shows that 70 percent of Americans think the economy is on the wrong track, up from 60 percent a year ago," Duncan explained. "In turn, despite historically low interest rates, consumers are still saying they don't see this as a good time to go out and borrow money to buy a house."

On August 18, Freddie Mac announced that mortgage rates hit record lows of 4.15 percent, which is lower than the previous low of 4.17 percent in November 2010. However, increased difficulty in securing loans hasn't boosted home sales.