Economics Update

October 20, 2009

• Effects of the Cash for Clunkers Program• Housing Starts• Employment Statistics• CPI• PPI• Imports/Exports

Topics

• Total:– July 2009: 344,688– August 2009: 349,885– September 2009: 342,489

• Total Excluding Automobiles:– July 2009: 288,452– August 2009: 287,120– September 2009: 284,270 (+0.5%)

Cash for Clunkers

Seasonly Adjusted Housing Starts

-20.00%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

2005-10

2005-12

2006-02

2006-04

2006-06

2006-08

2006-10

2006-12

2007-02

2007-04

2007-06

2007-08

2007-10

2007-12

2008-02

2008-04

2008-06

2008-08

2008-10

2008-12

2009-02

2009-04

2009-06

2009-08

Series1

Housing Starts

Seasonally Adjusted Housing Starts

0

500

1000

1500

2000

2500

2005-10

2006-01

2006-04

2006-07

2006-10

2007-01

2007-04

2007-07

2007-10

2008-01

2008-04

2008-07

2008-10

2009-01

2009-04

2009-07

Series1

Housing Starts Contd.

• Second week of October decreased to 514,000 from 524,000 during the first week

• Better than analysts expected (530,000)

Employment

• Mixed Results• The slowing was due to a dip in food prices and a dramatically slower gain in energy

costs. – Food component declined 0.1 percent after a 0.1 percent rise the month before. – Energy component slowed to a 0.6 percent boost in September, following a 4.6 percent jump in

August.

• The moderately faster pace for the core rate was due to gains in lodging away from home, medical care, new vehicles, used cars and trucks, and public transportation.

• Sluggish unless energy costs pickup.

CPI

Released on 10/15/2009

Prior Actual

CPI - M/M change 0.4 % 0.2 %

CPI - Y/Y change -1.4 % -1.3 %

CPI less food & energy 0.1 % 0.2 %

CPI less food & energy - Y/Y change 1.5 % 1.5 %

CPI %Change Graphs

• Signs of inflation have disappeared—but PPI report is still lagging the recent rise in oil prices

• The decline was due in part to a drop in prices for light trucks, gasoline, and computer prices.

• Inflation smothered by weak demand and an earlier dip in oil prices. May see a rise from recent oil prices.

PPI

Released on 10/20/2009

Prior Actual

PPI - M/M change 1.7 % -0.6 %

PPI -Yr/Yr change -4.3 % -4.7 %

PPI less food & energy - M/M change 0.2 % -0.1 %

PPI less food & energy - Yr/Yr change 2.3 % 1.8 %

PPI %Change Graphs

• Import prices are posing evidence that the weak dollar is increasing inflation pressures.

• Pressures may find their way to finished goods with prices for consumer goods excluding autos up 0.1

• Petroleum reading for October is likely to show an upswing.

Import/Export Prices

Released on 10/14/2009

Prior Actual

Export Prices - M/M change 0.7 % -0.3 %

Export Prices - Y/Y change -6.1 % -5.6 %

Import Prices - M/M change 2.0 % 0.1 %

Import Prices - Y/Y change -15.0 % -12.0 %