1. Brett Hammond, Ph.D. Managing Director and Chief Investment Strategist, TIAA-CREF ARE WE THERE YET? THE “NEW NORMAL” ECONOMY AND WHAT IT MEANS FOR INVESTORS Brett Hammond, Ph.D. Managing Director and Chief Investment Strategist, TIAA-CREF January 26, 2011

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3. 3 2010 HOW NORMAL?

4. 4 U.S. REAL GDP Source: Bureau of Economic Analysis ANNUALIZED GROWTH RATE (%) BY QUARTER

5. 5 Source: Global Insight REAL GDP FOR SELECT COUNTRIES QUARTERLY GROWTH RATES

6. 6 U.S. TREASURY YIELDS Source: U.S. Treasury Department %, QUARTER-ENDS, 12/31/09 – 12/31/10

7. 7 CREDIT SPREADS Sources: Merrill Lynch, Bloomberg. Option-adjusted spreads measure the relative value of fixed-income securities that contain an embedded option (such as a call provision in a corporate bond); they are quoted as a spread, or differential, over a benchmark security. The wider the option-adjusted spread, the higher the implied return and risk of the bond, compared with the benchmark. OPTION-ADJUSTED, BASIS POINTS OVER 10-YEAR U.S. TREASURY YIELD

8. 8 INFLATION Source: Bureau of Labor Statistics CONSUMER PRICE INDEX (CPI-U), % CHANGE FROM YEAR AGO

9. 9 EQUITIES Source: Global Insight U.S. EQUITY MARKET TOTAL RETURNS, 2008-2010 INDEX200820092010 Russell 3000® Index-37.31%28.34%16.93% Russell Midcap® Index-41.46%40.48%25.47% Russell 2000® Index-33.79%27.17%26.85% S&P 500® Index-37.00%26.46%15.06% Dow Jones Industrial Average-31.93%22.68%14.06% NASDAQ Composite-42.21%45.32%18.02% FTSE NAREIT Equity REIT-39.83%27.99%27.95% Past performance is no guarantee of future results. You cannot invest directly in any index.

10. 10 FIXED INCOME Source: Barclays Capital BARCLAYS CAPITAL FIXED-INCOME INDEX TOTAL RETURNS, 2008-2010 INDEX200820092010 U.S. Aggregate5.24%5.93% 6.54% U.S. Government12.39%-2.20% 5.52% U.S. Credit-3.08%16.04% 8.47% Municipal Bond 10-Year1.52%9.85% 4.05% U.S. TIPS-2.35%11.41% 6.31% Global Emerging Markets-16.16%35.61%10.93% Past performance is no guarantee of future results. You cannot invest directly in any index.

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12. 12 CONSUMER CONFIDENCE IN 2010 MONTHLY CONSUMER CONFIDENCE INDEX, % CHANGE FROM YEAR-AGO LEVELS Source: The Conference Board

13. 13 NOT WHAT’S NORMAL?

14. 14 CORPORATE PROFITS Source: Bureau of Economic Analysis $ BILLIONS, BEFORE TAXES

15. 15 LONG-TERM UNEMPLOYMENT Source: Bureau of Labor Statistics NUMBER OF FULL-TIME WORKERS UNEMPLOYED 52 WEEKS OR MORE

16. 16 SHRINKING PARTICIPATION IN THE WORKFORCE Source: Bureau of Labor Statistics. Civilian population age 16 and over. EMPLOYMENT-POPULATION RATIO, 2001-2010

17. 17 UNEMPLOYMENT BY GENDER MONTHLY UNEMPLOYMENT RATE (%), AGES 16 AND OLDER Source: Bureau of Labor Statistics

18. 18 A LOST DECADE FOR JOBS? Source: Bureau of Labor Statistics NONFARM PAYROLLS (IN THOUSANDS) Number of jobs has retreated to decade-ago levels

19. 19 HOUSING Sources: Global Insight Housing startsCase-Shiller Home Price Index NUMBER OF HOUSING STARTS AND RATE OF CHANGE IN HOME PRICES

20. 20 HOME SALES: HAVES AND HAVE NOTS Source: National Association of Realtors. Reflects year-ago % change in sales of existing homes nationwide, by price range, through 11/2010. $0-100K $100-250K $250-500K $500-750K $750K-1M $1M+ HOME SALES IN THESE PRICE RANGES DECLINED HOME SALES IN THIS PRICE RANGE INCREASED EXISTING HOME SALES HAVE DECLINED, WITH ONE EXCEPTION

21. 21 Source: Bureau of Labor Statistics. Earnings growth defined as change in mean real total money earnings by educational cohort of workers of all races and genders, age 25 and older, 2001 through 2008 (most recent data available) INCOME GROWTH: HAVES AND HAVE NOTS REAL INCOMES HAVE DECLINED, WITH ONE EXCEPTION High School Graduate Some College College Graduate Master’s Ph.D. MBA, JD, MD Not High School Graduate NEGATIVE INCOME GROWTH POSITIVE INCOME GROWTH

22. 22 LEADING ECONOMIC INDICATORS – UNITED STATES Source: The Conference Board INDEX VALUE

23. 23 LEADING ECONOMIC INDICATORS – G7 COUNTRIES* Source: OECD INDEX LEVEL

24. 24 Source: Bureau of Labor Statistics 24

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27. 27 ASSET CLASS OUTLOOK Equities Fixed Income Real Estate Commodities

28. 28 FORECASTERS’ BATTING AVERAGE:.000? ECONOMISTS HAVE MISSED EVERY RECESSION IN THE LAST 40 YEARS Sources: Federal Reserve Bank of Philadelphia; GMO. Based on 4-quarter moving averages of median forecasts vs. reported GDP. Actual data used through Jun 2010; projections through Sep 2011.

29. 29 This material has been prepared by and represents the views of Brett Hammond, and does not reflect the views of any TIAA-CREF affiliate. These views may change in response to changing economic and market conditions. The material is for informational purposes only and should not be regarded as a recommendation or an offer to buy or sell any product or service. TIAA-CREF personnel in its investment management area provide investment advice and portfolio management services through the following entities: Teachers Advisors, Inc., TIAA-CREF Investment Management, LLC, and Teachers Insurance and Annuity Association. TIAA, TIAA-CREF, Teachers Insurance and Annuity Association, TIAA-CREF Asset Management and FINANCIAL SERVICES FOR THE GREATER GOOD are registered trademarks of Teachers Insurance and Annuity Association. C49967 © 2011 Teachers Insurance and Annuity Association - College Retirement Equities Fund (TIAA-CREF), New York, NY 10017