Stuck at Subpar Growth

                            Stuck at Subpar Growth

Lackluster Consumer Spending Presages Continued Moderate Economic Growth

Outlook Remains Positive for Gradual Housing Recovery

PR Newswire

WASHINGTON, Aug. 21, 2012

WASHINGTON, Aug. 21, 2012 /PRNewswire/ -- Economic activity slowed during the
first half of 2012, fueled by a decline in the pace of consumer spending amid
a sluggish labor market. Inflation-adjusted consumer spending growth dropped
nearly a percentage point during the second quarter to a one-year low of 1.5
percent, as spending fell in June for the first time since last August.
However, strong July retail sales helped soothe concern of another pullback.
In addition, the July jobs report posted the strongest gain in five months
with 163,000 new jobs created. If sustained, such job growth may bolster weak
consumer and small business confidence, helping to offset headwinds presented
by the domestic policy environment and European debt markets. While modest
economic growth is still expected through the end of this year, risks to the
outlook remain on the downside, according to Fannie Mae's (OTC Bulletin Board:
FNMA) Economic & Strategic Research Group.

"The July data hasn't changed our forecast for slow growth in 2012, but we're
increasingly focused on the looming 'fiscal cliff' near year-end," said Fannie
Mae Chief Economist Doug Duncan. "The debt ceiling debate, as well as current
legislation that could create a drag of more than 4 percent on GDP in 2013,
may spur further caution among consumers and businesses alike. On the bright
side, we continue to see positive trends in the housing sector, which is
showing signs of a durable, long-term recovery."

In contrast to an otherwise dim economy, the broad housing outlook has stayed
generally positive. The expected increase in home sales in 2012 over 2011
remains steady at approximately 9 percent and home price expectations for the
remainder of the year are now trending upward. Inventories have dropped
significantly during the past 12 months, and the resulting tighter supply has
helped boost homebuilding activity in some areas. Overall, residential
investment is expected to contribute approximately 0.2 percentage points to
real GDP in 2012 – the first annual contribution since 2005. However, despite
many positive indicators across the housing sector, any growth is likely to
keep a modest pace due to other factors, including tight credit standards and
an elevated level of foreclosures facing the market in the coming years.

For an audio synopsis of the August 2012 Economic Outlook, listen to the
podcast on the Economic & Strategic Research site at www.fanniemae.com. Visit
the site to read the full August 2012 Economic Outlook, including the Economic
Developments Commentary, Economic Forecast, Housing Forecast, and Multifamily
Market Commentary.

Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's
Economic & Strategic Research (ESR) 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 ESR 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 ESR 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 purchasing or guaranteeing mortgage
loans originated by mortgage bankers and other lenders so that they may lend
to home buyers. Our job is to help those who house America.

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SOURCE Fannie Mae

Website: http://www.fanniemae.com
Contact: Pete Bakel, +1-202-752-2034