Solid Q4 2011 Economic Growth Provides Early 2012 Momentum, but Pace
                 Expected to Slow for Remainder of the Year

           Housing Expected to Add to GDP for First Time in Seven
                   Years, Albeit by a Very Modest Amount

    The 2012 outlook is improving modestly from a disappointing 2011. Economic 
growth picked up in the fourth quarter of 2011 to 2.8 percent and is expected 
to come in at 2.3 percent for 2012, up from 1.6 percent growth for all of last 
year, according to Fannie Mae's (OTC Bulletin Board: FNMA) Economic & Strategic 
Research Group. However, the year-end growth rate was due largely to a positive 
swing in business inventory growth, which is not indicative of underlying 
consumer demand or the overall health of the economy. Nevertheless, consumer 
spending improved modestly and manufacturing and services activity expanded at 
a strong pace. Importantly, labor market conditions continued to improve with 
nonfarm payroll job growth increasing nearly 250,000 across many industries, 
including construction. The unemployment rate dropped to 8.3 percent, down from 
8.5 percent the month prior, as the large increase in employment outweighed a 
growing number of people joining the work force -- indicating a genuine 
improvement in the labor market. If we continue to see this level of positive 
data, the Group notes, the labor market may become an upside determinant for an 
improved outlook.

    Housing also showed signs of improvement late last year with existing home 
sales rising in December for the third consecutive month. Indicators point to 
some good pickup in construction of apartment buildings and modest pickup in 
single-family construction in some locations. Overall, housing is expected to 
add to gross domestic product (GDP) for the first time in seven years, albeit 
by a very modest amount. Near-term improvement in housing sales is expected to 
be quite modest due to the current very low level of sales and continued 
expected declines in home prices, which remain a challenge to the housing 
market.

    "Risks to the forecast are more balanced between the upside and downside 
since our January forecast," said Fannie Mae Chief Economist Doug Duncan. "The 
economy appears to be more resilient than in previous months, and should be 
less vulnerable to shocks, including any spillover from the European sovereign 
debt crisis. However, economic growth will remain constrained by various 
headwinds, such as a potential spike in oil prices due to tension in the Middle 
East; an expected decline in net exports from the global slowdown; and an 
expected increase in fiscal drag, including the fading of federal spending from 
the stimulus and a decline in defense spending for operations in Iraq and 
Afghanistan."

    For an audio synopsis of the February 2012 Economic Outlook, listen to the 
podcast on the Economic & Strategic Research  
[http://www.fanniemae.com/portal/research-and-analysis/emma.html? ] site at 
http://www.fanniemae.com. Visit the site to read the full February 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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    Resource Center: +1-800-732-6643

    SOURCE:  Fannie Mae

    CONTACT: Pete Bakel, +1-202-752-2034