1. Economic Outlook Michael Wolf, Economist September 12, 2014

2. Economics 22 Gross Domestic Product Real GDP declined in the first quarter, but those contractionary forces should prove to be temporary Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

3. Government

4. Economics 4 Government Purchases The public sector has remained a weight on the overall economy, but should soon move back into being a minor contributor to overall growth Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

5. Economics 5 U.S. Budget Deficit Deficit is shrinking, but not nearly fast enough Source: U.S. Department of the Treasury and Wells Fargo Securities, LLC

6. Economics 6 U.S. Budget Gap The larger problem is that there is still no credible plan to move back into a surplus Source: Congressional Budget Office and Wells Fargo Securities, LLC

7. Economics 77 Federal Government Spending: Entitlements in the Driver’s Seat Entitlement programs are the main drivers of growing expenditures Source: Congressional Budget Office and Wells Fargo Securities, LLC

8. Business Investment

9. Economics 9 Business Investment Business investment looks to be strengthening after a hiccup earlier in the year Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

10. Economics 10 Corporate Cash The financial health of the corporate sector is very strong and should allow corporations to spend more going forward Source: Federal Reserve Board and Wells Fargo Securities, LLC

11. Economics 11 Business Lending Commercial and industrial lending has surged over the past quarter, helped by easier credit and increased demand Source: Federal Reserve Board and Wells Fargo Securities, LLC

12. Economics 12 Manufacturing Large, Global Businesses: Recent pickup in activity Source: Institute for Supply Management and Wells Fargo Securities, LLC

13. Economics 13 CRE: Industrial A rise in manufacturing and energy production has fueled growth in the industrial real estate market Source: PPR and Wells Fargo Securities, LLC

14. Economics 14 Manufacturing: Production and Jobs Gap Rising manufacturing production has not led to huge job gains Source: Institute for Supply Management and Wells Fargo Securities, LLC

15. Economics 15 CRE: Office Improvement in the office sector has been more modest despite strong gains in office-using employment Source: Reis, Inc. and Wells Fargo Securities, LLC

16. Economics 16 Commercial Real Estate The recovery has been uneven across property types Source: Reis, Inc., PPR and Wells Fargo Securities, LLC

17. Economics 17 Small Businesses Small Businesses: A full recovery in small business optimism is still distant, with taxes and regulation remaining the two big issues Source: National Federation of Independent Businesses, Gallup, Wells Fargo Bank and Wells Fargo Securities, LLC

18. Consumption

19. Economics 19 Personal Consumption Expenditures Consumption should rebound during the forecast period but growth is likely to remain somewhat subdued Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

20. Economics 20 Employment Total employment finally breached its prerecession peak… Source: U.S. Department of Labor and Wells Fargo Securities, LLC

21. Economics 21 Employment: Structural We still have a ways to go before recovering all of the full-time jobs lost in the most recent recession Source: U.S. Department of Labor and Wells Fargo Securities, LLC

22. Economics 22 Unemployment …but the unemployment rate overstates the health of the labor market. Discouraged workers and an abundance of part-time work rein in spending Source: U.S. Department of Labor and Wells Fargo Securities, LLC

23. Economics 23 Wages and Salaries In addition, wage growth has been relatively slow to pick up, while inflation begins to pull away Source: U.S. Department of Labor and Wells Fargo Securities, LLC

24. Economics 24 Income Growth: Different Rates After-tax nominal income has increased the most for the lowest and highest income households since the mid-1980s Source: U.S. Department of Labor and Wells Fargo Securities, LLC

25. Economics 25 Income Growth: Rising at Different Rates Since 2007, income growth has been clearly concentrated in the upper quintiles Source: U.S. Department of Labor and Wells Fargo Securities, LLC

26. Economics 26 Consumer Balance Sheet Although consumer leverage remains elevated, it is off its prerecession high Source: Federal Reserve Board, U.S. Department of Commerce and Wells Fargo Securities, LLC

27. Economics 27 Debt Service Ratio And the debt service ratio has fallen to historical lows Source: Federal Reserve Board, U.S. Department of Commerce and Wells Fargo Securities, LLC

28. Economics 28 Household Debt Rising student loan debt is crowding out other borrowing, particularly for autos and credit cards Source: Federal Reserve Board and Wells Fargo Securities, LLC 20132003

29. Housing Market

30. Economics 30 Housing Market: Existing Home Sales Existing home sales have started to rebound but remain lower than a year ago Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

31. Economics 31 Housing Market: Home Sales The recent weakness was seen across regions Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

32. Economics 32 Housing Market: New Home Sales New home sales have seen only modest improvement Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

33. Economics 33 Mortgage Rates Although mortgage rates remain low by historical standards, the rise over last year has had a negative effect on homebuying Source: Freddie Mac and Wells Fargo Securities, LLC

34. Economics 34 Residential Loan Standards Demand appears to be strengthening as tightening standards decrease Source: Federal Reserve Board and Wells Fargo Securities, LLC

35. Economics 35 Home Purchase Expectations But other indicators show that demand remains soft Source: The Conference Board and Wells Fargo Securities, LLC

36. Economics 36 Home Prices Home price gains have moderated considerably Source: Federal Housing Finance Agency, National Association of Realtors, S&P Corp. and Wells Fargo Securities, LLC

37. Economics 37 Housing Market: Inventories Low inventories have applied upward pressure on price Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

38. Economics 38 Housing Market: Distressed Home Sales Fewer distressed homes available at a discount also keep prices moving higher Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

39. Economics 39 Housing Market Fundamentals Are Changing Household formations remain well below their historical norms, and a larger proportion of new households are choosing to rent Source: U.S. Department of Commerce and Wells Fargo Securities, LLC Owners vs. RentersHousehold Formation

40. Economics 40 Housing Market: Home Sales Despite slow growth in new home sales, homebuilders remain a bit more optimistic Source: U.S. Department of Commerce, National Association of Home Builders and Wells Fargo Securities, LLC

41. Economics 41 Housing Market: Apartments Some builders are likely benefitting from growth in the multifamily market, where apartment demand and construction remains strong Source: Reis and Wells Fargo Securities, LLC

42. Economics 42 Housing Market: Condos Existing condo sales had also slipped recently but the upward trajectory is clear Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

43. Economics 43 Housing Market: Residential Construction We expect residential construction to continue to advance, though a full recovery in the housing market is a long way off Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

44. Economics 44 U.S. Forecast

45. Client/Prospect Name Wells Fargo Securities, LLC Economics Group 45 John E. Silvia …....................... … john.silvia@wellsfargo.comjohn.silvia@wellsfargo.com Global Head of Research and Economics Diane Schumaker-Krieg ………………… …… ….diane.schumaker@wellsfargo.comdiane.schumaker@wellsfargo.com Global Head of Research & Economics Chief Economist Mark Vitner, Senior Economist……………....………... mark.vitner@wellsfargo.com mark.vitner@wellsfargo.com Jay H. Bryson, Global Economist …………………....…… …. jay.bryson@wellsfargo.com jay.bryson@wellsfargo.com Sam Bullard, Senior Economistsam.bullard@wellsfargo.comsam.bullard@wellsfargo.com Nick Bennenbroek, Currency Strategist……nicholas.bennenbroek@wellsfargo.comnicholas.bennenbroek@wellsfargo.com Eugenio J. Alemán, Senior Economist… …………. eugenio.j.aleman@wellsfargo.com eugenio.j.aleman@wellsfargo.com Anika R. Khan, Senior Economist …. anika.khan@wellsfargo.comanika.khan@wellsfargo.com Senior Economists Zachary Griffiths, Economic Analyst zachary.griffiths@wellsfargo.comzachary.griffiths@wellsfargo.com Mackenzie Miller, Economic Analyst mackenzie.miller@wellsfargo.commackenzie.miller@wellsfargo.com Erik Nelson, Economic Analyst erik.f.nelson@wellsfargo.comerik.f.nelson@wellsfargo.com Alex Moehring, Economic Analyst alex.v.moehring@wellsfargo.comalex.v.moehring@wellsfargo.com Economists Azhar Iqbal, Econometrician………………… ……………azhar.iqbal@wellsfargo.comazhar.iqbal@wellsfargo.com Tim Quinlan, Economist …………………… ……………..tim.quinlan@wellsfargo.comtim.quinlan@wellsfargo.com Eric J. Viloria, Currency Strategist eric.viloria@wellsfargo.comeric.viloria@wellsfargo.com Sarah Watt House, Economist …………… …………sarah.house@wellsfargo.comsarah.house@wellsfargo.com Michael A. Brown, Economist ……………… … michael.a.brown@wellsfargo.commichael.a.brown@wellsfargo.com Michael T. 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