39th Annual Economic Forecast Conference, Thursday, January 13, 2011 (Seattle, WA). 2011 Forecast - Ken Goldstein, Puget Sound Economic Forecaster

1. 39th Annual Economic Forecast Conference

3. Mike Dueker, Russell Investments

4. Dick Conway, Puget Sound Economic Forecasterwww.enterpriseSeattle.org

5. PUGET SOUND ECONOMIC OUTLOOK Dick Conway The Puget Sound Economic Forecaster Conway Pedersen Economics, Inc. www.economicforecaster.com

7. Stock market has regained two-thirds of the value lost during the last plunge.

8. Spread between 3-month LIBOR and T-bill rate signals little, if any, stress in the credit markets.

10. In terms of jobs, the root of the recession was construction and financial activities.

12. The Great RecessionConstruction and Financial Activities Impact Percent Change Change Construction employment -45,000 -34.1 Financial activities employment -18,700 -17.1 Indirect employment* -61,200 --- Total employment impact -124,900 -6.7 Total employment change -138,200 -7.4 *Due to multiplier effect.

13. Puget Sound and U.S. EmploymentAnnual Percent Change

15. Boeing and Microsoft are our two biggest overseas sellers.

16. Since the mid-2009 turnaround in U.S. real GDP, exports have been the fastest growing sector.

18. With the focus now on balancing the budget, it will reduce spending and trim employment.

19. Due to a record drop in tax revenue, state and local governments will also cut expenditures.

21. U.S. Real Gross Domestic Product andPersonal Consumption Expenditures

22. Puget Sound Economic ForecastPercent Change 2009 2010 2011 2012 Employment -4.9 -1.9 1.2 2.4 Personal income -1.6 1.9 3.8 5.1 Consumer price index 0.6 0.5 1.5 1.7 Housing permits -50.1 22.9 4.0 36.9 Population 1.5 0.9 0.6 0.8

23. Puget Sound Economic Forecast (2)Percent Change 2009 2010 2011 2012 Retail sales -4.5 3.1 4.1 4.7 Taxable retail sales -12.4 -1.0 3.0 7.2 Home sales -2.5 0.9 10.2 9.9 Average home price -11.7 -0.2 1.3 5.5 Apartment vacancy (%) 6.9 5.5 4.9 4.8

24. Puget Sound Leading Index and Employment