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Goldman

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  • 1. 美国经济分析 Issue No: 10/22 2010 年 6 月 4 日 研究报告 高华全球经济研究网站 经济研究来自高华客户网 房价尚未触底 继早些时候大幅下跌之后,房价于 2009 年初企稳,售租比回到了“正常”水平。但 房价已经企稳 … 是与此同时,政府地产政策带来的临时提 Index Index 振作用消退在即,而该领域仍然受到供应 350 350 过剩和贷款违约率较高(显然仍在上升) House Price Indices: Case-Shiller Jan Hatzius 的困扰。 FHFA Index jan.hatzius@gs.com 300 Loan Perf ormance 300 212 902 0394 为了分析这些负面因素可能对未来房价造 成的影响,我们建立了一个包含 20 个城 Ed McKelvey 市区域的模型。我们得到的结果显示,房 ed.mckelvey@gs.com 250 250 212 902 3393 价格局取决于以下因素:(1) 价格走势, (2) 售租比,(3) 贷款违约率变动,(4) 按 Alec Phillips 揭利率,(5) 过剩供应,(6) 包括政府对房 200 200 alec.phillips@gs.com 地产市场政策在内的临时性因素。 202 637 3746 鉴于房地产市场供应过剩而且违约率上 Andrew Tilton 升,我们的模型表明,涵盖 20 个城市的 150 150 00 02 04 06 08 10 andrew.tilton@gs.com Case-Shiller 房价指数明年将下降 3%, 212 357 2619 后年进一步下降 1%。 Source: S&P, Fiserv, & MacroMarkets LLC. LoanPerf ormance. FHFA. Sven Jari Stehn 我们的模型预计,由于房屋空置率较高和 … 但过剩供应依然较高,违约率仍在上升 jari.stehn@gs.com /或贷款违约率上升,拉斯维加斯、西雅 Percent Percent 212 357 6224 图及波特兰的房价降幅最大。相反,我们 3.0 11 David Kelley 预计克利夫兰、明尼阿波利斯、圣地亚 10 david.kelley@gs.com 哥、旧金山等地的房价将温和上涨。 9 212 902 3053 2.5 5 月份的就业数据不及预期,除人口普查 8 Maria Acosta-Cruz 临时性岗位以外的非农就业人口仅增长了 maria.acosta- 21,000 人。即使我们将这一数字与 4 月 7 cruz@gs.com 份非常强劲的 223,000 人进行平均(鉴于 2.0 6 212 902 6709 过去两个月的差异较大,进行平滑处理可 5 能较为合理),就业市场仍然没有出现显 著较好的“乘数”效应。我们仍然预计 1.5 4 2010 年下半年实际 GDP 增长将放缓至 Homeowner V acancy Rate (lef t) 3 1½%。 Mortgage Delinquency Rate (right) 1.0 2 90 92 94 96 98 00 02 04 06 08 10 Source: Department of Commerce. Mortgage Banker's Association. 重要信息披露见本报告最后部分
  • 2. US Economics Analyst Issue No: 10/22 June 4, 2010 Research Report Gao Hua Economics Research at https://portal.ghsl.cn House Prices Have Not Bottomed Yet Following their sharp earlier decline, house House Prices Have Stabilized … prices have stabilized since early 2009 and Index Index valuations have returned to “normal” levels. 350 350 House Price Indices: Jan Hatzius But at the same time, temporary boosts from Case-Shiller jan.hatzius@gs.com government housing policies are fading and FHFA Index 212 902 0394 the housing market remains plagued by 300 Loan Perf ormance 300 excess supply and high—and apparently still Ed McKelvey rising—mortgage delinquencies. ed.mckelvey@gs.com 250 250 212 902 3393 To gauge what these opposing forces might imply for future house prices, we construct a Alec Phillips model for a panel of 20 metro areas. Our 200 200 alec.phillips@gs.com results show that house price dynamics are 202 637 3746 explained by (1) price momentum, (2) price/rent valuations, (3) the change in 150 150 Andrew Tilton mortgage delinquencies, (4) the mortgage 00 02 04 06 08 10 andrew.tilton@gs.com 212 357 2619 rate, (5) excess supply and (6) temporary Source: S&P, Fiserv, & MacroMarkets LLC. LoanPerf ormance. FHFA. factors, including the government housing Sven Jari Stehn policies. … But Excess Supply Remains Huge jari.stehn@gs.com and Delinquencies Are Still Rising Given the excess supply in the housing 212 357 6224 Percent Percent market and rising delinquencies, our model 3.0 11 David Kelley suggests that the composite 20-city Case- 10 david.kelley@gs.com Shiller index will fall by 3% over the next 212 902 3053 year and another 1% over the following year. 2.5 9 Our model projects the biggest price declines 8 Maria Acosta-Cruz maria.acosta-cruz@gs.com in Las Vegas, Seattle and Portland, due to 7 212 902 6709 high homeowner vacancy rates and/or rising 2.0 6 mortgage delinquencies. Conversely, we expect modest house price gains in 5 Cleveland, Minneapolis, San Diego and San 1.5 4 Francisco. Homeowner Vacancy Rate (lef t) 3 The May employment report was a Mortgage Delinquency Rate (right) 1.0 2 disappointment, with nonfarm payrolls 90 92 94 96 98 00 02 04 06 08 10 excluding temporary Census jobs rising just Source: Department of Commerce. Mortgage Banker's Association. 21,000. Even if we average this figure with the much sturdier gain of 223,000 seen in April—smoothing may be warranted given some unusual quirks in the last two reports—there are as yet few signs of substantial positive “multiplier” effects in the labor market. We continue to expect a slowdown in real GDP growth to 1½% in the second half of 2010. Important disclosures appear at the back of this document.
  • 3. GS Global ECS US Research US Economics Analyst I. House Prices Have Not Bottomed Yet Following their earlier collapse, house prices appear caught in a cross current. On the one hand, there are Exhibit 1: House Prices Have Stabilized indications that prices may have bottomed. While Index Index alternative house price indices differ in details, they 350 350 generally show that house prices have stabilized since House Price Indices: Case-Shiller early 2009 (Exhibit 1). Second, measures of valuation FHFA Index appear to be back in “normal” territory (Exhibit 2). 300 Loan Perf ormance 300 The Case-Shiller price/rent ratio—which stood nearly 25% above its long-run value in early 2006—is now broadly in line with its historical average. Housing affordability—measured as the percent of income 250 250 spent on mortgage principal and interest—has also improved noticeably during this period. 200 200 Other indicators, however, point to further house price declines. First, much of the stabilization of house prices since early 2009 appears due to government housing policies, including (1) the homebuyer tax 150 150 00 02 04 06 08 10 credit, (2) the Fed’s purchase of mortgage-backed Source: S&P, Fiserv, & MacroMarkets LLC. LoanPerf ormance. FHFA. securities and (3) temporary mortgage modifications through the Obama administration’s Home Affordable Mortgage Program. We have estimated that these Exhibit 2: Valuations and Affordability Have housing policies have temporarily boosted house Improved prices by around 5%.1 Second, the housing market Percent deviation f rom hist. avg 60 Index 25 remains plagued by enormous excess supply (Exhibit 3). Despite recent improvements, both the homeowner 50 vacancy rate and the months’ supply of single-family 40 homes for sale remain well above historical levels. 30 20 Third, the mortgage market remains troubled. Mortgage delinquencies have continued to rise from 20 their already elevated levels (Exhibit 3). 10 0 15 Given these cross currents, how should we expect house prices to develop over the next one or two -10 years? Our working assumption has been for a -20 Home Price/Rent Ratio (lef t)* renewed 5% drop in the national Case-Shiller index NAR Housing Af f ordability (right) between end-2009 and end-2010, and we already saw -30 10 90 92 94 96 98 00 02 04 06 08 10 a 1.3% decline in the first quarter.2 In this comment *Home prices is Case Shiller, spliced with FHLMC bef ore 1987. Rent is we present results from a new house price model owner's equivalent rent, spliced with residential rent bef ore 1983. suggesting that the remaining decline could stretch out Source: S&P, Fiserv, and MacroMarkets LLC. FHLMC. Dept. of Labor. over a somewhat longer time period. Specifically, the model points to declines of 3% over the next year and more data with longer time series are available.3 another 1% over the following year as excess supply However, we believe that the housing market is and rising mortgage delinquencies take their toll. characterized by sufficient regional variation to warrant a more disaggregated approach. Exhibit 4, for Modeling House Prices example, shows very different house price Our house price model is constructed as follows. First, developments in the three largest US metropolitan we choose to model house prices at the metro area areas. level. Most house price models have focused on forecasting aggregate prices at the national level, as Second, we decide to focus on the Case-Shiller house price index. Of the three most prominent house price 1 See “Housing Policies and Home Prices: A Big Boost,” US Economics Analyst 09/42, October 23, 3 See, for example, Vladimir Kluev, 2008, “What goes 2009. up must come down”, IMF WP/08/187, or Joshua 2 See “10 Questions for 2010”, US Economics Analyst Gallin, 2003, “The long-run relationship between 09/52, December 31, 2009. house prices and income”, FRB. Issue No: 10/22 2 June 4, 2010
  • 4. GS Global ECS US Research US Economics Analyst Exhibit 3: But Excess Supply is Huge and Exhibit 4: House Price Dynamics Display Delinquencies Are Still Rising Substantial Regional Variation Percent Percent Index Index 3.0 11 290 290 Regional Case-Shiller 10 Home Price Index: Los Angeles 9 2.5 240 Chicago 240 8 New York 7 2.0 190 190 6 5 1.5 140 140 4 Homeowner Vacancy Rate (lef t) 3 Mortgage Delinquency Rate (right) 1.0 2 90 90 90 92 94 96 98 00 02 04 06 08 10 00 01 02 03 04 05 06 07 08 09 10 Source: Department of Commerce. Mortgage Banker's Association. Source: S&P, Fiserv, and MacroMarkets LLC. indices, the Federal Housing Finance Agency (FHFA) In selecting our specification we aim for a model that index is least desirable as it covers only transactions describes house prices well both before and after the involving agency-backed mortgages and our previous collapse of the bubble. When estimated for the full statistical work has shown that the Case-Shiller index sample until 2010, our model does a decent job at is the better index at the regional level, containing capturing the turning point in 2006. However, the more useful information for future house price model is less successful at predicting the 2006 house appreciation.4 While the Loan Performance house price decline when estimated with data through 2005. price index (excluding distressed sales) is desirable in principle, too short a history is available at the metro Key House Price Determinants level to build a panel model. We identify six house price determinants (Exhibit 5): We therefore construct a quarterly model of the Case- 1.Persistence. Lagged house price appreciation is Shiller house price indexes for a panel of the 20 statistically significant with a sizable coefficient, largest US metropolitan areas for the period spanning confirming the existence of short-term momentum from 1997Q1 until 2010Q1. Whenever possible we in house prices. All else equal, a 1% price use data at the metro area level; when insufficient data decrease over four quarters is typically followed are available we either proxy the metro-area variable by another ½% fall one year later. with the corresponding state data (for existing home sales and mortgage delinquencies) or use national data 2.Price/rent valuation. We find a strongly negative when no state-level data are available (for months’ effect from “overvaluation” on future house supply of houses for sale and the mortgage rate). prices. All else equal, a 1 percentage point increase in the price/rent ratio lowers house prices Our model explains current house price appreciation by 0.2% after four quarters and by a full by past price changes and a number of lagged percentage point eight quarters later. explanatory variables.5 Although this approach does not allow for rich quarter-to-quarter dynamics, it 3.Excess supply. A one-percentage point increase in permits us to forecast future house prices with current the homeowner vacancy rate lowers house prices values of the explanatory variables without the need to by 1.8% four quarters later (and 5.4% after eight project data at the metro-area level. We run separate quarters), while a one-point increase in the models to project house prices four and eight quarters months’ supply of homes for sale lowers house ahead. To allow for structural differences in house prices by 1.4% four quarters later. A higher price dynamics across metro areas, we include fixed volume of existing home sales raises prices, as effects in our panel. excess supply is reduced. 4 See “Home Prices and Credit Losses: Projections and Policy Options”, Global Economics Paper 177, January 31, 2009. 5 This approach follows our previous work, see above. Issue No: 10/22 3 June 4, 2010
  • 5. GS Global ECS US Research US Economics Analyst Exhibit 5: House Price Determinants Exhibit 6: House Price Projections Forecast for: % Change in: 4Q 8Q 4Q 8Q 1. Persistence Atlanta -5 -1 Lagged Dependent Variable 0.5 0.6 Boston -1 0 Chicago -5 -10 2. Valuation Charlotte -5 -10 Price/Rent Ratio -0.2 -1.0 Cleveland -1 7 3. Excess capacity Dallas -1 1 Homeowner Vacancy Rate -1.8 -5.4 Denver 0 4 Months' House Supply -1.4 - Detroit -4 0 Existing Home Sales Growth 0.1 0.2 Las Vegas -12 -6 4. Mortgage Market Los Angeles -2 -1 Change in Delinquencies -3.2 -5.0 Miami 0 -3 Mortgage Rate -1.7 -7.2 Minneapolis 1 3 R-Squared 0.85 0.82 New York -4 -9 Number of Observations 1040 956 Portland -4 -12 Note: Dummies for 09Q3-10Q1 not reported. Phoenix -5 -10 All variables sign. at 1%. Area fixed effects included. Source: Our calculations. San Diego 0 5 San Francisco 2 3 4.Mortgage delinquencies. Rising delinquencies have Seattle -8 -22 a negative effect, lowering house prices by 3.2% after four quarters and 5% after eight quarters for Tampa -1 2 a one percentage point increase in the delinquency Wash. DC 1 -5 rate. CS 20 -2.6 -3.5 5.Mortgage rates. Higher borrowing costs also have Source: Our calculations. significantly negative effects on house prices, lowering prices by 1.7% after four quarters for home vacancy rates and steeply rising delinquencies every 100 basis points of nominal mortgage rate are expected to push down prices in all three areas, increases. some interesting differences emerge. Price declines in Las Vegas are projected to be front loaded, as negative 6.Temporary factors. To control for the effects of the price momentum and excess supply lead to near-term housing components of the fiscal stimulus bill, we price declines, before valuation undershoots include dummy variables for the period from sufficiently to push up prices. For Seattle and 2009Q2 to 2010Q1, which suggest that housing Portland, the model projects back-loaded price policies—including the homebuyer tax credit— declines as house prices currently look overvalued. have provided substantial support to house prices during this period (details not shown). The model projects the largest house price appreciation in Cleveland, Minneapolis, San Diego Prices Have Not Bottomed Yet and San Francisco. None of these areas suffers from sharply rising delinquency rates or high vacancy rates Given the excess supply in the housing market and (except Cleveland). In addition, house prices in rising delinquencies, our model suggests that the Cleveland appear undervalued and San Diego/San composite 20-city Case-Shiller index will fall by Francisco benefit from positive price momentum. about 3% over the next year and another 1% over the following year. This projection is weaker than the Our conclusion: Despite normalization of valuations, current consensus forecast of a 0.4% drop in the we expect excess supply, high delinquencies and the national Case-Shiller index in 2010 followed by a fading boost from housing policies to push down 1.6% increase in 2011. house prices somewhat further in 2010 and 2011. We predict the largest house price declines for Las Vegas, Seattle and Portland (Exhibit 6). While high Sven Jari Stehn Issue No: 10/22 4 June 4, 2010
  • 6. GS Global ECS US Research US Economics Analyst II. Will the “Multiplier” Overcome the H2 Headwinds? We expect real GDP growth to slow to just 1½% in May, with both moves due to changes in the labor (annualized) in the second half of 2010. This forecast force rather than changes in employment. Average is based on two main considerations. hourly earnings surprised on the downside in April and on the upside in May. Given these largely First, with inventories growing at a $34 billion offsetting moves, one might want to look at the (annualized) pace in the first quarter, the inventory average over two months to get a better read on cycle is probably close to complete. The pace of underlying labor market developments. Such an inventory accumulation might accelerate a bit further averaging shows an increase in nonfarm payrolls from here, but probably not by very much. This (excluding Census workers) of 122,000 per month, a means that the growth rate of real GDP is likely to flat unemployment rate, and a 0.2% increase in converge to that of real final demand. average hourly earnings. Second, real final demand itself has grown at just a But while it would be a mistake to read a renewed 1½% pace since the middle of 2009. Our baseline downturn into the report, what it does show is that forecast is for little change in this trend in the second there has not yet been much of a “multiplier” effect half of 2010. This is because we believe that the working through the labor market so far. Employment “headwinds”—the loss of the federal fiscal stimulus at is growing, but so far it is only growing at a 100,000 a time of ongoing state and local cutbacks, a renewed to 150,000 pace. This is sufficient to keep the downturn in home sales and residential investment unemployment rate stable and absorb most of the new following the expiration of the homebuyer tax credit, entrants into the labor force, but it is nowhere near the and the tightening of financial conditions in the wake 300,000+ pace which would be required to push the of the European troubles—will weigh on final demand unemployment rate down rapidly, implied by the growth even as the domestic economy heals from the experience of past cyclical labor market recoveries— after-effects of the bursting of the housing and credit and ultimately necessary to offset the “headwinds” bubble. and keep GDP growth from slowing to a below-trend pace in the second half of the year. Perhaps the most important way in which our forecast could prove too pessimistic is via a much stronger To be sure, there are few signs of a material slowdown “multiplier” effect from the improvement in the labor in output growth just yet. First, while employment market (which itself resulted from the earlier impulse growth fell short of expectations, the index of private- to growth from the inventory cycle and the fiscal sector hours worked registered a 0.3% increase in stimulus in the second half of 2009). If so, final May and is on track for a 4.0% (annualized) increase demand might accelerate from the sluggish pace seen in the second quarter as a whole. Second, surveys of in the recovery so far, and this might keep real GDP purchasing managers continue to point to good near- growth stronger than we are forecasting. This is why term growth, with both the manufacturing and new information about the performance of the labor nonmanufacturing ISM index holding at or near cycle market is even more important at this stage of the highs in May. Third, our “tracking” of the monthly business cycle than normally. data suggests that the risks to our 3% estimate for second-quarter GDP growth are tilted somewhat to the In this regard, the May employment report was a upside. disappointment. Job gains outside the hiring of temporary Census workers totaled just 21,000, and the But despite all this, we expect slower growth in household measure of employment dropped 35,000. subsequent quarters as the labor market “multiplier” These figures contrast quite sharply with the keeps the economy growing but is insufficient to boost improving trend seen in both the establishment final demand growth sufficiently in the face of the (payroll) survey and the household survey through the fiscal, housing, and European headwinds. April report. Jan Hatzius How serious is this disappointment? In our view, it would be premature to conclude that the recovery is stalling or even giving way to a renewed recession. All economic data are noisy, and it is striking just how much the May employment report looks like the mirror image of the April report. Payroll gains surprised on the upside in April, and on the downside in May. The unemployment rate rose in April but fell Issue No: 09/12 5 March 27, 2009
  • 7. GS Global ECS US Research US Economics Analyst III. Forecast Highlights 1. The recovery is moderating. Fiscal stimulus funds rate target—even from its near-zero current (including its multiplier effects) and stabilization in setting—until they see meaningful evidence of inventories accounted for all of the nearly 4% sustained improvement in labor market conditions (a annualized growth reported for the second half of substantial trend in payroll growth at a minimum, and 2009. These supports will have dissipated by the preferably clear signs that unemployment is falling). second half of 2010; meanwhile, the US economy This is especially true if our outlook for further faces several structural headwinds. Among them: (a) disinflation is right. Until that evidence starts to weakness in labor income, reflecting the impact of accumulate, we expect the FOMC’s strong high unemployment on wages and employers’ commitment to low interest rates to remain intact and reluctance to rehire aggressively, (b) fiscal drag from we do not anticipate a major effort to drain reserves. the state and local sector, (c) large overhangs of vacant homes and unused industrial capacity, which 5. Treasury yields are likely to remain low. The limit the potential for major improvements in private- financial market turmoil in the wake of the European sector investment, (d) limited credit availability from a crisis has pushed down Treasury yields sharply to just financial sector that is still on the mend, and (e) a hit above 3%. But even from a more fundamental of uncertain size from the European crisis. As a perspective, we do not expect much upward pressure result, we expect growth to slow gradually to an on yields. The increase in Treasury supply is less annual rate of 1½% in the second half of 2010 before important for bond yields than many investors believe, reaccelerating in 2011. for two reasons. First, increased saving by households   and businesses creates potential demand for Treasury 2. We expect unemployment to drift sideways in a securities and reduces the competition for lenders’ 9½%-10% range through the end of 2011. We think funds. Second, the Treasury’s auction schedule for the “jobless recovery” pattern of the 1991-92 and coupon securities is now more than adequate to meet 2001-03 recoveries provides a better template for funding needs over the next few years. In fact, the corporate hiring decisions over the next year or two latest set of refunding questions from the Treasury than the more robust payroll rebounds of earlier suggests that some reduction in supply may be at cycles. If our cautious view on the labor market is hand. Hence, we expect Treasury yields to end 2010 correct, then net hiring will not absorb all of the influx at 3¼% and rise only moderately in 2011. into the labor force that is apt to occur over the next year and a half, and the unemployment rate will drift sideways during this period. We should note that these comments abstract from the effects of federal hiring for the decennial census, which has now peaked and will subtract a cumulative 564,000 from payrolls in coming months. 3. Disinflation continues. Although highly expansionary fiscal and monetary policies have caused many market participants to worry intermittently about inflation, these concerns miss the point that the policies have been undertaken to combat a large gap between actual and potential output. Under any reasonable economic scenario, this gap—estimated at 6.5% of GDP as of year-end 2009 by the Congressional Budget Office—will require years of above-trend growth to eliminate. Accordingly, we expect the core consumer inflation measures—already below the Federal Open Market Committee’s (FOMC’s) long-range central tendency ranges—to trend down further, falling close to 0% by late 2011. 4. We expect no monetary tightening before 2012. The outlook for Fed policy hinges on what the recovery—however strong it turns out to be—means for the labor market and inflation. We think most members of the FOMC will be reluctant to raise the Issue No: 10/22 6 June 4, 2010
  • 8. GS Global ECS US Research US Economics Analyst THE US ECONOMIC AND FINANCIAL OUTLOOK (% change on previous period, annualized, except where noted) 2009 2010 2011 2010 2011 (f) (f) (f) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 OUTPUT AND SPENDING Real GDP 3.0 3.0 1.5 1.5 2.5 3.0 3.5 3.5 Year-to-year change -2.4 2.9 2.5 2.5 3.4 3.3 2.3 2.1 2.1 2.6 3.1 Consumer Expenditure -0.6 2.3 2.3 3.5 2.5 2.0 2.0 2.5 2.5 2.5 2.5 Residential Fixed Investment -20.5 -0.3 8.4 -10.7 15.0 -10.0 0.0 10.0 15.0 20.0 20.0 Business Fixed Investment -17.8 1.0 3.4 3.1 2.5 1.0 1.0 2.5 5.0 7.5 7.5 Industrial Production, Mfg -11.3 5.8 5.1 6.2 10.0 5.0 4.0 4.5 5.0 5.5 5.5 INFLATION Consumer Price Index 1.5 0.8 0.8 0.5 0.5 0.5 0.5 0.5 Year-to-year change -0.3 1.7 0.6 2.4 2.2 1.4 0.9 0.7 0.6 0.5 0.5 Core Indexes (% chg, yr/yr) CPI 1.7 0.8 0.2 1.3 0.9 0.7 0.4 0.4 0.2 0.1 0.0 PCE* 1.5 1.1 0.4 1.4 1.1 1.0 0.7 0.6 0.4 0.3 0.3 Unit Labor Costs (% chg, yr/yr) -1.9 -1.5 0.6 -4.2 -2.7 -0.3 1.2 1.3 0.6 0.3 0.4 LABOR MARKET Unemployment Rate (%) 9.3 9.7 9.8 9.7 9.7 9.6 9.8 9.9 9.9 9.8 9.7 FINANCIAL SECTOR Federal Funds** (%) 0.12 0.15 0.15 0.16 0.15 0.15 0.15 0.15 0.15 0.15 0.15 3-Month LIBOR (%) 0.25 0.80 1.00 0.27 0.70 0.70 0.80 0.70 0.75 0.85 1.00 Treasury Yield Curve** (%) 2-Year Note 0.87 0.90 2.00 0.96 0.75 0.75 0.90 1.00 1.25 1.50 2.00 5-Year Note 2.34 2.20 3.00 2.43 2.25 2.20 2.20 2.35 2.50 2.75 3.00 10-Year Note 3.59 3.25 4.00 3.73 3.50 3.25 3.25 3.50 3.50 3.75 4.00 Profits*** (% chg, yr/yr) -6.9 12.4 13.8 23.8 12.5 7.5 7.5 10.0 12.5 15.0 17.5 _ _ _ _ _ _ _ _ Federal Budget (FY, $ bn) -1,414 -1,575 -1,396 FOREIGN SECTOR Current Account (% of GDP) -2.9 -3.4 -3.1 -3.5 -3.5 -3.4 -3.3 -3.2 -3.1 -3.1 -3.0 Exchange Rates Euro ($/€)** 1.46 1.35 1.35 1.36 1.35 1.35 1.35 1.35 1.35 1.35 1.35 Yen (¥/$)** 90 96 98 91 92 94 96 98 98 98 98 * PCE = Personal consumption expenditures. ** Denotes end of period. *** Profits are after taxes as reported in the national income and product accounts (NIPA), adjusted to remove inventory profits and depreciation distortions. NOTE: Published figures are in bold We, Jan Hatzius, Ed McKelvey, Alec Phillips, Andrew Tilton and Sven Jari Stehn hereby certify that all of the views expressed in this report accurately reflect personal views, which have not been influenced by considerations of the firm’s business or client relationships. Global product; distributing entities The Global Investment Research Division of Goldman Sachs produces and distributes research products for clients of Goldman Sachs, and pursuant to certain contractual arrangements, on a global basis. Analysts based in Goldman Sachs offices around the world produce equity research on industries and companies, and research on macroeconomics, currencies, commodities and portfolio strategy. This research is disseminated in Australia by Goldman Sachs JBWere Pty Ltd (ABN 21 006 797 897) on behalf of Goldman Sachs; in Canada by Goldman Sachs & Co. regarding Canadian equities and by Goldman Sachs & Co. 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  • 9. General disclosures This research is disseminated in China by Gao Hua Securities. This research is for our clients only. This research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. We seek to update our research as appropriate, but various regulations may prevent us from doing so. Other than some industry reports published on a periodic basis, the large majority of reports are published at irregular intervals as appropriate in the analyst's judgment. Goldman Sachs Gao Hua, an affiliate of Gao Hua Securities, conducts an investment banking business. Gao Hua Securities, Goldman Sachs Gao Hua and their affiliates have investment banking and other business relationships with a substantial percentage of the companies referred to in this document. Our salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients and our proprietary trading desks that reflect opinions that are contrary to the opinions expressed in this research. Our proprietary trading desks and investing businesses may make investment decisions that are inconsistent with the recommendations or views expressed in this research. Gao Hua Securities and its affiliates, officers, directors, and employees, excluding equity analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives (including options and warrants) thereof of covered companies referred to in this research. This research is not an offer to sell or the solicitation of an offer to buy any security where such an offer or solicitation would be illegal. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Clients should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, if appropriate, seek professional advice, including tax advice. The price and value of the investments referred to in this research and the income from them may fluctuate. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Certain transactions, including those involving futures, options, and other derivatives, give rise to substantial risk and are not suitable for all investors. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments. Copyright 2010 Beijing Gao Hua Securities Company Limited No part of this material may be (i) copied, photocopied or duplicated in any form by any means or (ii) redistributed without the prior written consent of Beijing Gao Hua Securities Company Limited.
  • 10. US Calendar Focus for the Week Ahead Retail sales probably registered a decent gain in May, driven mainly by motor vehicles. Elsewhere, however, the report is apt to look weaker (June 11). Fed Chairman Ben Bernanke will make three appearances, including testimony on the federal budget and the economy before the House Budget Committee (June 7, 9). The trade deficit likely widened in April as imports seem to have grown more quickly than exports (June 10). Economic Releases and Other Events Time Estimate Date (EST) Indicator GS Consensus Last Report Mon Jun 7 8:00 NY Fed’s Potter spks at Connecticut Bank and Trust Conf 15:00 Consumer Credit (Apr) n.a. -$2.0bn +$2.0bn 17:00 SF Fed Pres Yellen spks at SF Fed Asia conference 19:55 Bernanke interviewed by Sam Donaldson, ABC News; DC Tue Jun 8 8:25 Fed Gov Duke spks at Consumer Bankers Assoc Conf; FL 9:10 Chicago Fed Pres Evans spks at Univ Club of Chicago 19:00 KC Fed Pres Hoenig spks at Fed Agricultural Symposium Wed Jun 9 10:00 Wholesale Inventories (Apr) n.a. +0.5% +0.4% 10:00 Bernanke testifies before House Budget Committee; DC 12:00 NY Fed’s Sack spks to NY Assoc of Business Economics 14:00 Fed “Beige Book” 16:00 Bernanke spks at Richmond Fed conference; VA Thu Jun 10 8:30 Trade Balance (Apr) -$42.0bn -$41.0bn -$40.4bn 8:30 Initial Jobless Claims n.a. 448,000 453,000 8:30 Continuing Claims n.a. 4,620,000 4,666,000 14:00 Federal Budget Balance (May) -$130.0bn -$140.0bn -$191.6bn Fri Jun 11 8:20 Philly Fed Pres Plosser spks on econ outlook; Altoona, PA 8:30 Retail Sales (May) +0.5% +0.2% +0.4% Ex Autos -0.1% +0.1% +0.4% 9:55 Reuters/U. Mich Consumer Sentiment—Prel (Jun) n.a. 74.6 73.6 10:00 Business Inventories (Apr) n.a +0.5% +0.4% Minn Fed Pres Kocherlakota spks in Minneapolis on the 12:00 economy Issue No: 10/22 8 June 4, 2010

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