Economic Outlook 2014 Robert Carreira, Ph.D.

Real GDP Growth (%)

United StatesArizonaCochise County Pre-Recession High mil (Jan 08) 2.69 mil (Oct 07) 39,650 (Jun 08) Recessionary Low mil (Feb 10) 2.37 mil (Sep 10) 33,825 (Ju1 14) Recessionary Job Losses -8.7 mil -6.3% -312, % -5, % Current (Aug 2014) mil2.57 mil34,125 From High +822, % -117, % -5, % From Low +9.5 mil 7.4% +195, % % Jobs Needed for 5% Unemployment 1.8 mil 1.3% 63, % 1, % Jobs

Peak Current (Aug 2014) Change from Peak Change from Peak (%) Construction (incl. mining) 2,900 (Jun 2006) 1,150 -1, % Manufacturing 925 (Oct 2005) % Trade, Transportation, and Utilities 7,075 (Dec 2006) 5,850 -1, % Information 675 (Aug 2009) % Financial Activities 1,150 (Jul 2007) 1, % Professional and Business Services 6,100 (Dec 2009) 3,900 -2, % Educational and Health Services 5,025 (Mar 2012) 4, % Leisure and Hospitality 4,325 (Apr 2008) 3, % Other Services 1,100 (Mar 2004) % Federal Government 5,975 (Jun 2006) 5, % State and Local Government 7,700 (Jun 2008) 6,425 -1, % Cochise County Jobs by Industry

Pre- Recession Low Recessionary High One Year Ago (August 2013) Current (August 2014) United States 4.4% (May 2007) 10.0% (Oct 2009) *7.2%*5.9% Arizona 3.5% (Jul 2007) 10.8% (Jan 2010) 8.1%7.1% Cochise County 3.4% (May 2007) 9.4% (Oct 2013) 8.7%8.1% Benson 6.1% (May 2007) 10.2% (Oct 2013) 10.2%9.4% Unemployment * September

Upside State/national economy improvement = tourism/ interstate traffic Benson can benefit from recovery outside Cochise County (Rosemont mine, Tucson economy) Downside Fort Huachuca Government (federal, state & local) Population declines Local Labor Market Outlook

Retail Sales BensonCochise CountyArizona 2014 (Jan-Jul)4.0% -4.9%2.9% % 1.5%7.3% % 2.5% % 7.1% % -3.1% % -10.7% % -13.1% % 4.3% Inflation-adjusted to CPI-U

Restaurant & Bar BensonCochise CountyArizona 2014 (Jan-Jul)0.6% 1.8%5.0% % -0.5%2.2% % -4.4% 5.0% % -0.2% 2.1% % 0.0% 1.8% % 0.3% -5.4% % 0.2% -6.2% % 0.1% -0.2% Inflation-adjusted to CPI-U

Accommodation BensonCochise CountyArizona 2014 (Jan-Jul)-13.6% -0.6%10.1% % -12.2%0.4% % -17.2% 1.7% % -13.1% 2.0% % 8.3% 0.8% % -9.0% -16.5% % 1.0% -8.4% % 19.7% 1.4% Inflation-adjusted to CPI-U

Retail Tractor Supply (Benson) Fort Huachuca Population declines Restaurant & Bar Interstate traffic/tourism (Benson) Fort Huachuca Accommodation Interstate traffic/tourism (Benson) Construction projects Fort Huachuca Sales Outlook

Home Sales (Single-family) Jan-Jun 2014 Cochise County: 712 (+5.5%) Benson Area: 69 (-6.8%)

Median Home Price * Jan-Jun

Foreclosures (% of sales)

New Home Construction

Foreclosures Upward pressure on sales Downward pressure on prices Dampened demand for new construction Population declines = downward pressure on new construction Benson: Location, land, and improving state economy Real Estate & Construction Outlook

Recession Kept out of recession by Fort Huachuca Cochise County recession began in 2011 Upside Improving state and national economies will help tourism and interstate commerce El Dorado purchase of entitled land Tractor Supply Downside Defense/Fort Huachuca Population declines Foreclosures Conclusion