Economic Forecast - Summer 2014 NCLGBA Conference

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Economic Forecast - Summer 2014 NCLGBA Conference

  1. 1. Economic Outlook Michael Wolf, Economist July 18, 2014
  2. 2. Economics 22 -10% -8% -6% -4% -2% 0% 2% 4% 6% 8% 10% -10% -8% -6% -4% -2% 0% 2% 4% 6% 8% 10% 2000 2002 2004 2006 2008 2010 2012 2014 U.S. Real GDP Bars = CAGR Line = Yr/Yr Percent Change GDP - CAGR: Q1 @ -2.9% GDP - Yr/Yr Percent Change: Q1 @ 1.5% Forecast Gross Domestic Product Real GDP declined in the first quarter but those contractionary forces should prove to be temporary Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
  3. 3. Government
  4. 4. Economics 4 -8% -6% -4% -2% 0% 2% 4% 6% 8% 10% -8% -6% -4% -2% 0% 2% 4% 6% 8% 10% 2000 2002 2004 2006 2008 2010 2012 2014 Real Government Purchases Bars = CAGR Line = Yr/Yr Percent Change Government Purchases-CAGR: Q1 @ -0.8% Government Purchases-Yr/Yr: Q1 @ -1.5% Forecast Government Purchases The public sector has remained a weight on the overall economy but should soon move back into being a minor contributor to overall growth Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
  5. 5. Economics 5 -$1,600 -$1,400 -$1,200 -$1,000 -$800 -$600 -$400 -$200 $0 $200 $400 -$1,600 -$1,400 -$1,200 -$1,000 -$800 -$600 -$400 -$200 $0 $200 $400 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Federal Budget Surplus or Deficit 12-Month Moving Sum in Billions of Dollars Surplus or Deficit: May @ -$490 Billion U.S. Budget Deficit Deficit is shrinking, but not nearly fast enough Source: U.S. Department of the Treasury and Wells Fargo Securities, LLC
  6. 6. Economics 6 14% 16% 18% 20% 22% 24% 26% 14% 16% 18% 20% 22% 24% 26% 2013 2015 2017 2019 2021 2023 U.S. Budget Gap CBO Baseline Scenario Projections, Percent of GDP Outlays: 2024 @ 22.1% Revenues: 2024 @ 18.3% U.S. Budget Gap The larger problem is that there is still no credible plan to move back into a surplus Source: Congressional Budget Office and Wells Fargo Securities, LLC
  7. 7. Business Investment
  8. 8. Economics 8 -40% -30% -20% -10% 0% 10% 20% 30% -40% -30% -20% -10% 0% 10% 20% 30% 2000 2002 2004 2006 2008 2010 2012 2014 Real Business Fixed Investment Bars = CAGR Line = Yr/Yr Percent Change Non-Res Fixed Invest - CAGR: Q1 @ -1.2% Non-Res Fixed Invest - Yr/Yr Percent Change: Q1 @ 3.5% Forecast Business Investment Business investment also declined slightly in the beginning of the year, but all signs point to a moderate pick up in investment moving forward Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
  9. 9. Economics 9 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 U.S. Nonfin. Corporate Cash Holdings Total Assets Market Value, U.S. Nonfinancial Corporations Cash Ratio: Q1 @ 4.3% 4-Q Moving Average: Q1 @ 4.4% Corporate Cash The financial health of the corporate sector is very strong and should allow corporations to spend more going forward Source: Federal Reserve Board and Wells Fargo Securities, LLC
  10. 10. Economics 10 0% 5% 10% 15% 20% 25% 30% 35% 40% 0% 5% 10% 15% 20% 25% 30% 35% 40% 88 90 92 94 96 98 00 02 04 06 08 10 12 14 Small Business Important Problems Single Most Important Problem Facing Firms, SA 3-MMA Regulations: Jun @ 20.0% Taxes: Jun @ 23.0% Poor Sales: Jun @ 13.3% Interest Rates: Jun @ 2.3% Small Businesses Problems have shifted from fears about sales to concerns about taxes and regulation Source: National Federation of Independent Business and Wells Fargo Securities, LLC
  11. 11. Consumption
  12. 12. Economics 1212 -8% -6% -4% -2% 0% 2% 4% 6% 8% -8% -6% -4% -2% 0% 2% 4% 6% 8% 2000 2002 2004 2006 2008 2010 2012 2014 Real Personal Consumption Expenditures Bars = CAGR Line = Yr/Yr Percent Change PCE - CAGR: Q1 @ 1.0% PCE - Yr/Yr Percent Change: Q1 @ 2.0% Forecast Personal Consumption Expenditures Consumption should rebound during the forecast period but growth is likely to remain somewhat subdued Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
  13. 13. Economics 13 -1,000 -800 -600 -400 -200 0 200 400 600 -1,000 -800 -600 -400 -200 0 200 400 600 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Nonfarm Employment Change Change in Employment, In Thousands Monthly Change: Jun @ 288K Employment Total employment finally breached its prerecession peak… Source: U.S. Department of Labor and Wells Fargo Securities, LLC
  14. 14. Economics 14 2% 4% 6% 8% 10% 12% 14% 16% 18% 2% 4% 6% 8% 10% 12% 14% 16% 18% 94 96 98 00 02 04 06 08 10 12 14 Unemployment Rates Seasonally Adjusted U-6 Unemployment Rate: Jun @ 12.1% U-3 Unemployment Rate: Jun @ 6.1% Unemployment …but the unemployment rate overstates the health of the labor market. Discouraged workers and an abundance of part-time work rein in spending Source: U.S. Department of Labor and Wells Fargo Securities, LLC
  15. 15. Economics 15 1% 2% 3% 4% 1% 2% 3% 4% 2002 2004 2006 2008 2010 2012 2014 Employment Cost Index Year-over-Year Percent Change Wages and Salaries: Q1 @ 1.6% Total Compensation: Q1 @ 1.8% Wages and Salaries In addition, wage growth has been relatively slow to pick up, while inflation begins to pull away Source: U.S. Department of Labor and Wells Fargo Securities, LLC
  16. 16. Economics 1616 -15% -12% -9% -6% -3% 0% 3% 6% 9% 12% -15% -12% -9% -6% -3% 0% 3% 6% 9% 12% 2000 2002 2004 2006 2008 2010 2012 2014 Real Disposable Personal Income Bars = CAGR Line = Yr/Yr Percent Change Real Disp. Personal Inc. - CAGR: Q1 @ 1.5% Real Disp. Personal Inc. - Yr/Yr Percent Change: Q1 @ 2.3% Forecast Income Disposable income growth is also likely to remain relatively subdued in the near term. Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
  17. 17. Economics 17 40% 50% 60% 70% 80% 90% 100% 110% 120% 130% 40% 50% 60% 70% 80% 90% 100% 110% 120% 130% 60 65 70 75 80 85 90 95 00 05 10 Household Debt - Consumer & Mortgage As a Percent of Disposable Personal Income Household Debt: Q1 @ 97.9% Consumer Balance Sheet Although consumer leverage remains elevated, it is off its prerecession high Source: Federal Reserve Board, U.S. Department of Commerce and Wells Fargo Securities, LLC
  18. 18. Economics 18 9.5% 10.0% 10.5% 11.0% 11.5% 12.0% 12.5% 13.0% 13.5% 9.5% 10.0% 10.5% 11.0% 11.5% 12.0% 12.5% 13.0% 13.5% 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 Household Debt Service Ratio Debt Payments as a Percent of Disposable Personal Income DSR: Q1 @ 9.9% Debt Service Ratio And the debt service ratio has fallen to historical lows Source: Federal Reserve Board, U.S. Department of Commerce and Wells Fargo Securities, LLC
  19. 19. Economics 1919 Household Debt Rising student loan debt is crowding out other borrowing, particularly for autos and credit cards Source: Federal Reserve Board and Wells Fargo Securities, LLC 20132003 Mortgage, 70.2% Student Loans, 3.1% Auto Loans, 8.7% Credit Card, 8.7% HE Revolving, 3.7% Other, 5.6% Household Debt - 2003 Mortgage, 70.0% Student Loans, 9.1% Auto Loans, 7.5% Credit Card, 6.0% HE Revolving, 4.7% Other, 2.7% Household Debt - 2013
  20. 20. Economics 20 Consumer Related Rising equities and higher house prices have a limited effect on consumers $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 $110 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 Household Assets Trillions of Dollars Financial Assets: Q1 @ $67.2 Trillion Household Real Estate Holdings: Q1 @ $20.2 Trillion Other Tangible Assets: Q1 @ $8.2 Trillion Source: Federal Reserve Board, Bloomberg LP and Wells Fargo Securities, LLC Consumer ConfidenceHousehold Wealth 0 20 40 60 80 100 120 140 160 0 20 40 60 80 100 120 140 160 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Consumer Confidence by Household Income 1985=100; 3-Month Moving Averages Under $15,000: Jun @ 52.9 $15,000-$24,999: Jun @ 58.1 $25,000-$34,999: Jun @ 71.1 $35,000-$49,999: Jun @ 75.7 $50,000 and Over: Jun @ 105.5
  21. 21. Housing Market
  22. 22. Economics 22 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Conventional 30-Year Mortgage Rate Percent, FHLMC Fixed-Rate Mortgage Conventional 30-Year Fixed Mortg. Rate: Jul-09 @ 4.12% Mortgage Rates Although mortgage rates remain low by historical standards, the rise over last year has had a negative effect on homebuying Source: Freddie Mac and Wells Fargo Securities, LLC
  23. 23. Economics 23 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Existing Home Resales Seasonally Adjusted Annual Rate - In Millions Existing Home Sales: May @ 4.9 Million Housing Market: Existing Home Sales Existing home sales have struggled with higher mortgage rates, weaker investor demand and a particularly severe winter. Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
  24. 24. Economics 24 100 300 500 700 900 1,100 1,300 1,500 100 300 500 700 900 1,100 1,300 1,500 89 91 93 95 97 99 01 03 05 07 09 11 13 New Home Sales Seasonally Adjusted Annual Rate, In Thousands New Home Sales: May @ 504,000 3-Month Moving Average: May @ 446,333 Housing Market: New Home Sales New home sales have continued to improve, though still remain at very low levels Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
  25. 25. Economics 25 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Confidence: Plans to Buy a Home Percent of Consumers, Conference Board Plans to Buy a Home Within Six Months: Jun @ 5.4% 12-Month Moving Average: Jun @ 5.7% Home Purchase Expectations Weak home sales have suffered from a lack of traditional homebuyer demand while investors have dropped out simultaneously Source: The Conference Board and Wells Fargo Securities, LLC
  26. 26. Economics 26 -32% -24% -16% -8% 0% 8% 16% 24% -32% -24% -16% -8% 0% 8% 16% 24% 96 98 00 02 04 06 08 10 12 14 Home Prices Year-over-Year Percentage Change Median Sale Price: May @ $213,600 Median Sales Price 3-M Mov. Avg.: May @ 5.3% FHFA (OFHEO) Purchase Only Index: May @ 5.6% S&P Case-Shiller Composite 10: Apr @ 10.8% Home Prices Home prices continue their upward trajectory, though gains have moderated considerably Source: Federal Housing Finance Agency, National Association of Realtors, S&P Corp. and Wells Fargo Securities, LLC
  27. 27. Economics 27 0.0 0.3 0.6 0.9 1.2 1.5 1.8 2.1 2.4 0.0 0.3 0.6 0.9 1.2 1.5 1.8 2.1 2.4 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 Thousands Housing Starts Millions of Units Multifamily Starts Multifamily Forecast Single-family Starts Single-family Forecast Forecast Housing Market: Residential Construction We expect residential construction to continue to advance, though a full recovery in the housing market is a long way off Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
  28. 28. North Carolina
  29. 29. Economics 29 -4% -2% 0% 2% 4% 6% 8% 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 -4% -2% 0% 2% 4% 6% 8% North Carolina Gross State Product & U.S. GDP Year-over-Year Percent Change U.S. GDP: 2013 @ 1.8% North Carolina GDP: 2013 @ 2.3% North Carolina: GDP In 2013, GDP growth in North Carolina outpaced that of the nation Source: U.S. Department of Labor and Wells Fargo Securities, LLC
  30. 30. Economics 30 91% 92% 93% 94% 95% 96% 97% 98% 99% 100% 101% 91% 92% 93% 94% 95% 96% 97% 98% 99% 100% 101% 69 73 77 81 85 89 93 97 01 05 09 13 North Carolina Employment: Percent of Previous Peak Percent Percent of Previous Peak: May @ 98.7% North Carolina: Labor Market But total employment remains below its prerecession peak Source: U.S. Department of Labor and Wells Fargo Securities, LLC
  31. 31. Economics 31 North Carolina: Labor Market A large drop in labor force participation has added to the downward momentum of the unemployment rate 60% 61% 62% 63% 64% 65% 66% 67% 68% 69% 70% 60% 61% 62% 63% 64% 65% 66% 67% 68% 69% 70% 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 Labor Force Participation Rate 3-Month Moving Averages, Seasonally Adjusted North Carolina: May @ 61.1% United States: Jun @ 62.8% Source: U.S. Department of Labor and Wells Fargo Securities, LLC UnemploymentLabor Force Participation 2% 4% 6% 8% 10% 12% 2% 4% 6% 8% 10% 12% 90 92 94 96 98 00 02 04 06 08 10 12 14 North Carolina vs. U.S. Unemployment Rate Seasonally Adjusted Unemployment Rate: May @ 6.4% United States: Jun @ 6.1%
  32. 32. Economics 3232 May 2014 -2% -1% 0% 1% 2% 3% 4% 5% 6% Information Other Services Construction Financial Activities Leisure and Hospitality Manufacturing Prof. & Bus. Svcs. Educ. & Health Services Government Trade, Trans. & Utilities Total Nonfarm North Carolina Employment Growth By Industry Year-over-Year Percent Change, 3-MMA Number of Employees Less More North Carolina: Employment Employment growth has been relatively broad based, with strong gains in administrative and business support industries Source: U.S. Department of Labor and Wells Fargo Securities, LLC
  33. 33. Economics 3333 98 100 102 104 106 108 110 112 114 98 100 102 104 106 108 110 112 114 10 11 12 13 14 Nonfarm Payrolls Index 100 = February 2010 Charlotte: May @ 111.6 Raleigh: May @ 113.2 Durham: May @ 107.7 Greensboro: May @ 104.8 Winston-Salem: May @ 105.5 Asheville: May @ 107.3 Wilmington: May @ 106.8 Hickory: May @ 102.9 Fayetteville: May @ 100.4 North Carolina: Employment Raleigh and Charlotte have had the strongest recoveries in terms of employment, while Fayetteville and Hickory struggle to return to growth Source: U.S. Department of Labor and Wells Fargo Securities, LLC
  34. 34. Economics 34 North Carolina Unemployment by County North Carolina Unemployment Rate May 2014 Less than 6.0% 6.0% to 6.9% 7.0% to 7.9% 8.0% and greater
  35. 35. Economics 3535 -8% -6% -4% -2% 0% 2% 4% 6% 8% 10% -8% -6% -4% -2% 0% 2% 4% 6% 8% 10% 91 93 95 97 99 01 03 05 07 09 11 13 North Carolina Nonfarm Employment Year-over-Year Percent Change Office Employment: May @ 3.8% Non-office Employment: May @ 1.4% North Carolina: Employment Meanwhile, economies that rely on office-using industries have performed considerably better Source: U.S. Department of Labor and Wells Fargo Securities, LLC
  36. 36. Economics 36 North Carolina: Employment Manufacturing has been declining for years, contributing to the relatively weak economies in some parts of the state -16% -14% -12% -10% -8% -6% -4% -2% 0% 2% 4% 6% -16% -14% -12% -10% -8% -6% -4% -2% 0% 2% 4% 6% 91 93 95 97 99 01 03 05 07 09 11 13 North Carolina Nonfarm Employment Year-over-Year Percent Change Manufacturing Employment: May @ -0.1% Non-Manufacturing: May @ 2.2% Source: U.S. Department of Labor and Wells Fargo Securities, LLC Manufacturing Total EmploymentManufacturing Growth 300 400 500 600 700 800 900 300 400 500 600 700 800 900 90 92 94 96 98 00 02 04 06 08 10 12 14 North Carolina Manufacturing Employment In thousands Manufacturing Employment: May @ 442.0 thousand
  37. 37. Economics 3737 -4% 0% 4% 8% 12% Winston-Salem Greensboro Asheville Raleigh Durham North Carolina Charlotte Wilmington Construction & Natural Resources Employment Year-over-Year Percent Change, 3-MMA May 2013 North Carolina: Construction Despite strong gains in a few areas, construction payrolls in the state are still more than 30 percent from their prerecession high, pushing workers to look for jobs in other industries or remain unemployed Source: U.S. Department of Labor and Wells Fargo Securities, LLC
  38. 38. Economics 3838 -12% -9% -6% -3% 0% 3% 6% 9% 12% 15% -12% -9% -6% -3% 0% 3% 6% 9% 12% 15% 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 North Carolina Personal Income Bars = Compound Annual Rate Line = Yr/Yr % Change North Carolina Personal Income: Q1 @ 2.7% North Carolina Personal Income: Q1 @ 3.1% North Carolina: Income Income growth has held steady in the state but remains below the gains seen in prior expansions Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
  39. 39. Economics 3939 -15% 0% 15% 30% 45% -15% 0% 15% 30% 45% 95 97 99 01 03 05 07 09 11 13 North Carolina Sales Tax Revenue Year-over-Year Percent Change North Carolina: Q4 @ 3.6% North Carolina: Sales Tax Nevertheless, sales tax revenue is growing again, indicating that consumers in the state are feeling more confident Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
  40. 40. Economics 4040 North Carolina: Housing The pace of residential construction has slowed, though home price continue to gain momentum 0 20 40 60 80 100 120 0 20 40 60 80 100 120 90 92 94 96 98 00 02 04 06 08 10 12 14 Thousands Thousands North Carolina Housing Permits Thousands of Permits, Seasonally Adjusted Annual Rate Single-Family: May @ 39,264 Single-Family, 12-MMA: May @ 34,242 Multifamily, 12-MMA: May @ 14,072 Single-Family Average (1998-2003): 62,968 Source: U.S. Department of Commerce, CoreLogic and Wells Fargo Securities, LLC Home PricesResidential Construction -20% -16% -12% -8% -4% 0% 4% 8% 12% 16% 20% -20% -16% -12% -8% -4% 0% 4% 8% 12% 16% 20% 90 92 94 96 98 00 02 04 06 08 10 12 14 Core Logic HPI: NC vs. U.S. Year-over-Year Percent Change United States: May @ 8.8% North Carolina: May @ 5.2%
  41. 41. Economics 4141 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% Greensboro Winston-Salem North Carolina Asheville Durham Charlotte Raleigh Wilmington North Carolina Population Year-over-Year Percent Change 2013 North Carolina: Demographics Areas with the highest population growth rates are also likely to see some of the strongest economic growth rates moving forward Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
  42. 42. Economics 42 U.S. Forecast Wells Fargo U.S. Economic Forecast 2011 2012 2013 2014 2015 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Real Gross Domestic Product 1 1.1 2.5 4.1 2.6 -2.9 2.7 2.9 2.9 1.8 2.8 1.9 1.4 2.9 Personal Consumption 2.3 1.8 2.0 3.3 1.0 2.2 2.4 2.5 2.5 2.2 2.0 2.1 2.5 Inflation Indicators 2 PCE Deflator 1.4 1.1 1.1 1.0 1.1 1.6 1.7 1.9 2.4 1.8 1.1 1.6 2.0 Consumer Price Index 1.7 1.4 1.5 1.2 1.4 2.0 2.1 2.4 3.1 2.1 1.5 2.0 2.3 Industrial Production 1 4.2 1.9 2.5 4.9 4.5 4.8 4.4 4.3 3.3 3.8 2.9 4.2 4.8 Corporate Profits Before Taxes 2 2.1 4.5 5.7 6.2 -2.2 3.6 3.8 4.0 7.9 7.0 4.6 2.4 4.3 Trade Weighted Dollar Index 3 76.2 77.5 75.2 76.4 76.9 75.9 76.5 76.8 70.9 73.5 75.9 76.5 78.2 Unemployment Rate 7.7 7.5 7.2 7.0 6.7 6.2 6.0 5.9 8.9 8.1 7.4 6.2 5.7 Housing Starts 4 0.95 0.86 0.88 1.03 0.93 1.04 1.05 1.07 0.61 0.78 0.92 1.03 1.19 Quarter-End Interest Rates 5 Federal Funds Target Rate 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.63 Conventional Mortgage Rate 3.57 4.07 4.49 4.46 4.34 4.16 4.35 4.34 4.46 3.66 3.98 4.30 4.46 10 Year Note 1.87 2.52 2.64 3.04 2.73 2.53 2.75 2.80 2.78 1.80 2.35 2.70 3.00 Forecast as of: July 9, 2014 1 Compound Annual Growth Rate Quarter-over-Quarter 2 Year-over-Year Percentage Change 3 Federal Reserve Major Currency Index, 1973=100 - Quarter End 4 Millions of Units 5 Annual Numbers Represent Averages ForecastActual 2013 ForecastActual 2014
  43. 43. Client/Prospect Name Wells Fargo Securities, LLC Economics Group 43 John E. Silvia … ....................... … john.silvia@wellsfargo.com Global Head of Research and Economics Diane Schumaker-Krieg ………………… ……….diane.schumaker@wellsfargo.com Global Head of Research & Economics Chief Economist Mark Vitner, Senior Economist……………....………. . .mark.vitner@wellsfargo.com Jay H. Bryson, Global Economist …………………....…… ….jay.bryson@wellsfargo.com Sam Bullard, Senior Economist sam.bullard@wellsfargo.com Nick Bennenbroek, Currency Strategist ……nicholas.bennenbroek@wellsfargo.com Eugenio J. Alemán, Senior Economist… ………….eugenio.j.aleman@wellsfargo.com Anika R. Khan, Senior Economist … . anika.khan@wellsfargo.com Senior Economists Zachary Griffiths, Economic Analyst zachary.griffiths@wellsfargo.com Mackenzie Miller, Economic Analyst mackenzie.miller@wellsfargo.com Blaire Zachary, Economic Analyst blaire.a.zachary@wellsfargo.com Economists Azhar Iqbal, Econometrician………………… ……………azhar.iqbal@wellsfargo.com Tim Quinlan, Economist …………………… ……………..tim.quinlan@wellsfargo.com Eric J. Viloria, Currency Strategist eric.viloria@wellsfargo.com Sarah Watt House, Economist …………… …………sarah.house@wellsfargo.com Michael A. Brown, Economist ……………… … michael.a.brown@wellsfargo.com Michael T. Wolf, Economist ………………… … .michael.t.wolf@wellsfargo.com Economic Analysts Administrative Assistants Wells Fargo Securities Economics Group publications are produced by Wells Fargo Securities, LLC, a U.S broker-dealer registered with the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority, and the Securities Investor Protection Corp. Wells Fargo Securities, LLC, distributes these publications directly and through subsidiaries including, but not limited to, Wells Fargo & Company, Wells Fargo Bank N.A., Wells Fargo Advisors, LLC, Wells Fargo Securities International Limited, Wells Fargo Securities Asia Limited and Wells Fargo Securities (Japan) Co. Limited. Wells Fargo Securities, LLC. (“WFS”) is registered with the Commodities Futures Trading Commission as a futures commission merchant and is a member in good standing of the National Futures Association. Wells Fargo Bank, N.A. (“WFBNA”) is registered with the Commodities Futures Trading Commission as a swap dealer and is a member in good standing of the National Futures Association. WFS and WFBNA are generally engaged in the trading of futures and derivative products, any of which may be discussed within this publication. The information and opinions herein are for general information use only. Wells Fargo Securities, LLC does not guarantee their accuracy or completeness, nor does Wells Fargo Securities, LLC assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sales of any security or as personalized investment advice. Wells Fargo Securities, LLC is a separate legal entity and distinct from affiliated banks and is a wholly owned subsidiary of Wells Fargo & Company © 2014 Wells Fargo Securities, LLC. SECURITIES: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE Important Information for Non-U.S. Recipients For recipients in the EEA, this report is distributed by Wells Fargo Securities International Limited (“WFSIL”). WFSIL is a U.K. incorporated investment firm authorized and regulated by the Financial Conduct Authority. The content of this report has been approved by WFSIL a regulated person under the Act. WFSIL does not deal with retail clients as defined in the Markets in Financial Instruments Directive 2007. The FCA rules made under the Financial Services and Markets Act 2000 for the protection of retail clients will therefore not apply, not will the Financial Services Compensation Scheme be available. This report is not intended for, and should not be relied upon by, retail clients. This document and any other materials accompanying this document (collectively, the “Materials”) are provided for general informational purposes only. Peg Gavin, Executive Assistant. peg.gavin@wellsfargo.com Cyndi Burris, Senior Administrative Assistant cyndi.burris@wellsfargo.com

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