Fannie Mae projects 'brighter outlook' for 2011

Citing high consumer confidence, increase in demands for goods and services and low unemployment numbers, Fannie Mae's Economics & Mortgage Market Analysis Group see a "brighter outlook" for the economy, according to a news release regarding their "December 2010 Economic Outlook."

The report boosted projections for economic growth in 2011 from 2.9 percent to 3.4 percent, as the group "anticipates improving labor market conditions, despite the huge disappointment from the November employment report" and for the "housing recovery [to] gain momentum going into 2011 if the expected stronger labor market materializes."

Fannie Mae chief economist Doug Duncan said that, despite rising interest rates, 2011 looks promising. "We expect modest increases in home sales, despite recent interest rate rises, due in part to modest additional declines in home prices, and we expect people to take advantage of affordability as their employment and income outlook brightens."

Despite optimism, the group detailed the potential "downside" 2011 could bring given "a weaker than expected employment report, the ongoing economic turmoil in Europe and potential inflation problems in China."

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