1. Where to From Here? Dr. Steven P. Lanza Executive Editor
The Connecticut Economy
CREUES Commercial Real Estate Conference
November 11, 2009

4. RISK PREMIUMS: A RETURN TO NORMALCY
TED Spread = 3-month LIBOR minus 3-month Treasury Bill Rate

5. Existing home sales on the rise
NAR Indexed Sales 2006 = 100

6. Cutting the overhang of Supply
Month’s Supply

8. Stocks regain some lost ground
+ 40%

9. New unemployment claims drop sharply
“Normal”

10. Factories start humming again
PMI Manufacturing Index

11. GDP marks a turnaround Contributions to GDP Growth +3.5% -2.7% -0.7%
Percentage Points at Annual Rates
-2.7%
-0.7%
-5.4%
-6.4%

12. “V” RECOVERY: IS HISTORY DESTINY?
This Recession, at Historical Average
Average Quarterly Growth During
Equivalent Period of Expansion
Average Quarterly Contraction During Recession

13. Employers pared workforces aggressively
Total Recession Job Losses, in Thousands
2007-Q4 through 2009-Q2
1 Million

14. CONSUMER CONFIDENCE IS RETURNING
Index 1985 = 100
Future +118%
Overall +77%
Current -5%

15. MOST* STIMULUS SPENDING IS YET TO COME
Spent
$150 Billion
25%
75%
Unspent
$650 Billion
* AS OF 11/11/09

16. RETURNING TO LATEST TREND WILL TAKE TIME
$18
$16
$15
$13
$12
$11
$10 $9
Annual Growth
Quarters
to Trend
11.8% 5
7.1% 9
1.9%
n.a.
U.S. GDP, in Trillions
3.4%
Trend = 2.9% since 2001,
3.4% 1947-present

17. HOUSEHOLDS ARE SOCKING AWAY MORE INCOME
Avg
Personal Saving as a Percent of Disposable
1950
1970
1990

18. DESPITE REBOUND, CONFIDENCE SUBDUED
Index 1985 = 100

19. LENDERS TIGHTEN STANDARDS AT SLOWER PACE, BUT LOANS REMAIN HARD TO GET
Consumer
Net Percent of Banks Tightening Standards

20. AND LOAN DEMAND IS STILL WEAK
Consumer
Business
Net Percent of Banks with Stronger Loan Demand

21. TRILLIONS IN HOME EQUITY HAS DISAPPEARED
Billions of Dollars
-37%

22. CT JOBS UNDER DIFFERENT RECOVERY PATHS
GDP Growth 7% 5%
Thousands 3% 2%

23. PATHS FOR CT INCOME COULD BE SMOOTHER
GDP Growth 7% 5% 3% 2%
Billions of 2005 Dollars

24. BUT JOBLESS RATE WILL BE HARD TO TAME
GDP Growth 2% 3% 5%
Percent Unemployed in Connecticut 7%