1. Omair Ali Antonio Alfonso Shehab Chowdhury Mohammad Zubair Ahsan Syed Federal Reserve Open Market Committee Fed Challenge 2011

2. AGENDA I. General Comments II. GDP growth trends III. Consumer Sector IV. Housing Market V. Labor Markets and Productivity VI. Inflation VII. Financial Markets VIII. Specific Issues of Concern: Eurozone Worries IX. Policy Action

3. I. General Comments: U.S. Economic Climate  GDP growth has improved  Labor market is weak with the unemployment rate stuck at 9.1%  Consumers remain cautious – Consumer confidence still low.  Business investment picking up.  Oil Prices are volatile.  Financial market worries dominate.  Policy actions – focus on reducing unemployment

4. II. GDP Growth  3Q 2011 marks ninth consecutive quarter increase in real GDP.  3Q 2011 real GDP growth stepped up to a 2.5% rate from 1.3% in 2Q and 0.4% in 1Q.  Growth is up 1.6% compared to a year ago.  Strength seen in consumer spending (up 2.4%) and fixed nonresidential investment (up 14%).  Final sales grew at a healthy 3.6% rate, but inventories subtracted 1.1% from this to give us 2.5% 3Q growth.  Core PCE deflator was up at a 2.4% rate in 3Q, which is high, but better than the 3.3% rate seen in 2Q.  Despite 3Q improvement, the GDP gap – the difference between actual and potential GDP is sizeable at 6.7%

5. Large GDP Gap  Overall Assessment: Despite firmer 3Q growth, downside risks remain.

6. III. Consumer Outlook  3Q 2011 revival in consumer spending but negative signs dominate.  Consumer confidence slipped in October.  Income growth is meager

7. IV. Housing  Some stabilization seen  Consumer confidence slipped in October.  Income growth is meager

8. Mortgage rates

9. Housing starts

10. Home Sales and the NAHB Housing Market Index Source: The Dismal Scientist

11. Foreclosure activity and Delinquency Source: Dismal Scientist

12. Case Shiller Home Price Indexes Source: The Dismal Scientist

13. Case-Shiller continued Source: S&P Indices, Press Release, October 25, 2011

14. V. Labor Markets and Productivity  Unemployment rate is stuck at 9.1%  Consumer confidence slipped in October.  Income growth is meager

15. Unemployment Source: Bureau of Labor Statistics

16. Under Employed Labor Source: Bureau of Labor Statistics

17. Pay Roll Source: Bureau of Labor Statistics

18. Jobless Claims Source: Bureau of Labor Statistics

19. ISM Source: Institute of Supply Management

20. Industrial Production Source: Board of Governors Federal Reserve

21. Inventory Sales

22. Durable goods

23. Non Defense Captial goods Source:

24. Trade Balance Source: St. Louis Federal reserve

25. U.S Dollar Index Source: Bloomberg

26. Federal Deficit In terms of GDP Source: Congressional Budget Office

27. Out Put Per Hour Source: Bureau of Labor Statistics

28. PPI Source: Bureau of Labor Statistics

29. Capacity

30. Money Supply

31. Federal Funds Rate

32. Commercial Paper