Economic Outlook Brightens According to Fannie Mae's Economics & Mortgage Market Analysis Group

By Fannie Mae, PRNE
Sunday, December 19, 2010

Economic Growth Poised to Kick into Higher Gear by Second Quarter of 2011

WASHINGTON, December 20, 2010 - Improvements in consumer spending and consumer confidence, increased
demand for goods and services, and falling unemployment claims are all
positive factors for a brighter outlook as we move into 2011, according to
the December 2010 Economic Outlook released today by Fannie Mae's (OTC
Bulletin Board: FNMA) Economics & Mortgage Market Analysis Group. Downside
risks still exist, however, including a weaker than expected employment
report, the ongoing economic turmoil in Europe, and potential inflation
problems in China.

For 2011, forecasted growth was upgraded from 2.9 percent to 3.4 percent
based on the positives in the recent reports. The forecast anticipates
improving labor market conditions, despite the huge disappointment from the
November employment report. The housing recovery should gain momentum going
into 2011 if the expected stronger labor market materializes.

"Despite rising mortgage rates, our forecast for home sales is stronger
than the previous forecast, given our brighter economic growth and labor
market outlook," said Fannie Mae Chief Economist Doug Duncan. "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

For an audio synopsis of the December 2010 Economic Outlook, listen to
the podcast on the Economics & Mortgage Market Analysis site at Visit the site to read the full December 2010
Economic Outlook, including the Economic Developments Commentary, Economic
Forecast, and Housing Forecast.

Also available via link from the Economic Developments Commentary is a
Multifamily Market Commentary by Kim Betancourt, Director, Multifamily
Economics and Market Research. The Commentary provides information on current
multifamily market conditions. Sales of multifamily properties have been
rising all year, and property sales are expected to remain stable in 2011.
Location, class, and condition of properties continue to be the greatest
decision-making factors for investors.

Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's
Economics & Mortgage Market Analysis (EMMA) group included in these materials
should not be construed as indicating Fannie Mae's business prospects or
expected results, are based on a number of assumptions, and are subject to
change without notice. How this information affects Fannie Mae will depend on
many factors. Although the EMMA group bases its opinions, analyses,
estimates, forecasts, and other views on information it considers reliable,
it does not guarantee that the information provided in these materials is
accurate, current, or suitable for any particular purpose. Changes in the
assumptions or the information underlying these views could produce
materially different results. The analyses, opinions, estimates, forecasts,
and other views published by the EMMA group represent the views of that group
as of the date indicated and do not necessarily represent the views of Fannie
Mae or its management.

Fannie Mae exists to expand affordable housing and bring global capital
to local communities in order to serve the U.S. housing market. Fannie Mae
has a federal charter and operates in America's secondary mortgage market to
enhance the liquidity of the mortgage market by providing funds to mortgage
bankers and other lenders so that they may lend to home buyers. Our job is to
help those who house America.

Pete Bakel, +1-202-752-2034

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