1 U.S. Economic & Market outlook Thomas Corcoran Senior Managing Director GE Capital May 13, 2014

The Latest No economic growth in Q1 Housing recovery has stalled Geopolitical tensions are rising Some asset prices are a little too high 2

Tonight’s discussion The Fed will err on keeping rates too low The impact on the markets More runway for growth Less extreme business cycles Beginning to see fiscal improvements 3

The Fed’s Critical Juncture

5 Extraordinary Fed response continues

6 Abundant liquidity still being provided

Labor Markets Slowly Improve 7

8 A single policy for an uneven situation

There’s Increasingly More Opportunity 9

Expectations Hold Near 2% 10

11 - Gradual pullback from extraordinary accommodation - Fed’s likely to state its intentions with less lead time New leadership

Market Accommodated in ’14 So Far 12

13 Watch short-term Treasuries

The Fed’s impact on the Market

15 Private credit expansion continues

Latest Market Volatility’s Contained 16

17 Wealth is being restored

Credit Markets Get More Attention 18

Euro-Zone’s in a Better Place 19

Runway for growth

GDP Mix, Mild Differences 6 Yrs Later 21

GDP’s Grown Despite Dramatic Change 22

Is Moderate Growth Behind Us? 23

24 The fiscal drag looks set to ease

Consumption - Up 17 Straight Quarters 25

Upside Potential … Bus. Investment 26

Upside Potential … US Exports 27

The Stretched Out Business Cycle

29 What inning are we in?

30 Household finances have improved

31 Watch business inventories

US Fiscal Realities

US Public Debt Crosses GDP Relative Growth 33

Making Progress, Will it Continue? 34

Big Actuarial Challenges Ahead 35

36 Fed policy aids the US Treasury

Summary – What to Watch for - Gov’t spending/investment -----> Less fiscal drag - Export growth -----> Dollar is competitive - Full-time job gains -----> Higher pay? - Business investment -----> Uneven, pent-up demand - Housing -----> Will recent slowdown last? - 2-yr UST yields -----> Fed’s policy path - Global -----> Geopolitical developments - Asset markets -----> Low volatility unlikely to last 37

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