1

Rebuilding Our Economy: The Prospects for the Economy to do More in 2010

Craig ThomasSenior Economist

April 26, 2010

2

Can the Return of Job Growth Continue? Yes

-800

-600

-400

-200

0

200

400

Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-104.04.55.05.56.06.57.07.58.08.59.09.510.010.5

Change in jobs, ths (L)Unemployment rate, % (R)

Source: BLS, BEA

3

Quickly Getting Rid of Excess Housing Stock

250500

7501,0001,250

1,5001,7502,0002,250

2,5002,750

Apr-61 Apr-68 Apr-75 Apr-82 Apr-89 Apr-96 Apr-03

New households, ths Housing starts, ths

Source: BOC

Got us into trouble

Getting us out of trouble

4

60

80

100

120

140

160

180

200U.S.

Northeast OH

Columbus

Southwest OH

Toledo

Worst Is Over In the Ohio Housing Market

Source: Case Shiller, PNC Economics

Case Shiller house price index, 2000Q1=100

5

Households Are Getting Books Back In Order. Savings up, Debt Burdens Down

1.01.52.02.53.03.54.04.55.05.56.06.5

1995Q1 1997Q1 1999Q1 2001Q1 2003Q1 2005Q1 2007Q1 2009Q111.0

11.5

12.0

12.5

13.0

13.5

14.0Saving rate (L) Debt service burden (R)

Source: BEA, FRB

% share of disposable income

6

Consumers Are Back!

-30

-25

-20

-15

-10

-5

0

5

10

15

Jan-06 Jan-07 Jan-08 Jan-09 Jan-10

Total

Clothing

Motor vehicles

Source: BEA

Retail sales, % change year ago

7

Shelves Are Bare. We Need More Stuff Now!

-20

-15

-10

-5

0

5

10

15

Jan-95 Jan-00 Jan-05 Jan-10

Manufacturing

Retail

Wholesale

Source: BOC

Inventories, % change year ago

8

Once Above 50, Manufacturing Is Expanding Again

202530354045505560657075

Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10

New Export Orders

New Orders

Production

Source: BOC

ISM New Orders Diffusion Index, Index, SA

9

Exports Are No Longer A Drag; Higher Imports Reflect Stronger Domestic Demand

-20

-15

-10

-5

0

5

10

Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10

Exports Imports

Source: BOC

Monthly change, 3-mth MA, $ bil., SA

10

Earnings Have Rebounded Strongly, and the Markets Have Noticed.

600700

800900

1,000

1,1001,2001,3001,400

1,5001,600

2004Q1 2005Q1 2006Q1 2007Q1 2008Q1 2009Q1 2010Q1-250

255075

100125150175

200225

S&P 500 price index (L)

S&P 500 Earnings, $ bil. (R)

Source: S&P

11

-8%

-6%

-4%

-2%

0%

2%

4%

1995Q1 1998Q1 2001Q1 2004Q1 2007Q1 2010Q1

Northeast OHColumbusSouthwest OH

ToledoU.S.

Jobs Are In Sight

Source: PNC Economics

Total employment, % change year ago

12

2%

4%

6%

8%

10%

12%

14%

1995Q1 1998Q1 2001Q1 2004Q1 2007Q1 2010Q1

Northeast OHColumbusSouthwest OH

ToledoU.S.

Joblessness Will Remain a Challenge, And Opportunity

Source: PNC Economics

Unemployment rate, %

13

0

20

40

60

80

100

120

140

160

2000Q1 2002Q1 2004Q1 2006Q1 2008Q1 2010Q16065707580859095100105

Professional services (L) State government (L) Education (L)Healthcare (L) Manufacturing (R)

Solid Industrial Diversity Shields Columbus From Manufacturing Consolidation

Source: PNC Economics

Employment, ths

14

-15

-10

-5

0

5

10

2008 2009

Columbus Cincinnati AkronYoungstown Toledo Cleveland

When It Comes to Columbus, Migrants Vote With their Feet

Source: PNC Economics

Net migration, ths

15

-2%

0%

2%

4%

6%

8%

10%

1995Q1 1998Q1 2001Q1 2004Q1 2007Q1 2010Q1

Inflation 10yr. Treasury yield30yr. fixed mortgage rate

Moderately Higher Rates on the Horizon

Source: PNC Economics

16

PNC Economics Regional Forecasting Platformwww.pnc.com/economicreports

17

The PNC Financial Services Group, Inc.

Disclaimer: The material presented is of a general nature and does not constitute the provision of investment or economic advice to any person, or a recommendation to buy or sell any security or adopt any investment strategy. Opinions and forecasts expressed herein are subject to change without notice. Relevant information was obtained from sources deemed reliable. Such information is not guaranteed as to its accuracy. You should seek the advice of an investment professional to tailor a financial plan to your particular needs.