Steve Scranton, Chief Investment Officer at Washington Trust Bank, gave an economic update presentation at the Good Morning Greater Spokane program on May 10, 2013.

1. Good Morning Greater
Spokane
Economic Update
Steve Scranton, CFA
Chief Investment Officer
Washington Trust Bank

2. Why Continued Slow Economic
Growth?
-10
-8
-6
-4
-2
0
2
4
6
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Real Gross Domestic Product
(GDP Annualized Change from Preceding Quarter)

3. Slow Wage Growth Has Led To…
-3.00%
-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
Mar-07
Jun-07
Sep-07
Dec-07
Mar-08
Jun-08
Sep-08
Dec-08
Mar-09
Jun-09
Sep-09
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
Year-Over-Year Real Wage Growth

4. …Drawing Down Savings, Which Has
Led To……
0
1
2
3
4
5
6
7
8
9
Dec-2007
Feb-2008
Apr-2008
Jun-2008
Aug-2008
Oct-2008
Dec-2008
Feb-2009
Apr-2009
Jun-2009
Aug-2009
Oct-2009
Dec-2009
Feb-2010
Apr-2010
Jun-2010
Aug-2010
Oct-2010
Dec-2010
Feb-2011
Apr-2011
Jun-2011
Aug-2011
Oct-2011
Dec-2011
Feb-2012
Apr-2012
Jun-2012
Aug-2012
Oct-2012
Dec-2012
Feb-2013
Personal Savings Rate

5. …Slower Consumer Spending
-20.00%
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
Dec-07
Feb-08
Apr-08
Jun-08
Aug-08
Oct-08
Dec-08
Feb-09
Apr-09
Jun-09
Aug-09
Oct-09
Dec-09
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
Dec-10
Feb-11
Apr-11
Jun-11
Aug-11
Oct-11
Dec-11
Feb-12
Apr-12
Jun-12
Aug-12
Oct-12
Dec-12
Feb-13
Retail Sales
YOY Change

6. Employment is Slowly Recovering…
124000
126000
128000
130000
132000
134000
136000
138000
140000
Jan-2007
Mar-2007
May-2007
Jul-2007
Sep-2007
Nov-2007
Jan-2008
Mar-2008
May-2008
Jul-2008
Sep-2008
Nov-2008
Jan-2009
Mar-2009
May-2009
Jul-2009
Sep-2009
Nov-2009
Jan-2010
Mar-2010
May-2010
Jul-2010
Sep-2010
Nov-2010
Jan-2011
Mar-2011
May-2011
Jul-2011
Sep-2011
Nov-2011
Jan-2012
Mar-2012
May-2012
Jul-2012
Sep-2012
Nov-2012
Jan-2013
Mar-2013
U.S. Non-Farm Payrolls

7. …But Fewer Citizens Have Jobs
61.5
62
62.5
63
63.5
64
64.5
65
65.5
66
66.5
67
Jan-07
Mar-07
May-07
Jul-07
Sep-07
Nov-07
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
Jul-12
Sep-12
Nov-12
Jan-13
Mar-13
Labor Participation Rate

8. The Myth of The Baby Boomers
Causing the Drop in the Labor Force
0
5000
10000
15000
20000
25000
30000
35000
40000
(000's)
Month
Change in Civilian Labor Force
16-17 18-19 20-24 25-34 35-44 45-54 55+

9. Focus on Jobs Creation

10. Spokane Does Not Necessarily
Reflect the U.S.

11. Consumer Spending is Trending Up….
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
Spokane YOY Growth
Retail Sales

12. …Because Our Wage Mix Has Changed
• Job losses since 2011
Category Average Salary
– Retail trade $27,537
– Leisure/hospitality $16,101
– Doug Tweedy, Labor Economist, Employment Security Department, State of Washington

13. Our Wage Mix Has Changed
• Job gains since 2011
Category Average Salary
– Financial Service $60,883
– Professional, Scientific and Tech $49,378
– Manufacturing $48,601
– Health Care $44,022
– Doug Tweedy, Labor Economist, Employment Security Department, State of Washington

14. Jobs Creation is Still the Challenge
185.0
190.0
195.0
200.0
205.0
210.0
215.0
220.0
225.0
Jan-07
Mar-07
May-07
Jul-07
Sep-07
Nov-07
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
Jul-12
Sep-12
Nov-12
Jan-13
Mar-13
Spokane Non-Farm Payroll

15. Conclusions
• Expect 1-3% economic growth to continue
• Expect low interest rates to continue until
economy strengthens or inflation moves
above 2.5%
• Avoid “Puget Sound” envy!