1. Economic Outlook October 5, 2009

2. | Government Finance Officers Association of South Carolina 2 Table of Contents I.National Economic Overview II.Residential Real Estate Summary III.South Carolina Appendix

3. | Government Finance Officers Association of South Carolina 3 National Economic Overview

4. | Government Finance Officers Association of South Carolina 4  We believe the recession may have ended in June. The downturn turned into the longest of the post-war period at 19 months, but some signs of stabilization are appearing.  We are beginning to see some small positives in many key indicators mixed in with smaller declines.  The labor market remains the primary concern as job losses have reached 7.2 million on their way to more than 8.0 million before the end of the cycle. This will easily exceed every downturn since the aftermath of World War II. The unemployment rate should exceed 10 percent later this year.  Level One  Level Two  Level Three  Level Four Highlights The Recession Appears to Have Ended This Summer, but the Recovery Will be Slow and Agonizing U.S. Economic Overview Wells Fargo U.S. Economic Forecast Source: Federal Reserve Board, U.S. Department of Commerce, U.S. Department of Labor and Wells Fargo Securities, LLC

5. | Government Finance Officers Association of South Carolina 5  Real "core" GDP, or private domestic final sales, lines up well with the persistent weakness in the domestic economy more clearly than GDP. The measure has been negative in the past six quarters, and we expect it to turn positive for the second half of this year.  International trade collapsed last year. Imports have fallen dramatically this year, while exports have fallen less.  Businesses have struggled to bring inventories in line with demand. Massive liquidations occurred in the first and second quarters. We expect the drawdown process to proceed, albeit more slowly, for several more quarters.  Nominal GDP, a measure of revenue growth for the economy, has already seen the steepest decline since 1958 and will likely turn positive in the second half of this year. Highlights The Domestic Economy Has Been Extremely Weak but Is on Track for a Modest Recovery U.S. Economic Overview Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

6. | Government Finance Officers Association of South Carolina 6  Collapsing Labor Market  The torrent of layoffs and job losses is unlikely to abate until next year.  Housing & Home Equity  Housing prices and home equity are still likely headed lower, weighing further on consumer spending and sentiment.  Fiscal Stimulus  A reduction in payroll withholdings provided a lift to take-home pay in the middle of this year.  Consumer Confidence  While confidence is still low, consumer expectations for the future have rebounded off of their lows. NegativePositive Discretionary Consumer Spending Consumer Spending Plunged in the Late 2008 and Early 2009, but the Declines Moderated This Spring Consumer Overview Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

7. | Government Finance Officers Association of South Carolina 7  Credit markets began a steady thaw late last year, and progress has continued in recent weeks. The TED spread has moved to its lowest level since the credit crunch began and is now at a more normal level.  Corporate borrowing has improved as credit spreads have narrowed. Credit is still relatively expensive and difficult to qualify for for small businesses and consumers.  Mortgage rates were pushed sharply lower by the Fed ’ s intervention in the MBS market, reaching historically low levels in April. Thirty-year fixed mortgage rates have remained around five percent since then. Highlights Fed and Treasury Actions Have Helped Narrow Credit Spreads Credit Spreads & The Yield Curve Source: British Bankers’ Association, Federal Reserve Board, Freddie Mac and Wells Fargo Securities, LLC

8. | Government Finance Officers Association of South Carolina 8  After declining in 2009, global economic growth is poised to rebound in 2010.  European economies have contracted more than the U.S. economy, but there are tentative signs that European recessions are coming to an end.  The dollar should continue to grind higher against most major currencies over the next few quarters as U.S. growth prospects continue to improve. Wells Fargo Bank Currency Strategy Group Forecast Highlights The Global Recession Drags On Global Growth & The Dollar Source: Bloomberg LP, Federal Reserve Board, International Monetary Fund and Wells Fargo Securities, LLC

9. | Government Finance Officers Association of South Carolina 9 Unemployment by County Unemployment Rate August 2009 Greater than 12.5% 10.0% to12.5% 8.0% to10.0% 6 to8.0% Less than 6.0% Unemployment Rate Large Portions of the United States Face Serious Unemployment Issues Source: US Department of Labor and Wells Fargo Securities, LLC

10. | Government Finance Officers Association of South Carolina 10 Residential Real Estate Summary

11. | Government Finance Officers Association of South Carolina 11  We estimate an overbuild of roughly 2.0 million units occurred at the cycle peak, and, unfortunately, little progress was made in reducing inventories in 2008 despite the collapse in new home construction. Inventory levels have improved this year but still remain elevated. This will continue to pressure new construction activity and prices.  Housing starts remain at low levels, although they have inched up recently. Starts probably bottomed during the first half of this year, but we are at least two years away from seeing starts move back above 1 million units.  Excess supply from builders and the rising tide of foreclosed properties have driven prices sharply lower. Price declines have moderated in recent months. Progress will likely remain uneven, and we do not expect to see house prices trough until 2010. Wells Fargo Housing Outlook Highlights Construction May Have Bottomed, but This Will Likely Not Be the End of the Problems for Housing Homebuilding Source: Federal Housing Finance Agency, National Association of Realtors, S&P Corp, U.S. Department of Commerce and Wells Fargo Securities, LLC

12. | Government Finance Officers Association of South Carolina 12  New home sales have improved markedly in recent months. Sales fell sharply last autumn despite lower mortgage rates and increased incentives from builders.  Existing sales have held up better and have also increased recently. A large portion, however, is foreclosure and distressed sales. The first-time homebuyers ’ tax credit is likely providing a lift to home sales. The tax credit, however, is due to expire at the end of the year.  The near-term relevance of the housing affordability measure has diminished, because prices have been pushed down by foreclosure activity and fewer people can qualify for conventional mortgages.  Credit standards loosened somewhat in the third quarter but still remain tight. Continued caution is understandable given the rise in delinquency rates and foreclosures. Highlights While Construction May Have Seen a Trough, We Expect Prices to Continue Declining for Some Time Residential Real Estate Source: Federal Reserve Board, National Association of Realtors, S&P Corp, U.S. Department of Commerce and Wells Fargo Securities, LLC

13. | Government Finance Officers Association of South Carolina 13 FHFA (OFHEO) Home Price Index Home Price Declines Will Likely Continue into 2010 Home Price Declines from Peak Source: FHFA and Wells Fargo Securities, LLC

14. | Government Finance Officers Association of South Carolina 14 South Carolina

15. | Government Finance Officers Association of South Carolina 15  South Carolina ’ s unemployment rate is the sixth highest in the nation. In July, the unemployment rate hit the highest level since the series began. Manufacturing layoffs are a major drag on the state, particularly in rural areas.  Employment growth collapsed earlier but has slowly edged up, although the trend remains down. Layoffs have risen quickly throughout the state.  Population growth remained strong, though slightly off the record-setting highs of 2007. The state ’ s relatively affordable housing continues to attract new residents, but recently the strongest gains have been in the Upstate and Charlotte ’ s South Carolina suburbs.  Housing construction activity has slowed more than 70 percent from its cycle peak in mid-2005, with much of the deceleration occurring along the coast. Investor activity drove up property values along the coast, and natural disasters increased insurance premiums. These factors combined to hurt affordability in Myrtle Beach, Charleston and Hilton Head. South Carolina Source: U.S. Department of Commerce, U.S. Department of Labor and Wells Fargo Securities, LLC Highlights South Carolina’s Persistently High Unemployment Rate Remains Troublesome

16. | Government Finance Officers Association of South Carolina 16  Employment growth has turned positive after dropping sharply at the end of last year. The growth can largely be attributed to employment gains in the education and healthcare sectors. While a high level of public employment, notably at the state capital and the University of South Carolina, normally would provide some insulation to job losses, the state ’ s budget shortfall and poor tax collections will be damaging.  The unemployment rate moved steadily higher over the past year but has recently edged down. State government and the university provide a great deal of stability.  Population growth recorded another near- record year in 2008 as the area remained relatively affordable compared to other Sunbelt states.  Building activity is well off its cycle highs, but the boom in Columbia was not nearly as large as along the coast. Recent data show improvement in single-family residential construction. Columbia Source: U.S. Department of Commerce, U.S. Department of Labor and Wells Fargo Securities, LLC Highlights The Pace of Declines Is Slowing in the State Capital

17. | Government Finance Officers Association of South Carolina 17  After several exceptionally strong years of growth, Charleston ’ s economy has cooled off considerably. Nonfarm employment has declined 2.6 percent since the recession began, but recent data show a slight reversal of the downward trend.  The unemployment rate has shot up considerably. Manufacturing employment has declined sharply, down 7.5 percent year over year. The economy is largely dependent on consumer-driven industries, such as leisure and hospitality and retail trade. The projected slow growth in consumer spending will dampen the coastal destination ’ s recovery.  In addition to tight credit, higher insurance costs and a weak second-home market are combining to restrain demand. The underlying trend in residential construction remains down, but the single- family sector has shown recent improvements.  Population growth for the past few years have been robust. The economic downturn, however, has caused a lack of household formation and mobility, thus population growth for 2009 should slow. Charleston Source: U.S. Department of Commerce, U.S. Department of Labor and Wells Fargo Securities, LLC Highlights Charleston Has Slowed Along with the Nation

18. | Government Finance Officers Association of South Carolina 18  After losing 7,900 jobs over the past year, job losses appear to be moderating. Job losses have been broad-based with construction, manufacturing and trade recording the largest declines. Auto-related manufacturers are quite concentrated in Greenville and have been struggling.  The unemployment rate has spiked over the past year, largely due to record population growth in the region as well as the severely weakened national economy.  Housing construction activity has slowed significantly, with the 12-month moving average now down nearly 70 percent over the past two years. Slowing construction activity should give existing inventories of new homes time to work through the system. The lack of a housing boom has allowed Greenville to largely avoid the requisite bust.  A successful diversification into the service sector should help support Greenville ’ s economy in the long run as old line manufacturing declines. This will be aided by strong population growth and increases in R&D spending. Greenville Source: U.S. Department of Commerce, U.S. Department of Labor and Wells Fargo Securities, LLC Highlights Employment Problems Dominate the Landscape

19. | Government Finance Officers Association of South Carolina 19  With tourism being the big driver and consumers cutting back on vacations, Myrtle Beach has taken a significant hit on the employment front. The unemployment rate surged to a record high of 12.7 percent in February, but has come down since.  Homebuilding surged in 2005, with both single-family and condominium developments soaring to unprecedented heights.  Myrtle Beach is clearly the most overbuilt market in South Carolina and one of the most overbuilt markets in the nation.  Population growth was robust for the past four years, although it slowed in 2008. The recession has limited the mobility of retirees to relocate to the area. Myrtle Beach Source: U.S. Department of Commerce, U.S. Department of Labor and Wells Fargo Securities, LLC Highlights A Weak Consumer Hampers on This Beach Destination

20. | Government Finance Officers Association of South Carolina 20 Appendix

21. | Government Finance Officers Association of South Carolina 21  Monthly Economic Outlook  Weekly Economic & Financial Commentary  Special Reports  Economic Indicators  Global Economic Commentary  Federal Reserve Commentary  Real Estate & Housing  Consumer & Retail  Chief Economist List  To join any of our research distribution lists please visit our website:  http://www.wachovia.com/economic semail http://www.wachovia.com/economic semail Distribution ListsRecent Special Commentary A Sampling of Our Recent Special, Regional and Industry Commentary Economics Group Publications

22. | Government Finance Officers Association of South Carolina 22 Wells Fargo Securities, LLC Economics Group Wells Fargo Securities Economics Group publications are produced by Wells Fargo Securities, LLC, a U.S broker-dealer registered with the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority, and the Securities Investor Protection Corp. Wells Fargo Securities, LLC, distributes these publications directly and through subsidiaries including, but not limited to, Wells Fargo & Company, Wachovia Bank N.A., Wells Fargo Bank N.A, Wells Fargo Advisors, LLC, and Wells Fargo Securities International Limited. The information and opinions herein are for general information use only. Wells Fargo Securities, LLC does not guarantee their accuracy or completeness, nor does Wells Fargo Securities, LLC assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sales of any security or as personalized investment advice. Wells Fargo Securities, LLC is a separate legal entity and distinct from affiliated banks and is a wholly owned subsidiary of Wells Fargo & Company © 2009 Wells Fargo Securities, LLC. SECURITIES: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE John E. Silvia, Ph.D. Chief Economist Diane Schumaker-Krieg Global Head of Research & Economics  diane.schumaker@wachovia.com diane.schumaker@wachovia.com  john.silvia@wachovia.com john.silvia@wachovia.com Sam Bullard Economist  sam.bullard@wachovia.com sam.bullard@wachovia.com  Desk Operations  Financial Services Anika Khan Economist  anika.khan@wachovia.com anika.khan@wachovia.com  Real Estate  Retail & Automotive Azhar Iqbal Econometrician  azhar.iqbal@wachovia.com azhar.iqbal@wachovia.com  Quantitative Macro- Economic Modeling Adam G. York Economist  adam.york@wachovia.com adam.york@wachovia.com  U.S. Consumer  Real Estate Ed Kashmarek Economist  ed.kashmarek@wellsfargo.com ed.kashmarek@wellsfargo.com  U.S. Macro Economy Tim Quinlan Economic Analyst  tim.quinlan@wachovia.com tim.quinlan@wachovia.com  Global Economies  Business Investment Kim Whelan Economic Analyst  kim.whelan@wachovia.com kim.whelan@wachovia.com  U.S. Macro Economy  Business Investment Yasmine Kamaruddin Economic Analyst  yasmine.kamaruddin@wachovia.com yasmine.kamaruddin@wachovia.com  U.S. Macro Economy Mark Vitner Senior Economist  mark.vitner@wachovia.com mark.vitner@wachovia.com  U.S. Macro Economy  Real Estate Jay H. Bryson, Ph.D. Global Economist  jay.bryson@wachovia.com jay.bryson@wachovia.com  Global Economies  Foreign Exchange Scott Anderson, Ph.D. Senior Economist  scott.a.anderson@wellsfargo.com scott.a.anderson@wellsfargo.com  U.S. Macro Economy Eugenio Aleman, Ph.D. Senior Economist  eugenio.j.aleman@wellsfargo.com eugenio.j.aleman@wellsfargo.com  U.S. Macro Economy