Lynn ReaserNABE Vice President

Bank of America

Richard DeKaserWoodley Park Research

Charles SteindelFederal Reserve Bank of New York

William StraussFederal Reserve Bank of Chicago

Embargoed until Monday, February 23, 2009 at 12:01 AM EST. Survey conducted Jan 29-Feb 12, 2009 and released February 23, 2009. Disclaimer: the views expressed in this report are those of the analysts and do not necessarily represent the views of their affiliated companies or institutions.

The February 2009 NABE Outlook

Parul JainMacroFin Analytics

2

Most respondents see recession ending this year

0

25

50

75

First half2009

Second half2009

2010 Later No response

Percent of respondents

(0)

3

Real GDP forecast to fall in 2009, rebound in 2010

-1.00

0.00

1.00

2.00

3.00

4.00

2006 2007 2008 2009f 2010f

Percent change, Q4/Q4

4

Forecast has “V”-shaped form

-6.0

-4.0

-2.0

0.0

2.0

4.0

2008 2009f 2010f

Real gross domestic product, percent change over prior quarter, annualized rate

5

GDP components

(% Chg. over year ago

except inventories)

2008

Actual

2009

Forecast

2010

Forecast

Real GDP 1.3 -1.9 2.4

Consumption 0.3 -1.3 2.2

Business Fixed Investment

Structures 11.8 -6.3 -4.8

Equipment & Software -2.9 -12.2 1.5

Residential Investment -20.8 -16.0 6.4

Inventory Change (Bils.) -21.0 -42.2 20.0

Government 2.9 2.8 2.2

Exports 6.5 -5.1 3.3

Imports -3.3 -6.0 4.4

Based on annual totals, 2000 chained dollars

6

Fiscal stimulus effects seen in both 2009 and 2010

0

10

20

30

40

50

Negativeimpact

0.0 to 0.5 0.6 to 1.0 1.1 to 1.5 More than1.5

Noresponse

4Q2009 over 4Q2008 4Q2010 over 4Q2009

Percent of respondents, impact on real GDP in percentage points

(0)

7

Job losses expected through 2009

-300

-200

-100

0

100

200

2006 2007 2008 2009f 2010f

Nonfarm employment,. average monthly change, thousands

8

Jobless rate expected to peak at 9.0%

0.00

2.00

4.00

6.00

8.00

10.00

2008 2009f 2010f

Percent, quarterly averages

9

Economists see prolonged period before payrolls surpass their 2007Q4 peak

0

10

20

30

40

50

60

70

2009 2010 2011 Later No response

Percent of respondents

(0) (0)

10

Consumer prices expected to fall in 2009, rise in 2010

-1.00

0.00

1.00

2.00

3.00

4.00

2006 2007 2008 2009f 2010f

Percent change, annual averages

11

Motor vehicle sales forecast to fall further in 2009 with some recovery in 2010

0

4

8

12

16

20

2006 2007 2008 2009f 2010f

Millions of units

12

Home sales and housing starts forecast to bottom in 2009, with some lag in prices

0.00

10.00

20.00

30.00

40.00

50.00

Q408 First half2009

Second half2009

Later No response

Home sales Housing starts Home prices

Percent of respondents

13

Far West27.8%

Southwest 2.8%

Great Lakes and Far West expected to be most affected by recession

Measured by unemployment rates, percent of respondents

Rocky Mountain

1.4%Plains 1.4%

Southeast12.5%

Great Lakes31.9%

New England6.9%

Mideast15.3%

14

Fed funds and 10-year Treasury rates forecast to rise in 2010

0.0

1.0

2.0

3.0

4.0

5.0

2008 2009f 2010f

Percent, quarter-end

10-year Treasury

Fed Funds

15

Forecast Summary

• Forecast panel sees economy turning higher in second half

• 2010 GDP rebound expected to be above-trend• Housing and autos predicted to reach their lows in

2009• Job recovery forecast to be slow• Both deflation and inflation risks are contained• Higher interest rates forecast in 2010