Babson Capital/UNC Charlotte Economic Forecast March 11, 2014

Outline for TodayReview of 2013Positive Economic SignsNegative Economic Signs North Carolina Outlook for 2014The Employment PictureRegional PerspectiveHousing Trends

Current ExpansionBegan July 200956 months7th longest of 33 total expansions since December 1854

North Carolina in 2013

Quarterly Growth Rates in Forecasted RGSP

Chart1

-0.1

3.6

2.3

4.1

3.6

Sheet1

2013 I2013 II2013 III2013 IV

-0.13.62.34.1

2013 Sector AnalysisWholesale Trade 3.6Percent of Real Sector Growth

Total Real GSP Growth 2.5 % Mining 1.2TWU 4.3E&H Services 4.9Agriculture 22.7Percent of Total Real GSP0.80.03.79.110.73.25.05.83.6 10.62.0Construction 1.9Durables 0.7Retail Trade 1.8Government 1.7FIRE 2.9Nondurables -0.5B&P Services 4.1Information 2.0H&L Services 2.1Other Services 2.97.321.713.33.2

Wholesale Trade 1.1Percent of Employment Growth

Total Employment Growth 1.6% Mining 0.0TWU 3.8E&H Services 1.4Percent of Total Employment0.13.15.85.14.111.5 4.31.813.817.5Construction -2.2Durables 0.4Retail Trade 2.7Government -0.1FIRE 1.3Nondurables 0.2B&P Services 4.1Information 7.6L&H Services 2.1Other Services 1.010.65.013.83.52013Year-End Employment Trends64,500 Net Jobs

2013 North Carolina Unemployment RateDecember Rate 6.9%

Chart1

9.5JAN7.9

9.4FEB7.7

9.2MAR7.6

8.9APR7.5

8.8MAY7.6

8.8JUN7.6

8.9JUL7.4

8.7AUG7.3

8.3SEP7.2

8OCT7.3

7.4NOV7

6.9DEC6.7

NC Seasonally Adjusted

NC Seasonally Adjusted Forecast

US Seasonally Adjusted

Sheet1

JANFEBMARAPRMAYJUNJULAUGSEPOCTNOVDEC

NC Seasonally Adjusted9.59.49.28.98.88.88.98.78.387.46.9

NC Seasonally Adjusted Forecast

US Seasonally Adjusted7.97.77.67.57.67.67.47.37.27.376.7

Sheet2

Housing Stock/Prices Interest RatesInflationConsumer CreditConsumer ConfidenceDollarGas PricesBudget Deficit

Positive Indicators

U.S. Monthly New Home Inventory (Seasonally Adjusted)

Chart1

4.4

4.3

4.1

4.3

4.2

4.3

4.2

4.5

4.7

4.5

5

4.9

5.3

6.1

5.9

6.3

6.2

6.3

7.3

6.7

6.7

7.3

6.6

6.5

7.2

7.9

7.9

7.4

7.8

8.2

8.3

9.2

9.2

8.5

9.4

9.6

9.3

9.7

10.5

10.3

10.7

10.7

10.5

11.3

10.9

11.6

11.4

11.2

12.4

11.1

11.3

10.4

9.5

8.4

7.7

7.7

7.7

7.1

7.6

7.8

8

8

7.1

6.3

9.2

8.2

8.9

9.1

7.6

8.6

8.4

6.9

7.2

7.8

7

6.6

6.5

6.6

6.8

6.7

6.4

6.3

6

6.8

5.4

4.8

4.9

4.9

4.7

4.8

4.6

4.6

4.5

4.8

4.5

4.5

3.9

4.1

4.2

4.3

4.5

4.3

5.5

5.4

5.4

4.9

4.9

5.2

4.7

January 200912.4 Months Supply

December 20144.7 Months Supply

Sheet1

Jan-05FebMarAprMayJunJulAugSepOctNovDecJan-06FebMarAprMayJunJulAugSepOctNovDecJan-07FebMarAprMayJunJulAugSepOctNovDecJan-08FebMarAprMayJunJulAugSepOctNovDecJan-09FebMarAprMayJunJulAugSepOctNovDecJan-10FebMarAprMayJunJulAugSepOctNovDecJan-11FebMarAprMayJunJulAugSepOctNovDecJan-12FebMarAprMayJunJulAugSepOctNovDecJan-13FebMarAprMayJunJulAugSepOctNovDecJan

4.44.34.14.34.24.34.24.54.74.554.95.36.15.96.36.26.37.36.76.77.36.66.57.27.97.97.47.88.28.39.29.28.59.49.69.39.710.510.310.710.710.511.310.911.611.411.212.411.111.310.49.58.47.77.77.77.17.67.8887.16.39.28.28.99.17.68.68.46.97.27.87.06.66.56.66.86.76.46.36.06.85.44.84.94.94.74.84.64.64.54.84.54.53.94.14.24.34.54.35.55.45.44.94.95.24.7

Source

http://research.stlouisfed.org/fred2/data/MSACSR.txt

Current Rate 0 - .25%Monthly Federal Funds Rate 1996-2013

Chart1

5.56

5.22

5.31

5.22

5.24

5.27

5.4

5.22

5.3

5.24

5.31

5.29

5.25

5.19

5.39

5.51

5.5

5.56

5.52

5.54

5.54

5.5

5.52

5.5

5.56

5.51

5.49

5.45

5.49

5.56

5.54

5.55

5.51

5.07

4.83

4.68

4.63

4.76

4.81

4.74

4.74

4.76

4.99

5.07

5.22

5.2

5.42

5.3

5.45

5.73

5.85

6.02

6.27

6.53

6.54

6.5

6.52

6.51

6.51

6.4

5.98

5.49

5.31

4.8

4.21

3.97

3.77

3.65

3.07

2.49

2.09

1.82

1.73

1.74

1.73

1.75

1.75

1.75

1.73

1.74

1.75

1.75

1.34

1.24

1.24

1.26

1.25

1.26

1.26

1.22

1.01

1.03

1.01

1.01

1

0.98

1

1.01

1

1

1

1.03

1.26

1.43

1.61

1.76

1.93

2.16

2.28

2.5

2.63

2.79

3

3.04

3.26

3.5

3.62

3.78

4

4.2

4.3

4.5

4.6

4.8

5

5.25

5.25

4.75

4.5

4.25

4

3

2.25

2

2

1.5

1

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25

Sheet1

1/1/962/1/963/1/964/1/965/1/966/1/967/1/968/1/969/1/9610/1/9611/1/9612/1/961/1/972/1/973/1/974/1/975/1/976/1/977/1/978/1/979/1/9710/1/9711/1/9712/1/971/1/982/1/983/1/984/1/985/1/986/1/987/1/988/1/989/1/9810/1/9811/1/9812/1/981/1/992/1/993/1/994/1/995/1/996/1/997/1/998/1/999/1/9910/1/9911/1/9912/1/991/1/002/1/003/1/004/1/005/1/006/1/007/1/008/1/009/1/0010/1/0011/1/0012/1/001/1/012/1/013/1/014/1/015/1/016/1/017/1/018/1/019/1/0110/1/0111/1/0112/1/011/1/022/1/023/1/024/1/025/1/026/1/027/1/028/1/029/1/0210/1/0211/1/0212/1/021/1/032/1/033/1/034/1/035/1/036/1/037/1/038/1/039/1/0310/1/0311/1/0312/1/031/1/042/1/043/1/044/1/045/1/046/1/047/1/048/1/049/1/0410/1/0411/1/0412/1/041/1/052/1/053/1/054/1/055/1/056/1/057/1/058/1/059/1/0510/1/0511/1/0512/1/051/1/062/1/063/1/064/1/065/1/067/1/064/1/0710/1/0711/1/0712/1/071/1/082/1/084/1/085/1/088/1/0810/8/0810/29/0812/16/081/1/091/7/091/1/101/7/101/8/101/9/101/10/101/11/101/12/101/1/111/4/111/7/111/10/111/1/121/4/121/7/121/10/121/1/131/4/131/5/131/6/131/7/131/8/131/9/2131/10/131/11/131/12/13

5.565.225.315.225.245.275.45.225.35.245.315.295.255.195.395.515.55.565.525.545.545.55.525.55.565.515.495.455.495.565.545.555.515.074.834.684.634.764.814.744.744.764.995.075.225.25.425.35.455.735.856.026.276.536.546.56.526.516.516.45.985.495.314.84.213.973.773.653.072.492.091.821.731.741.731.751.751.751.731.741.751.751.341.241.241.261.251.261.261.221.011.031.011.0110.9811.011111.031.261.431.611.761.932.162.282.52.632.7933.043.263.53.623.7844.24.34.54.64.855.255.254.754.54.25432.25221.510.250.250.250.250.250.250.250.250.250.250.250.250.250.250.250.250.250.250.250.250.250.250.250.250.250.250.250.25

Percentage Changes in CPI 1949-2013

Chart1

1.3

7.9

1.9

0.8

0.7

-0.4

1.5

3.3

2.8

0.7

1.7

1

1

1.3

1.3

1.6

2.9

3.1

4.2

5.5

5.7

4.4

3.2

6.2

11

9.1

5.8

6.5

7.6

11.3

13.5

10.3

6.2

3.2

4.3

3.6

1.9

3.6

4.1

4.8

5.4

4.2

3

3

2.6

2.8

3

2.3

1.6

2.2

3.4

2.3

1.6

2.3

2.7

3.4

3.2

2.8

3.9

-0.4

1.6

3

1.7

1.5

Annual Increases

-0.4% 1.6%2011 3.0%2012 1.7%2013 1.5%

Sheet1

1950195119521953195419551956195719581959196019611962196319641965196619671968196919701971197219731974197519761977197819791980198119821983198419851986198719881989199019911992199319941995199619971998199920002001200220032004200520062007200820092010201120122013

1.37.91.90.80.7-0.41.53.32.80.71.7111.31.31.62.93.14.25.55.74.43.26.2119.15.86.57.611.313.510.36.23.24.33.61.93.64.14.85.44.2332.62.832.31.62.23.42.31.62.32.73.43.22.83.9-0.41.631.71.5

1980-2013 U.S. Household Debt Payments as a Percent of IncomePeak 2007 III 13.18%Current 9.93%

Chart1

10.62174

10.70524

10.46391

10.25096

10.3109

10.45616

10.35764

10.42253

10.50338

10.56394

10.4638

10.41905

10.39211

10.41708

10.42077

10.47198

10.52119

10.64994

10.75527

10.91354

11.25193

11.34104

11.62778

11.74853

11.77018

11.83887

11.9383

12.08082

11.94575

12.0872

11.95716

11.82346

11.77239

11.75641

11.71174

11.58815

11.5772

11.74492

11.80786

11.76526

11.66295

11.62683

11.60271

11.61834

11.59962

11.46177

11.35131

11.14776

10.87223

10.69183

10.55375

10.47988

10.42446

10.37324

10.42695

10.39407

10.41022

10.46902

10.60291

10.72039

10.89992

11.10029

11.20866

11.24708

11.2642

11.28853

11.33524

11.39299

11.34482

11.34884

11.3572

11.31218

11.16636

11.18659

11.17198

11.2334

11.29892

11.45041

11.57669

11.56704

11.51835

11.68227

11.85828

12.08785

12.19347

12.40523

12.33603

12.63181

12.40447

12.34376

12.3879

12.37216

12.3645

12.26995

12.12775

12.192

12.16035

12.09688

12.21214

12.21935

12.52803

12.53287

12.55908

12.58402

12.56366

12.67104

12.77386

12.85631

12.87622

12.95806

13.05901

13.18099

13.04459

12.67477

12.77708

12.74022

12.65857

12.30541

12.14026

11.87188

11.64353

11.34063

11.13899

10.9692

10.74195

10.64559

10.53313

10.46095

10.28206

10.19832

10.17951

9.93814

10.09965

9.99631

9.92477

Sheet1

1/1/19804/1/19807/1/198010/1/19801/1/19814/1/19817/1/198110/1/19811/1/19824/1/19827/1/198210/1/19821/1/19834/1/19837/1/198310/1/19831/1/19844/1/19847/1/198410/1/19841/1/19854/1/19857/1/198510/1/19851/1/19864/1/19867/1/198610/1/19861/1/19874/1/19877/1/198710/1/19871/1/19884/1/19887/1/198810/1/19881/1/19894/1/19897/1/198910/1/19891/1/19904/1/19907/1/199010/1/19901/1/19914/1/19917/1/199110/1/19911/1/19924/1/19927/1/199210/1/19921/1/19934/1/19937/1/199310/1/19931/1/19944/1/19947/1/199410/1/19941/1/19954/1/19957/1/199510/1/19951/1/19964/1/19967/1/199610/1/19961/1/19974/1/19977/1/199710/1/19971/1/19984/1/19987/1/199810/1/19981/1/19994/1/19997/1/199910/1/19991/1/20004/1/20007/1/200010/1/20001/1/20014/1/20017/1/200110/1/20011/1/20024/1/20027/1/200210/1/20021/1/20034/1/20037/1/200310/1/20031/1/20044/1/20047/1/200410/1/20041/1/20054/1/20057/1/200510/1/20051/1/20064/1/20067/1/200610/1/20061/1/20074/1/20077/1/200710/1/20071/1/20084/1/20087/1/200810/1/20081/1/20094/1/20097/1/200910/1/20091/1/20104/1/20107/1/201010/1/20101/1/20114/1/20117/1/201110/1/20111/1/20124/1/20127/1/201210/1/20121/1/20134/1/20137/1/2013

10.6210.7110.4610.2510.3110.4610.3610.4210.5010.5610.4610.4210.3910.4210.4210.4710.5210.6510.7610.9111.2511.3411.6311.7511.7711.8411.9412.0811.9512.0911.9611.8211.7711.7611.7111.5911.5811.7411.8111.7711.6611.6311.6011.6211.6011.4611.3511.1510.8710.6910.5510.4810.4210.3710.4310.3910.4110.4710.6010.7210.9011.1011.2111.2511.2611.2911.3411.3911.3411.3511.3611.3111.1711.1911.1711.2311.3011.4511.5811.5711.5211.6811.8612.0912.1912.4112.3412.6312.4012.3412.3912.3712.3612.2712.1312.1912.1612.1012.2112.2212.5312.5312.5612.5812.5612.6712.7712.8612.8812.9613.0613.1813.0412.6712.7812.7412.6612.3112.1411.8711.6411.3411.1410.9710.7410.6510.5310.4610.2810.2010.189.9410.1010.009.92

Source

http://research.stlouisfed.org/fred2/data/TDSP.txt

Consumer ConfidenceOctober 1992 54.6March 2009 25.0January 2014 81.7

Chart1

112.6

99.8

95.2

62.8

51.9

56.9

59.8

38

44.9

38

25

40.8

54.9

47.4

54.1

55.9

46

52.5

57.7

63.3

51

53.5

54.1

70.4

63.4

65.4

60.8

59.2

44.5

40.9

61.5

70.8

64.9

60

73.7

58.4

69.6

76.2

81.5

78.1

81.7

Sheet1

Jul 07Sep 07Oct 07Apr 08Jul 08Aug 08Sep 08Oct 08Nov 08Dec 08Feb 09Apr 09May 09Jul 09Aug 09Jan 10Feb 10Mar 10Apr 10May 10Jul 10Aug 10Nov 10Feb 11Mar 11Apr 11May 11Jul 11Aug 11Oct 11Jan 12Feb 12May 12Aug 12Nov 12Jan 13Feb 13May-13Aug-1313-DecJan-14

112.699.895.262.851.956.959.83844.9382540.854.947.454.155.94652.557.763.35153.554.170.463.465.460.859.244.540.961.570.864.96073.758.469.676.281.578.181.7

$0.87$1.362000-2013 Dollar Price of Euro

Chart1

0.99

0.93

0.9

0.87

0.92

0.87

0.89

0.89

0.88

0.92

0.98

1

1.07

1.14

1.13

1.19

1.25

1.2

1.22

1.3

1.31

1.26

1.22

1.19

1.2

1.26

1.28

1.32

1.35

1.37

1.35

1.44

1.56

1.55

1.42

1.27

1.29

1.35

1.42

1.47

1.36

1.23

1.27

1.33

1.35

1.43

1.43

1.34

1.31

1.25

1.25

1.29

1.32

1.3

1.32

1.36

Sheet1

2000 I2000 II2000 III2000 IV2001 I2001 II2001 III2001 IV2002 I2002 II2002 III2002 IV2003 I2003 II2003 III2003 IV2004 I2004 II2004 III2004 IV2005 I2005 II2005 III2005 IV2006 I2006 II2006 III2006 IV2007 I2007 II2007 III2007 IV2008 I2008 II2008 III2008 IV2009 I2009 II2009 III2009 IV2010 I2010 II2010 III2010 IV2011 I2011 II2011 III2011 IV2012 I2012 II2012 III2012 IV2013 I2013 II2013 III2013 IV

0.990.930.90.870.920.870.890.890.880.920.9811.071.141.131.191.251.21.221.31.311.261.221.191.21.261.281.321.351.371.351.441.561.551.421.271.291.351.421.471.361.231.271.331.351.431.431.341.311.251.251.291.321.31.321.36

Monthly Gas Prices2012-2014

Chart1

3.44

3.6395

3.90725

3.9582

3.791

3.59575

3.4982

3.78025

3.9095

3.812

3.52075

3.3806

3.39075

3.736

3.77875

3.6382

3.675

3.6885

3.6606

3.64475

3.6042

3.4195

3.32175

3.3568

3.39

3.43

Sheet1

JanuaryFebruaryMarch 2012April 2012May 2012June 2012July 2012August 2012September 2012October 2012November 2012December 2012January 2013February 2013March 2013April 2013May 2013June 2013July 2013August 2013September 2013October 2013November 2013December 2013JanuaryFebruary

3.443.643.913.963.793.603.503.783.913.813.523.383.393.743.783.643.683.693.663.643.603.423.323.363.393.43

Source

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EMM_EPM0_PTE_NUS_DPG&f=W

Effect of EnergyPrice Increase on U.S. Economy Annual Transportation Usage187 billion gallons per yearAnnual Total Usage288 billion gallons per yearEffect of a $.50 increase in priceTransportation$93.5 billion per yearTotal $144.0 billion per year

1980 2023 U.S. Budget Deficit 2013 Budget Deficit $672 billion2015 Budget Deficit $388 billion

Chart1

0Year

-73.1411980

-73.8591981

-120.5931982

-207.6921983

-185.2691984

-221.5291985

-237.9151986

-168.3571987

-192.2651988

-205.3931989

-277.6261990

-321.4351991

-340.4081992

-300.3981993

-258.841994

-226.3671995

-174.0191996

-103.2481997

-29.9251998

1.921999

86.4222000

-32.4452001

-317.4172002

-538.4182003

-567.9612004

-493.6112005

-434.4942006

-342.1532007

-641.8482008

-1549.682009

-1370.492010

-1362.752011

-1148.88-1148.88

2013 f-671.8347161226

2014 f-578.75860339

2015 f-388.224198592

2016 f-439.5154134272

2017 f-488.7081491613

2018 f-542.237212966

2019 f-637.4573250555

2020 f-703.5117518093

2021 f-731.59624009

2022 f-814.6239143567

2023 f-793.7108023056

Sheet1

Year1980198119821983198419851986198719881989199019911992199319941995199619971998199920002001200220032004200520062007200820092010201120122013 f2014 f2015 f2016 f2017 f2018 f2019 f2020 f2021 f2022 f2023 f

Deficit-73.141-73.859-120.593-207.692-185.269-221.529-237.915-168.357-192.265-205.393-277.626-321.435-340.408-300.398-258.84-226.367-174.019-103.248-29.9251.9286.422-32.445-317.417-538.418-567.961-493.611-434.494-342.153-641.848-1549.68-1370.49-1,363-1148.88

-1148.88-672-579-388-440-489-542-637-704-732-815-794

Excess ReservesTrade DeficitTax Increases

Negative Indicators

2008 2014 Banking System Excess Reserves February Excess Reserves $2,517 billion

Chart1

1.64

1.726

2.978

1.846

2.013

2.275

1.977

1.991

60.051

267.904

559.053

767.412

798.247

643.502

725

824

844

751

733

765.8

860.1

994.7

1077.3

1075.4

1046

1162

1120

1050

1045

1035

1022

1020

981

974

972

1007

1037

1191

1363

1452

1513

1589

1618

1584

1551

1545

1498

1502

1520

1560

1510

1486

1457

1457

1483

1477

1409

1418

1435

1459

1519

1617

1698

1769

1863

1947

2031

2134

2214

2308

2393

2416

2422

2517

Sheet1

1/1/082/1/083/1/084/1/085/1/086/1/087/1/088/1/089/1/0810/1/0811/1/0812/1/081/1/092/1/093/1/094/1/095/1/096/1/097/1/098/1/099/1/0910/1/0911/1/0912/1/091/1/102/1/103/1/204/1/205/1/106/1/202107/1/108/1/109/1/1010/1/1011/1/1012/1/101/1/112/1/113/1/114/1/115/1/116/1/117/1/118/1/119/1/1110/1/1111/1/1112/1/111/1/122/1/123/1/124/1/125/1/126/1/127/1/128/1/129/1/1210/1/1211/1/1212/1/121/1/132/1/133/1/134/1/135/1/136/1/137/1/138/1/139/1/1310/1/1311/1/1312/1/131/1/142/1/14

1.641.7262.9781.8462.0132.2751.9771.99160.051267.904559.053767.412798.247643.502725824844751733765.8860.1994.71077.31075.410461162112010501045103510221020981974972100710371191136314521513158916181584155115451498150215201560151014861457145714831477140914181435145915191617169817691863194720312134221423082393241624222517

Source

http://research.stlouisfed.org/fred2/data/EXCSRESNS.txt

1992-2013 U.S. Trade Deficits2009 Trade Deficit$382 Billion2008 Trade Deficit$681 Billion2006Trade Deficit$799 Billion2013TradeDeficit$475 Billion

Chart1

1992-39212

1993-70311

1994-98493

1995-96384

1996-104065

1997-108273

1998-166140

1999-265090

2000-379835

2001-365504

2002-457248

2003-519089

2004-628519

2005-739796

2006-798478

2007-713389

2008-681343

2009-381636

2010-449471

2011-457725

2012-440416

2013-474983

Year

Trade Deficit

Sheet1

Year1992199319941995199619971998199920002001200220032004200520062007200820092010201120122013

Trade Deficit-39,212-70,311-98,493-96,384-104,065-108,273-166,140-265,090-379,835-365,504-457,248-519,089-628,519-739,796-798,478-713,389-681,343-381,636-449,471-457,725-440,416-474,983

Spending Cuts2014 - 2015Fiscal Year 2014Original Sequestration$100 billionNew Sequestration$50 billion

Fiscal Year 2015Original Sequestration$100 billionNew Sequestration$75 billion

North Carolina Forecast2014

Quarterly Growth Rates in Forecasted RGSP

Chart1

2.1

3.5

2.9

2.8

3.5

Sheet1

2014 I2014 II2014 III2014 IV

2.13.52.92.8

2014 Sector AnalysisWholesale Trade 3.6Percent of Real Sector Growth

Total Real GSP Growth 3.0 % Mining 1.9TWU 3.4E&H Services 2.2Agriculture 11.9Percent of Total Real GSP0.90.03.79.110.73.25.05.83.6 10.52.0Construction 4.2Durables 2.9Retail Trade 2.4Government 3.8FIRE 3.3Nondurables 2.5B&P Services 1.8Information 2.1H&L Services 1.7Other Services 4.17.221.813.43.1

Wholesale Trade 3.2Percent Employment Growth

Total Employment Growth 1.5% Mining -4.4TWU 3.3E&H Services 1.7Percent of Total Employment0.13.25.85.04.211.5 4.41.813.817.2Construction 3.7Durables 1.7Retail Trade 1.8Government 0.0FIRE 0.1Nondurables 0.3B&P Services 1.7Information 0.7L&H Services 1.8Other Services 2.310.75.013.83.52014 Year-End Employment Trends60,000 Net Jobs

2013-2014 North Carolina Unemployment RateDecember Rate 6.9%

Chart1

9.5JAN7.9

9.4FEB7.7

9.2MAR7.6

8.9APR7.5

8.8MAY7.6

8.8JUN7.6

8.9JUL7.4

8.7AUG7.3

8.3SEP7.2

8OCT7.2

7.4NOV7

6.96.96.7

JAN6.7JAN

FEB6.4FEB

MAR6.2MAR

APR6.1APR

MAY6MAY

JUN5.9JUN

JUL5.9JUL

AUG5.8AUG

SEP5.8SEP

OCT5.7OCT

NOV5.7NOV

DEC5.7DEC

NC Seasonally Adjusted

NC Seasonally Adjusted Forecast

US Seasonally Adjusted

Sheet1

JANFEBMARAPRMAYJUNJULAUGSEPOCTNOVDECJANFEBMARAPRMAYJUNJULAUGSEPOCTNOVDEC

NC Seasonally Adjusted9.59.49.28.98.88.88.98.78.387.46.9

NC Seasonally Adjusted Forecast6.96.76.46.26.165.95.95.85.85.75.75.7

US Seasonally Adjusted7.97.77.67.57.67.67.47.37.27.276.7

Sheet2

Employment Picture

Employment Decline: -8,736,000 Employment Gain: 7,557,000 Percent Recovered: 86.5%2007-2013 United States Payroll Employment

Employment Decline: -334,600 Employment Gain: 243,900 Percent Recovered: 72.9%2007-2013 North CarolinaPayroll Employment

Whats the Target?

3,000,000 Jobs per Year250,000 Jobs per Month

US Job Growth 20122,193,000 jobs182,750 per month

(Second Largest Job Growth Since 1999)

US Job Growth 20132,186,000 jobs182,150 per month

(Third Largest Job Growth Since 1999)

U.S. Job Growth1990 - 2013

Chart1

-848

1168

2810

3844

2157

2810

3391

3014

3170

1944

-1757

-532

62

2019

2484

2071

1115

-3617

-5052

1022

2103

2193

2186

Sheet1

19911992199319941995199619971998199920002001200220032004200520062007200820092010201120122013

-8481,1682,8103,8442,1572,8103,3913,0143,1701,944-1,757-532622,0192,4842,0711,115-3,617-5,0521,0222,1032,1932,186

Source

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EMM_EPM0_PTE_NUS_DPG&f=W

NC Job Growth1990 - 2013

Chart1

-10.9

92.6

116.3

108.6

80.7

95.8

115.4

102.4

83.8

30.2

-83.2

-22.4

-24.9

87.1

73.4

153.4

65.2

-117.6

-204.2

45.8

50.4

89.9

64.5

Sheet1

19911992199319941995199619971998199920002001200220032004200520062007200820092010201120122013

-10.992.6116.3108.680.795.8115.4102.483.830.2-83.2-22.4-24.987.173.4153.465.2-117.6-204.245.850.489.964.5

Source

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EMM_EPM0_PTE_NUS_DPG&f=W

NC Job Growth 201289,900 jobs7,490 per month

(Second Largest Job Growth Since 1998)

NC Job Growth 201364,500 jobs5,375 per month

(Sixth Largest Job Growth Since 1998)

July 2013Unemployment Rates

StateRateNEVADA9.5ILLINOIS9.2NORTH CAROLINA8.9RHODE ISLAND8.9GEORGIA8.8MICHIGAN8.8CALIFORNIA8.7NEW JERSEY8.6MISSISSIPPI8.5TENNESSEE8.5

December 2013Unemployment Rates

StateRateRHODE ISLAND9.3NEVADA9.0ILLINOIS8.9CALIFORNIA8.3MICHIGAN8.3KENTUCKY7.9MISSISSIPPI7.8TENNESSEE7.7ARIZONA7.6ARKANSAS7.4CONNECTICUT7.4GEORGIA7.4NEW JERSEY7.2MASSACHUSETTS7.1OHIO7.1OREGON7.1NEW YORK7.0NORTH CAROLINA6.9INDIANA6.8PENNSYLVANIA6.8WASHINGTON6.7SOUTH CAROLINA6.6

2013North Carolina Labor Force

Chart1

4728203

4722903

4717349

4711403

4706798

4700433

4692338

4684402

4676725

4672469

4665153

4661777

Sheet1

JanFebMarAprMayJunJulAugSepOctNovDec

4,728,2034,722,9034,717,3494,711,4034,706,7984,700,4334,692,3384,684,4024,676,7254,672,4694,665,1534,661,777

Sheet2

2013North Carolina Unemployment

Chart1

417396

408352

400295

393657

391216

388320

382204

372467

359522

348186

333838

323094

Sheet1

JanFebMarAprMayJunJulAugSepOctNovDec

417,396408,352400,295393,657391,216388,320382,204372,467359,522348,186333,838323,094

Sheet2

2013North Carolina Employment

Chart1

4310807

4314551

4317054

4317746

4315582

4312113

4310134

4311935

4317203

4324283

4331315

4338683

Sheet1

JanFebMarAprMayJunJulAugSepOctNovDec

4,310,8074,314,5514,317,0544,317,7464,315,5824,312,1134,310,1344,311,9354,317,2034,324,2834,331,3154,338,683

Sheet2

NC Number of Unemployed per Job Opening (Not Seasonally Adjusted)January 2008 1.21 Persons per Job Opening

Chart1

20081.21

20081.21

20081.15

20081.17

20081.36

20081.56

20081.86

20081.68

20081.57

20081.79

20082.18

20082.43

20093.16

20093.61

20093.47

20093.11

20093.48

20093.83

20093.62

20093.69

20093.63

20093.56

20093.86

20093.97

20103.97

20103.9

20103.44

20103.31

20103.19

20102.94

20103.15

20102.84

20102.71

20102.65

20102.85

20102.92

20112.92

20112.75

20112.33

20112.29

20112.32

20112.46

20112.38

20112.19

20112.12

20112.02

20112.22

20112.45

20122.41

20122.38

20122.12

20121.97

20121.89

20122.03

20122.01

20121.8

20121.82

20121.99

20122.07

20122.3

20132.24

20131.97

20131.54

20131.47

20131.55

20131.83

20131.59

20131.74

20131.33

20131.5

20131.57

20131.56

January 20103.97 Persons per Job Opening

December 2013 1.56 Persons per Job Opening

Sheet1

200820082008200820082008200820082008200820082008200920092009200920092009200920092009200920092009201020102010201020102010201020102010201020102010201120112011201120112011201120112011201120112011201220122012201220122012201220122012201220122012201320132013201320132013201320132013201320132013

1.211.211.151.171.361.561.861.681.571.792.182.433.163.613.473.113.483.833.623.693.633.563.863.973.973.93.443.313.192.943.152.842.712.652.852.922.922.752.332.292.322.462.382.192.122.022.222.452.412.382.121.971.892.032.011.81.821.992.072.32.241.971.541.471.551.831.591.741.331.51.571.56

Source

http://research.stlouisfed.org/fred2/data/MSACSR.txt

Regional Perspective

MSA Jobs Gained

GeographyJobs GainedPercentage North Carolina256.60.77 Charlotte-Gastonia-Rock Hill NC-SC MSA93.51.29 Raleigh-Cary MSA47.81.44 Durham-Chapel Hill MSA20.51.45 Greensboro-High Point MSA14.00.38 Asheville MSA8.40.76 Wilmington MSA7.40.55 Winston-Salem MSA7.20.43 Greenville MSA5.31.23 Burlington MSA3.40.52 Hickory-Lenoir-Morganton MSA2.50.13 Fayetteville MSA2.51.92 Goldsboro MSA1.00.32 Rocky Mount MSA-1.5-0.21

MSA Jobs Percentage

GeographyJobs GainedPercentage North Carolina256.60.77 Fayetteville MSA2.51.92 Durham-Chapel Hill MSA20.51.45 Raleigh-Cary MSA47.81.44 Charlotte-Gastonia-Rock Hill NC-SC MSA93.51.29 Greenville MSA5.31.23 Asheville MSA8.40.76 Wilmington MSA7.40.55 Burlington MSA3.40.52 Winston-Salem MSA7.20.43 Greensboro-High Point MSA140.38 Goldsboro MSA1.00.32 Hickory-Lenoir-Morganton MSA2.50.13 Rocky Mount MSA-1.5-0.21

MSANumber of Unemployed

Number of Unemployed (not seasonally-adjusted)January 2008December 2013Area NameNumber of UnemployedNumber of UnemployedAsheville, NC Metropolitan Statistical Area, NC9,20410,682Burlington, NC Metropolitan Statistical Area, NC3,8864,601Charlotte-Gastonia-Concord, NC-SC Metropolitan Statistical A, NC45,91060,303Durham-Chapel Hill, NC Metropolitan Statistical Area, NC10,93113,287Fayetteville, NC Metropolitan Statistical Area, NC8,56012,464Goldsboro, NC Metropolitan Statistical Area, NC2,6483,588Greensboro-High Point, NC Metropolitan Statistical Area, NC20,14025,011Greenville, NC Metropolitan Statistical Area, NC4,7946,398Hickory-Lenoir-Morganton, NC Metropolitan Statistical Area, NC11,58411,718Jacksonville, NC Metropolitan Statistical Area, NC3,1374,359Raleigh-Cary, NC Metropolitan Statistical Area, NC22,71730,963Rocky Mount, NC Metropolitan Statistical Area, NC4,9706,363Wilmington, NC Metropolitan Statistical Area, NC9,22512,669Winston-Salem, NC Metropolitan Statistical Area, NC11,98114,403

MSA Number of Job Openings

Number of Job OpeningsJanuary 2008December 2013Area NameNumber of Job OpeningsNumber of Job OpeningsAsheville, NC Metropolitan Statistical Area, NC7,0829,961Burlington, NC Metropolitan Statistical Area, NC2,1732,558Charlotte-Gastonia-Concord, NC-SC Metropolitan Statistical A, NC54,91049,251Durham-Chapel Hill, NC Metropolitan Statistical Area, NC19,72415,268Fayetteville, NC Metropolitan Statistical Area, NC7,4877,795Goldsboro, NC Metropolitan Statistical Area, NC1,8751,538Greensboro-High Point, NC Metropolitan Statistical Area, NC8,67317,695Greenville, NC Metropolitan Statistical Area, NC5,3154,619Hickory-Lenoir-Morganton, NC Metropolitan Statistical Area, NC4,8615,151Jacksonville, NC Metropolitan Statistical Area, NC2,1222,893Raleigh-Cary, NC Metropolitan Statistical Area, NC34,93733,956Rocky Mount, NC Metropolitan Statistical Area, NC2,1192,274Wilmington, NC Metropolitan Statistical Area, NC6,7177,868Winston-Salem, NC Metropolitan Statistical Area, NC9,3698,072

MSA Job Supply and Demand

Number of Unemployed to Number of Job Openings January 2008December 2013Area NameNumber of Unemployed per Job OpeningNumber of Unemployed per Job OpeningAsheville, NC Metropolitan Statistical Area, NC1.301.07Burlington, NC Metropolitan Statistical Area, NC1.791.80Charlotte-Gastonia-Concord, NC-SC Metropolitan Statistical A, NC0.841.22Durham-Chapel Hill, NC Metropolitan Statistical Area, NC0.550.87Fayetteville, NC Metropolitan Statistical Area, NC1.141.60Goldsboro, NC Metropolitan Statistical Area, NC1.412.33Greensboro-High Point, NC Metropolitan Statistical Area, NC2.321.41Greenville, NC Metropolitan Statistical Area, NC0.901.39Hickory-Lenoir-Morganton, NC Metropolitan Statistical Area, NC2.382.27Jacksonville, NC Metropolitan Statistical Area, NC1.481.51Raleigh-Cary, NC Metropolitan Statistical Area, NC0.650.91Rocky Mount, NC Metropolitan Statistical Area, NC2.352.80Wilmington, NC Metropolitan Statistical Area, NC1.371.61Winston-Salem, NC Metropolitan Statistical Area, NC1.281.78

Housing in 2013

US Residential Construction (NIPA) 2007-2013

Chart1

749.3

717.3

671.7

616.4

565.5

538.4

507.4

452.1

405.5

376.3

392

395.2

383.1

400.8

365.6

374.7

377.1

381

386.8

398.1

418.4

425.7

443.7

468.8

490.3

513.2

532.6

531

Sheet1

2007200820092010201120122013

IIIIIIIVIIIIIIIVIIIIIIIVIIIIIIIVIIIIIIIVIIIIIIIVIIIIIIIV

Residential749.3717.3671.7616.4565.5538.4507.4452.1405.5376.3392395.2383.1400.8365.6374.7377.1381386.8398.1418.4425.7443.7468.8490.3513.2532.6531

US Residential Building Permits

YearTotal PermitsSingle Family Permits1991948.8753.519921,094.9910.719931,199.1986.519941,371.61,068.519951,332.5997.319961,425.61,069.519971,441.11,062.419981,612.31,187.619991,663.51,246.720001,592.31,198.120011,636.71,235.620021,747.71,332.620031,889.21,460.920042,070.11,613.420052,155.31,682.020061,838.91,378.220071,398.4979.92008905.4575.62009583.0441.12010604.6447.32011624.1418.52012829.7518.72013957.0608.5

NC Residential Building Permits* Based on 11 months of data

YearTotal PermitsSingle Family Permits200279,82466,400200379,22666,883200493,07777,147200597,91084,975200699,97982,672200785,77770,339200854,65239,082200933,80025,388201033,88926,047201132,80424,8632012 48,69229,9452013*50,51035,399

U.S. Monthly New Home Inventory (Seasonally Adjusted)

Chart1

4.4

4.3

4.1

4.3

4.2

4.3

4.2

4.5

4.7

4.5

5

4.9

5.3

6.1

5.9

6.3

6.2

6.3

7.3

6.7

6.7

7.3

6.6

6.5

7.2

7.9

7.9

7.4

7.8

8.2

8.3

9.2

9.2

8.5

9.4

9.6

9.3

9.7

10.5

10.3

10.7

10.7

10.5

11.3

10.9

11.6

11.4

11.2

12.4

11.1

11.3

10.4

9.5

8.4

7.7

7.7

7.7

7.1

7.6

7.8

8

8

7.1

6.3

9.2

8.2

8.9

9.1

7.6

8.6

8.4

6.9

7.2

7.8

7

6.6

6.5

6.6

6.8

6.7

6.4

6.3

6

6.8

5.4

4.8

4.9

4.9

4.7

4.8

4.6

4.6

4.5

4.8

4.5

4.5

3.9

4.1

4.2

4.3

4.5

4.3

5.5

5.4

5.4

4.5

4.3

January 200912.4 Months Supply

November 2013 4.3 Months Supply

Sheet1

Jan-05FebMarAprMayJunJulAugSepOctNovDecJan-06FebMarAprMayJunJulAugSepOctNovDecJan-07FebMarAprMayJunJulAugSepOctNovDecJan-08FebMarAprMayJunJulAugSepOctNovDecJan-09FebMarAprMayJunJulAugSepOctNovDecJan-10FebMarAprMayJunJulAugSepOctNovDecJan-11FebMarAprMayJunJulAugSepOctNovDecJan-12FebMarAprMayJunJulAugSepOctNovDecJan-13FebMarAprMayJunJulAugSepOctNov

4.44.34.14.34.24.34.24.54.74.554.95.36.15.96.36.26.37.36.76.77.36.66.57.27.97.97.47.88.28.39.29.28.59.49.69.39.710.510.310.710.710.511.310.911.611.411.212.411.111.310.49.58.47.77.77.77.17.67.8887.16.39.28.28.99.17.68.68.46.97.27.87.06.66.56.66.86.76.46.36.06.85.44.84.94.94.74.84.64.64.54.84.54.53.94.14.24.34.54.35.55.45.44.54.3

Source

http://research.stlouisfed.org/fred2/data/MSACSR.txt

US Case Schiller Housing Price Index(Composite 20)

MonthIndexConditionPercent Change January 2000100.00BaseJuly 2006206.52Peak106.5%March 2012134.07Trough-35.1%December 2012146.089.0%December 2013165.69Current13.4%

Charlotte Case Schiller Housing Price Index

MonthIndexConditionPercent Change January 2000100.00BaseJuly 2007135.61Peak35.6%January 2012108.39Trough-20.1%December 2012115.056.1%December 2013124.07Current7.8%

Keys to WatchConsumer ConfidenceConsumer DebtHousing PricesExcess ReservesUS Monthly Job Growth (1st Friday)Gasoline Prices

Babson Capital/UNC Charlotte Economic Forecast March 11, 2014

Current ExpansionBegan July 200954 months7th longest of 33 total expansions since December 1854

**************************************************************