Economic Update by Doug Duncan Chief Economist Fannie Mae

2. Economic UpdatebyDoug DuncanChief EconomistFannie Mae American Land Title Association October 17, 2008 Kaua’i, Hawaii

3. The Macroeconomy

4. Real GDP Annualized Growth Rate History in blue, forecast in red Source: Bureau of Economic Analysis

5. Real GDP Annualized Growth Rate Forecast September forecast October forecast Source: Bureau of Economic Analysis

6. Change in Components of Real GDP Q1:08 to Q2:08 $Bil Chained 2000

7. Private Nonfarm Payroll EmploymentYear/Year Percent Change Source: Bureau of Labor Statistics

8. Change in Payroll Employment from November 2007 Thousands of Jobs – Seasonally Adjusted Source: Bureau of Labor Statistics

9. Wilshire 5000 Stock Price Index Dec-31-70=830.27 Source: Wall Street Journal

10. Dow Jones Industrial Average Annual high: May 2 – 13,058.2 House rejects first bailout plan At 4:30 p.m. Source: Bloomberg

11. Owners’ Equity in Real Estate $Bil Source: Federal Reserve Board

12. Net Home Equity Extraction $Bil SAAR Source: Federal Reserve Board

13. Consumer Credit Loan Delinquency Rate Percent – Seasonally Adjusted Credit Cards Other Consumer Debt Source: Federal Reserve Board

14. Personal Consumption ExpendituresYear/Year Percent Change Source: Bureau of Economic Analysis

15. Nominal Broad Trade-Weighted Exchange Value of the US Dollar vs. Euro/Dollar Exchange Rate Euros Trade-Weighted Exchange Value (left axis) Index: Jan. 1997 = 100 Euro/$ Exchange Rate (right axis) Source: Federal Reserve Board

16. Inflation*Year/Year Percent Change CPI Core CPI *Consumer Price Index Source: Bureau of Labor Statistics

17. Credit Markets and Interest Rates

18. Federal Funds Target Rate Percent Source: Federal Reserve Board

19. 3-Month LIBOR-3-Month Overnight Index Swap Rate Spread Basis Points Source: Financial Times, Bloomberg

20. One Year LIBOR-One Year Treasury Spread Basis Points Source: Financial Times, Federal Reserve Board

21. Seasoned Baa Corporate Bond Yields – 10-Year Treasury Spread Basis Points Source: Federal Reserve Board, Moody’s

22. Month/Month Percent Change in Consumer Credit Source: Federal Reserve Board

23. Commercial Paper Outstanding $Bil – Seasonally Adjusted Source: Federal Reserve Board

24. 30-Year FRM-10-Year Treasury Spread Basis Points Source: Federal Reserve Board

25. Current Coupon Fannie Mae MBS – 10-Year Treasury Spread Basis Points Source: Federal Reserve Board, Merrill Lynch

26. Senior Loan Officer Opinion Survey, July 2008 Net Percentage of Responding Banks Tightening Credit Standards for Residential Mortgage Loans Source: Federal Reserve Board

27. The Housing Market

28. The water in the swimming pool is currently dangerously high No Lifeguard on Duty! Swim at Your Own Risk! Foreclosures New housing completions Existing homes Condo conversions Months’ Supply 10 Normal Fill Level 6 Destruction Apartment conversions New home sales Existing home withdrawals Existing home sales 0

29. Housing StartsSeasonally Adjusted Annual Rate Thousands of Units Single-family Multifamily Source: Census Bureau

30. Single-Family Housing Starts and PermitsSeasonally Adjusted Annual Rate Thousands of units starts permits Source: Census Bureau

31. Year/Year Percent Change in Number of Households Source: Census Bureau

32. New Single-family Home SalesSeasonally Adjusted Annual Rate Thousands of Units Source: Census Bureau

33. Existing Single-family Home SalesSeasonally Adjusted Annual Rate Thousands of Units Source: National Association of REALTORS®

34. Supply of New Single-family Homes on the Market Thousands of Units, SA Months Inventory on the Market End-of-Month (right axis) Months’ Supply (left axis) Source: Census Bureau

35. Supply of Existing Single-family Homes on the Market Thousands of Units, SA Months Inventory on the Market End-of-Month (right axis) Months’ Supply (left axis) Source: National Association of REALTORS®

36. Case-Shiller National Home Price Index vs.OFHEO House Price IndexYear/Year Percent Change Case-Shiller OFHEO Source: Standard & Poors, OFHEO

37. NAHB Housing Market Index Index When all respondents answer "good", the index is 100. If all respondents answer "poor", the index is 0. If equal numbers of respondents answers "good" and "poor", the index is 50. Source: National Association of Home Builders

38. Real Estate Finance

39. Percent of All Mortgages Past Due But Not in ForeclosureSeasonally Adjusted Source: Mortgage Bankers Association

40. Percent of All Mortgages Foreclosure StartedSeasonally Adjusted Source: Mortgage Bankers Association

41. Foreclosures Started as Percent of All Mortgages: 2008:Q2 Confidential - Internal Distribution Source: Mortgage Bankers Association Serious Delinquency Survey

42. Nonfarm Payroll Employment vs. Mortgage Delinquencies Year/Year Percent Change Nonfarm Payroll Employment (left axis) Percent of Mortgages That Are Delinquent Excluding Foreclosure Inventory (right axis) Sources: Bureau of Labor Statistics and Mortgage Bankers Association

44. Ratio of Foreclosures Started to All Mortgages Past DueSeasonally Adjusted – Four-quarter rolling average Percent Source: Mortgage Bankers Association, Fannie Mae calculations

45. 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, and are subject to change without notice. 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. 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.