Economy Continues to Grow, But at a Very Modest Pace According to Fannie Mae's Economics & Mortgage Market Analysis Group

Housing Bottom Proves Elusive

Economic Outlook Podcast Available

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Sep 15, 2010, 08:37 ET

WASHINGTON, Sept. 15 /PRNewswire/ -- Soft consumer spending coupled with ongoing labor market duress have precipitated downgraded growth expectations for the remainder of 2010 and most of 2011, according to the September 2010 Economic Outlook released today by Fannie Mae's (OTC Bulletin Board: FNMA) Economics & Mortgage Market Analysis Group. For all of 2010, the group expects growth to come in at 2.2 percent, before gradually strengthening modestly to 2.5 percent in 2011. Demand for housing also continues to struggle despite home price declines and drops in interest rates to generational lows, reflecting household concerns about personal finances and weak employment prospects.

"We continue to see a supply and demand imbalance in the housing sector with very low levels of sales activity. This is further delaying housing's return to normalcy," said Fannie Mae Chief Economist Doug Duncan. "At this point in the post-recession cycle, housing is usually contributing to economic growth. In our current environment, slow housing growth is detracting from overall economic growth. Very low mortgage rates are spurring refinance activity, but we don't expect low rates to boost purchase activity as long as the labor market remains weak."

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

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.

SOURCE Fannie Mae