1. Is the US Headed for Another Economic Crisis?

2. Specific Topics 1) Is the Banking Sector Stable? 2) Are State and Local Governments Solvent? 3) How Serious is the Federal Debt Problem? 4) Will the Real Estate Market Recover? 5) What About Consumer Spending? 6) What Should we Expect Over the Next 12 Months

3. 1) Is the Banking Sector Stable?

4. FDIC Bank Closures 1990 to 2011

5. FDIC Problem Banks 1990 to 2011

6. Total Assets for all FDIC Insured Banks: Approximately $14 Trillion Total Assets for the 865 Banks on the FDIC Problem List: Approximately $400 Billion (Less Than 3% of the $14 Trillion)

7. Overall Grade for the US Banking Sector

8. Overall Grade for the US Banking Sector C

9. US Banks are Flush with Cash

10. 2) Are State and Local Governments Solvent?

11. State and Local Government Revenue and Expenses

12. Overall Grade for the Financial Condition of the Typical State or Local Government

13. Overall Grade for the Financial Condition of the Typical State or Local Government B -

14. 3) How Serious is the Federal Debt Problem?

15. Total Federal Debt

16. How Big of a Threat is the Federal Debt Problem for the General Health of the US Economy?

17. Analogy to Debt Capacity for a Family There is a “Tipping Point” Beyond Which Lenders are Unwilling to Extend Credit The Level of Interest Expense and the Ability to Service the Debt are of Greater Concern Than the Level of Debt per se.

18. Additional Factor in the Case of US Treasury Debt The International Transactions Demand for US Dollars and US Treasury Debt

19. What the Implication of International Demand for the Tipping Point? International Demand Clearly Adds to the Capacity for US Debt Relative to the Level of Debt Capacity for Other Nations. However, the Full Extent of the Increase In Debt Capacity Had Yet to Be Tested In Addition, it is too Early to Assess the Potential Effect of a Nasty Political Debate Over US Debt

20. US Debt Held by Foreigners

21. Overall Grade for the Financial Condition of the Federal Government

22. Overall Grade for the Financial Condition of the Federal Government D

23. 4) Will the Real Estate Market Recover?

24. Housing Starts

25. Overall Grade for the Residential Real Estate Market

26. Overall Grade for the Residential Real Estate Market E

27. 5)What About Consumer Spending?

28. Consumer Spending

29. Overall Grade for the Consumer Sector

30. Overall Grade for the Consumer Sector A -

31. 6) What Should we Expect Over the Next 12 Months?

32. How Strong is (was) the Economic Recovery?

33. Real GDP from 2002 to 2011

34. Real GDP From 1950 to 2011

35. Inventory to Sales Ratio

36. New Factory Orders

37. Average Weekly Overtime

38. If the Economy was Recovering Then Why Has The Unemployment Rate Remained So High?

39. Unemployment Rate

40. Unemployment 101

41. Okun’s Law

42. Unemployment 101 Okun’s Law Effects of Recession Severity on Critical Economic Linkages

43. Unemployment 101 Okun’s Law Effects of Recession Severity on Critical Economic Linkages Growth in Labor Productivity

44. Unemployment 101 Okun’s Law Effects of Recession Severity on Critical Economic Linkages Growth in Labor Productivity Growth in Work Force

45. Unemployment 101 Okun’s Law Effects of Recession Severity on Critical Economic Linkages Growth in Labor Productivity Growth in Work Force Mechanics of the Unemployment Measure

46. An Additional Observation The Absolute Decrease in Real GDP and the Absolute Increase in Real GDP Might not be the Best Way to Measure the Beginning and End of an Economic Recession. Most Economists Agree that a Better Measure is the Increase or Decrease in Real GDP Relative to the Long Term Trend in Productive Capacity

47. Real GDP from 2002 to 2011

48. The Recession of 1990-91

49. The Recession of 2001

50. What Has Been Driving This Economic Recovery?

51. Is the Recovery Due to Monetary Stimulus?

52. Interest Rate on a Conventional 30 Year Mortgage

53. What About Fiscal Stimulus Programs?

54. TARP Program in Late 2008: $700 Billion for Investments in Financial Institutions

55. What About Fiscal Stimulus Programs? TARP Program in Late 2008: $700 Billion for Investments in Financial Institutions ARRA Programs in Late 2009: $300 Billion in Tax Cuts and $500 Billion in Additional Spending

56. Private Sector Employment

57. Is There Another Factor Contributing to Economic Recovery?

58. Trade-Weighted Value of the US Dollar

59. Trade-Weighted Value of the US Dollar – A Longer View

60. Yuan Per Dollar

61. Canadian Dollar vs US Dollar

62. What Effect Does a Decline in the Value of the US Dollar Have on the US Economy?

63. The Dual Pricing Effect Foreign goods and services become more expensive for US consumers US goods and services become less expensive for non US consumers

64. By Virtue of a Substantially Lower Value of the US Dollar, You Can Even Expect to See a Decline in the Rate of International Outsourcing for Parts and Services

65. Economic Forecast for the Next 12 Months

66. Despite Continuing Issues for Many Parts of the US Economy, I Expect to See Modest Growth in Real GDP at an Annual Rate of 1% or 2%.

67. Economic Forecast for the Next 12 Months Despite Continuing Issues for Many Parts of the US Economy, I Expect to See Modest Growth in Real GDP at an Annual Rate of 1% or 2%. I also Think There is a Roughly Equal Chance of Either Modest Decline or Enhanced Growth in Real GDP During any Given Quarter

68. And Most Important of All

69. If Any of These Predictions Turn Out to Be Incorrect, Please Remember That my Name is:

70. And Most Important of All If Any of These Predictions Turn Out to Be Incorrect, Please Remember That my Name is: Ben Bernanke