The document provides an overview of key economic indicators including: - Personal income was unchanged in September while spending declined 0.5% and savings increased. - Real GDP expanded 3.5% in Q3 2009 primarily from consumer spending, exports, inventory investment and federal spending. - The Conference Board's Leading Economic Index increased 0.3% in October and has risen for 7 consecutive months, indicating a continued economic recovery. - Productivity growth rose 9.5% in Q3 while unit labor costs fell, as firms cut back on labor to maximize profits with increasing output.

1. GDP Sector Status ReportBen Araya- Personal IncomeBrett Hart- GDPRob Kunces- Index of Leading IndicatorsBrad Neumyer- P & CNovember30, 2009

2. Personal IncomeIncome received by households from employment, investments, and transfer payments.Wages and SalaryReleased monthly

3. Personal Income: what to look forTrends in personal income growthTrends in savings ratesChanges in consumer expendituresChanges in growth in the core PCE deflator

4. Current SituationPersonal income was unchanged in SeptemberSpending declined 0.5% Savings rate increase to 3.3%

5. Monthly Personal Income Trend

6. Personal Income Last 5 Years

7. REAL GDPReal GDP is an inflation-adjusted measurement of the value of all the goods and services produced in a fiscal year, expressed in base-year prices. This is referred to as “constant-price”

8. REAL GDPThe US economy expanded 3.5% in the third quarter. The first growth since the second quarter of 08. Growth came primarily from consumer spending, exports, inventory investment, homebuilding and federal government spending.

9. Recent Real GDP3Q GDP 3.5%Since the latest financial crisis the GDP has been on a negative decline, until this quarter.Economist feel GDP will continue to grow but the growth will not be as strongConsumers must sustain their gains in spending without government helpConsumption 09Q2: -.87 09Q3: 3.35Fixed Res Investment 09Q2: -23.2 09Q3: 23.28Government 09Q2: 6.72 09Q3: 2.32

11. Conference Board Leading Indicator - What is it?A weighted average of 10 key economic data series that is released monthly.Is a strong predictor of recessionsHas successfully predicted each of the eight recessions since 1950.The 10 variables have historically turned downward before a recession and upward before an expansion.Weakness: Lag between the a turn in the index and the economy makes predictions delayed and therefore more difficult to institute a new economic policy.

12. Leading Indicators up to September 2009

13. Conference Board Leading Indicator

14. Conference Board Leading Economic Index (LEI) for the U.S. increased 0.3 percent in October, following a 1.0 percent gain in September, and a 0.4 percent rise in August.5.7 percent increase in the LEI since March-2009 continuing a 6 month upward trend.Index of consumer expectations, building permits, index of supplier deliveries (vendor performance), and manufacturers’ new orders for nondefense capital goods were negative contributors in October.The LEI has increased 7 consecutive months.LEI is up %4.2 from last year at this time and is the fastest growth rate since 2005.

15. Analysis & PredictionGDP growth in the 3rd quarter is expected to reach an annualized rate of 3%.4th quarter predictions see GDP rate slowing down due to consumer balance sheets still not at their previous levels.Slow job creation and the end of the clash for clunkers program will see the high numbers of September come back down.Depending on how fast firms replenish their workforce will determine the length and velocity of the recovery of the economy.The labor market and slow housing market recovery support the view of a slow paced recovery.

16. Analysis & Prediction Continued…November and December are expected to be up again to end 2009 but their percent change increase is to be small.Consumer confidence and stability in the financial market will keep GDP positive but consumer spending is slowed by employment recovery.High national unemployment in manufacturing will limit growth for the remainder of the year.The housing market recovery has slowed and is expected to slow recovery in 2010.

17. CurrentData- Productivity & CostsProductivity growth for the 3rd quarter rose 9.5% at an annualized rateThere was a steep drop in unit labor costsFirms cut back on labor at a rapid paceAlthough there is growth, the gains in productivity will limit the need for new hires

19. Change By SectorNonfarm business productivity rose 9.5%Output in the nonfarm business sector rose 4%Nonfarm business labor costs fell 5.2%Manufacturing productivity rose 13.6%

20. Why Did This Happen? Where Is It Going?There has been a steep drop in hours worked relative to outputThis signifies a realignment of the workforce is to maximize profits for the time being until aggregate demand begins to increaseSubstantial firming of aggregate demand as well as net job growth are expected to take place in mid-2010

21. Taylor Rule.9735= 1.7 + 2 + .5 (1.7 - 2) + .5 (-2.253 - 2.9)

22. Aggregate Demand-Aggregate SupplyLRASPSRASBP*AD2AAD1YY*

23. Final Policy Recommendation