A Few Common Sense Observations On The U.S. Economic Outlook What Do The Resurgent Stock Market, Greenspan’s Conundrum, Froth In The Housing Market & Hurricane Katrina Mean For The U.S. Economy? Atlanta Appraisal Institute Atlanta, Georgia Mark Vitner Director and Senior Economist Wachovia Corporation September 15, 2005

2 The Economy Has Strong Momentum

3 Hiring Has Picked Up

4 Unemployment Falls Below 5%

5 Inventory Rebuilding Will Boost Growth In 2006

6 The Fed Still Has More Work To Do

7 Greenspan’s Conundrum, We Have Been Here Before

8 Economic Forecast *(Qtr/Qtr% Change, Annual Rate) Real GDP*2.7%4.2%3.5%3.1% Personal Consumption* 2.9%3.9%3.5%2.6% Equipment & Software* 3.2%11.9%10.6%7.2% CPI (YoY)2.3%2.7%3.1%2.8% Corporate Profits (YoY) 16.4%12.6%13.5%8.1% 10-Yr T-Note3.89%4.21%4.56%4.86%

9 Atlanta Is Seeing Modest Gains

10 Atlanta Unemployment Rising?

11 Atlanta Bankruptcies

12 Population Growth

13 Atlanta Homebuilding

14 Atlanta Home Prices

15 Atlanta Office Employment

16 Office Vacancy Rates Trending Down?

17 Industrial Vacancy Rates

18 Summary & Conclusions Hurricane Katrina Will Lead To Slower Growth During The Second Half Of 2005 & Slightly Higher Inflation The Flattening Of The Yield Curve Reflects Growing Perceptions That Economic Growth Is Slowing Slower Economic Growth Will Curb Inflation & Eventually Cause The Fed To Pause We See Little Likelihood Of A Recession In The Next Few Years The Rhetoric On The Housing Bubble May Be A Bit Fevered Home Prices Are Rising Because Demand Exceeds Supply More Than To Rampant Speculation Demographics Should Remain Positive Through The End Of The Decade There Is Very Little Speculative Inventory In The Single-Family Market Prices Will Fall In Some Regions When Demand Finally Cools Off