ECONOMIC OUTLOOK: IS GROWTH BACK? Dr. Michael Walden Reynolds Distinguished Professor North Carolina State University 1

Nation’s Economic Report Card: Real GDP (annualized % change in real GDP) 2

MEANING OF “END TO THE RECESSION” 3

Job Growth Has Turned Positive 4

BUT THE JOB RECOVERY WILL BE SLOW (NONFARM EMP AND UNEMP RATE) 5

CONSUMER WEALTH AND INCOME HAVE REBOUNDED (billions of 2005 $) 6

CONSUMER FINANCIAL BEHAVIOR HAS DRAMATICALLY CHANGED (INDICES) 7

BUT CONSUMER SPENDING AT RETAIL STORES IS INCREASING (billions of 2005 $, seasonally-adjusted, excl. vehicles & parts) 8

CORPORATE PROFITABILITY HAS ALSO IMPROVED (PRE-TAX, % OF GDP) 9

HOUSING MARKET HAS NOT IMPROVED CONSISTENTLY 10

HAVE HOUSING PRICES STOPPED FALLING? (ANNUALIZED % CHANGE) 11

INFLATION IS CURRENTLY NOT A PROBLEM (CPI, total and core) 12

ARE INTEREST RATES POISED TO RISE? (YIELDS ON TRESURY SECURITIES) 13

GOVERNMENT POLICY 14

The Fed’s Monetary Policy 15

FISCAL POLICY – RISING DEBT 16

Social Security, Medicare, and Medicaid are Driving Federal Spending 17

NORTH CAROLINA ECONOMIY 18

NC JOBS HAVE BEGUN TO COME BACK 19

N.C. Major Sector Job Changes ( thousands, manuf and prof. serv on left, const and fin. on right) 20

Unemployment Rate Forecasts 21

Goldsboro Metro Job Market Trends (Index, December 2007 = 100, seas. adj.) 22

Goldsboro and N.C.: May Unemployment Rate (seasonally unadjusted) 23

WRAP UP: WHAT’S AHEAD? No “double dip”, but slow growth Household debt reduction is the key Keen competition for growth – NC well positioned 24