1. Presentation Prepared for: Washington Association of Money Managers Washington, D.C., December 3, 2003 2004 Economic Outlook: Growth, the Awe of Productivity, and Social Change Presented by: Kathleen Camilli Camilli Economics

2. Nominal GDP Real GDP Corp. Profits GDP Deflator CPI Fed Funds 10-yr note Q3’03 10.1% 8.2% +11.8% 1.9% 2.2% 1.0% 4.2% Q4’03 7.4% 5.5% +10.0% 1.9% 2.3% 1.0% 4.5% Q1’04 6.0% 4.1% +9.0% 1.9% 2.4% 1.5% 5.5% Q2’04 6.9% 5.0% +7.0% 1.9% 2.3% 2.0% 5.0% Q3’04 6.3% 4.4% +8.0% 1.9% 2.2% 2.5% 4.5% Q4’04 6.4% 4.5% +9.0% 1.9% 2.3% 3.0% 4.5% 2003 6.5% 4.6% +8.1% 1.9% 2.3% 1.1% 4.0% 2004 6.4% 4.5% +8.3% 1.9% 2.4% 2.3% 4.9% 2003 U.S. Economic Outlook

3. Civilian Unemployment Rate: 16 yr + SA, % Gross Domestic Product % Change - Annual Rate SAAR, Bil.Chn.1996$ 00959085807570 Sources: Bureau of Labor Statistics, Bureau of Economic Analysis /Haver Analytics11/19/03 12 10 8 6 4 2 20 15 10 5 0 -5 -10

4. Civilian Unemployment Rate: 16 yr + SA, % All Employees: Total Nonfarm Difference - Period to Period SA, Thous 0095908580 Source: Bureau of Labor Statistics /Haver Analytics11/19/03 12 10 8 6 4 2 1200 800 400 0 -400 -800

5. Nonfarm Business Sector: Output Per Hour/All Persons % Change - Annual Rate SA, 1992=100 Civilian Unemployment Rate: 16 yr + SA, % 00959085807570 Source: Bureau of Labor Statistics /Haver Analytics11/19/03 16 12 8 4 0 -4 -8 12 10 8 6 4 2

6. Unemployment Rate: Private Wage and Sal Wkrs: Information Industry NSA, % All Employees: Information Difference - Period to Period SA, Thous 03020100999897969594 Source: Bureau of Labor Statistics /Haver Analytics11/19/03 10 8 6 4 2 120 80 40 0 -40 -80

7. Unemployment Rate: Private Wage and Sal Wkrs: Manufacturing Industry NSA, % All Employees: Manufacturing Difference - Period to Period SA, Thous 03020100999897969594 Source: Bureau of Labor Statistics /Haver Analytics11/19/03 7.50 6.75 6.00 5.25 4.50 3.75 3.00 150 75 0 -75 -150 -225

8. Fixed Private Nonresidential Investment % Change - Annual Rate SAAR, Bil.Chn.1996$ Nonresidential Equipment & Software % Change - Annual Rate SAAR, Bil.Chn.1996$ 030201009998979695949392919089 Source: Bureau of Economic Analysis /Haver Analytics11/19/03 22.5 15.0 7.5 0.0 -7.5 -15.0 30 20 10 0 -10 -20

9. Housing Starts SAAR, Thous.Units Contract Rates on Commitments: Conventional 30-Yr Mortgages, FHLMC % 00959085807570 Sources: Census Bureau, Federal Reserve Board /Haver Analytics11/19/03 2500 2000 1500 1000 500 20.0 17.5 15.0 12.5 10.0 7.5 5.0

10. Resident Population: 50-54 Years Thous Housing Starts SAAR, Thous.Units 00959085807570 Source: Census Bureau /Haver Analytics11/19/03 20000 18000 16000 14000 12000 10000 2500 2000 1500 1000 500

11. Total U.S. Patent Applications excl Reissues Units Resident Population: 50-54 Years Thous 00959085807570 Sources: U.S. Patent & Trademark Office, Census Bureau /Haver Analytics11/19/03 350000 300000 250000 200000 150000 100000 50000 20000 18000 16000 14000 12000 10000

12. Foreign Exchange Rate: People's Republic of China Yuan/US$ Trade Balance: China (Mainland): Customs Value NSA, Mil.$ 0095908580 Sources: Federal Reserve Board, Census Bureau /Haver Analytics11/19/03 10 8 6 4 2 0 4000 0 -4000 -8000 -12000 -16000

13. BOP: Balance on Current Account SA, Mil.$ Nominal Trade-Weighted Exch Value of US$ vs Major Currencies MAR 73=100 0095908580 Sources: Bureau of Economic Analysis, Federal Reserve Board /Haver Analytics11/19/03 40000 0 -40000 -80000 -120000 -160000 160 140 120 100 80 60

14. Cash Price: Gold, Handy and Harman Base Price $/troy Oz Nominal Trade-Weighted Exch Value of US$ vs Major Currencies MAR 73=100 0095908580 Sources: Wall Street Journal, Federal Reserve Board /Haver Analytics11/19/03 700 600 500 400 300 200 160 140 120 100 80 60

15. JOC-ECRI Industrial Price Index: All Items 1996=100 Cash Price: Gold, Handy and Harman Base Price $/troy Oz 0095908580 Sources: JOC-ECRI, Wall Street Journal /Haver Analytics11/19/03 110 100 90 80 70 60 700 600 500 400 300 200

16. Cash Price: Gold, Handy and Harman Base Price $/troy Oz 10-Year Treasury Note Yield at Constant Maturity % p.a. 0095908580 Sources: Wall Street Journal, Federal Reserve Board /Haver Analytics11/19/03 700 600 500 400 300 200 17.5 15.0 12.5 10.0 7.5 5.0 2.5

17. 10-Year Treasury Note Yield at Constant Maturity % p.a. PCE: Chain Price Index % Change - Year to Year SA, 1996=100 0095908580 Sources: Federal Reserve Board, Bureau of Economic Analysis /Haver Analytics11/19/03 17.5 15.0 12.5 10.0 7.5 5.0 2.5 12 10 8 6 4 2 0

18. Thank You 2004 Economic Outlook: Growth, the Awe of Productivity, and Social Change Presented by: Kathleen Camilli Camilli Economics