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Economic Update by Doug Duncan Chief Economist Fannie Mae American Land Title Association October 17, 2008 Kaua’i, Hawaii.

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Presentation on theme: "Economic Update by Doug Duncan Chief Economist Fannie Mae American Land Title Association October 17, 2008 Kaua’i, Hawaii."— Presentation transcript:

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2 Economic Update by Doug Duncan Chief Economist Fannie Mae American Land Title Association October 17, 2008 Kaua’i, Hawaii

3 The Macroeconomy

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

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

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

7 Private Nonfarm Payroll Employment Year/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= Source: Wall Street Journal

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

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 Credit Cards Other Consumer Debt Percent – Seasonally Adjusted Source: Federal Reserve Board

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

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

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

17 Credit Markets and Interest Rates

18 Federal Funds Target Rate Source: Federal Reserve Board Percent

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

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

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

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 Source: Federal Reserve Board Basis Points

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

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 Normal Fill Level No Lifeguard on Duty! Swim at Your Own Risk! The water in the swimming pool is currently dangerously high Months’ Supply ForeclosuresNew housing completionsExisting homesCondo conversions Destruction New home sales Existing home sales Existing home withdrawals Apartment conversions

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

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

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

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

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

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

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

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

37 NAHB Housing Market Index Source: National Association of Home Builders 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.

38 Real Estate Finance

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

40 Percent of All Mortgages Foreclosure Started Seasonally Adjusted Source: Mortgage Bankers Association

41 Confidential - Internal Distribution Foreclosures Started as Percent of All Mortgages: 2008:Q2 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

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

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.

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