Weak Second-Half Growth Expected to Carry Into 2011, According to Fannie Mae's Economics & Mortgage Market Analysis Group

Uncertainty Hangs over Economy, Housing

WASHINGTON, October 20, 2010 - Sluggish job creation and modest consumer spending continue to spur slow
economic growth according to the October 2010 Economic Outlook released today
by Fannie Mae's (OTC Bulletin Board: FNMA) Economics & Mortgage Market
Analysis Group. The economy is expected to grow at a rate below two percent
in the current quarter before picking up modestly in the first half of 2011
and strengthening in the second half of next year. The current outlook
remains clouded with uncertainty and has not changed materially from the
previous forecast, with 2.2 percent growth projected for all of 2010,
followed by a 2.5 percent pace for 2011.

"The labor market has yet to make significant progress, which is the
primary reason for our continued weak growth forecast," said Fannie Mae Chief
Economist Doug Duncan. "With economic growth slowing, job creation also has
been tepid, keeping the unemployment rate high. Housing sales will likely be
soft until the labor market strengthens."

For an audio synopsis of the October 2010 Economic Outlook, listen to the
podcast on the Economics & Mortgage Market Analysis
(www.fanniemae.com/media/economics/index.jhtml?p=Media&s=Economics+%26+Mortgage+Market+Analysis )
site at www.fanniemae.com. Visit the site to read the full October
2010 Economic Outlook, including the Economic Developments Commentary,
Economic Forecast, and Housing Forecast.

New this month and available via link from the Economic Developments
Commentary is an article by Doug Duncan on current attitudes and expectations
for homeownership and renting based on results from the Fannie Mae National
Housing Survey.

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