1. Douglas Economic Outlook 2012

2. GROSS DOMESTIC PRODUCT Seasonally Adjusted Annual Rate

3. INFLATION (CPI) Compared to same month previous year

4. NATIONAL OUTLOOK Continued slow economic growth Labor market improvement sluggish Short- and long-run inflation threat remains

5. GDP BY STATE

6. THE LOCAL ECONOMY Cochise County & Douglas

7. COCHISE COUNTY RETAIL SALES GROWTH Inflation adjusted; compared to same month previous year

8. DOUGLAS RETAIL SALES TAX REVENUE Unadjusted; compared to same month previous year

9. Cochise County 2012: 1.8% * 2011: -1.2% 2010: -4.8% 2009: -4.2% 2008: -6.5% 2007: -1.3% Douglas (Retail Sales Tax Revenue) 2012: 6.8% * 2011: 5.5% 2010: -1.1% 2009: -4.8% 2008: 6.1% 2007: 2.2% RETAIL SALES RECENT ACTIVITY * Jan-Jul only; comparison to same period the previous year

10. RESTAURANT AND BAR SALES GROWTH Inflation adjusted; compared to same month previous year

11. Cochise County 2012: -4.5% * 2011: -0.2% 2010: 0.0% 2009: 0.3% 2008: 0.2% 2007: 0.1% Douglas 2012: 6.4% * 2011: 12.9% 2010: -1.2% 2009: 0.4% 2008: -7.7% 2007: -2.9% RESTAURANT & BAR SALES RECENT ACTIVITY * Jan-Jul only; comparison to same period the previous year

12. ACCOMMODATION SALES GROWTH Inflation adjusted; compared to same month previous year

13. Cochise County 2012: -17.7% * 2011: -13.1% 2010: 8.3% 2009: -9.0% 2008: 1.0% 2007: 19.7% Douglas 2012: -28.2% * ACCOMMODATION SALES RECENT ACTIVITY * Jan-Jul only; comparison to same period the previous year

14. SALES OUTLOOK Modest retail sales growth Restaurant and bar and accommodation sales trending downward

15. EMPLOYMENT

16. UNEMPLOYMENT RATES * Jan-Jul only; seasonally adjusted

17. MONTHLY UNEMPLOYMENT RATES Seasonally adjusted

18. COCHISE COUNTY NONFARM JOB GROWTH Compared to same month previous year

19. COCHISE COUNTY JOB GAINS/LOSSES BY INDUSTRY 12 months ended July 2012 * Includes mining

20. COCHISE COUNTY JOB GROWTH RATE BY INDUSTRY 12 months ended July 2012 * Includes mining

21. EMPLOYMENT OUTLOOK Labor market improvement sluggish Continued slow improvement likely through 2012-2013 Blips along the way

22. HOUSING AND REAL ESTATE

23. NEW HOME CONSTRUCTION Single Family Residential Building Permits

24. MLS HOME SALES

25. MEDIAN HOME PRICE * 1 st half only

26. OUTLOOK New residential construction picking up countywide Douglas historically has low levels of new residential construction Boost to sales from foreclosures/lower prices/lower interest rates Continued downward pressure on median price

27. CONCLUSION Moving in the right direction, but slowly Local retail sales show promise, hospitality continues to struggle Countywide, defense spending cuts pose threat Labor market improvement slow Construction and home sales picking up Election year politics