1. Bernard L. Weinstein, Ph.D. Presentation to ISM-Dallas January 10, 2008 A Falling Dollar, $100 Oil, and the Sub-Prime Mess: Is a Recession Inevitable?

2. Gross domestic product Source: Commerce Department Real Economic Growth 2003 2004 2005 2006 2007 3Q 2007: 4.9%

3. Monthly change, in thousands Source: Labor Department Dec. ’07: 18,000 ’05 2006 2007 Nonfarm Payrolls

4. In percent, seasonally adjusted: Source: U.S. Department of Labor ’06 2007 U. S. Jobless Rate

5. Total personal income in trillions of dollars, before taxes, at seasonally adjusted annual rates Source: U.S. Department of Commerce; Bureau of Economic Analysis Nov. 2007: $11.87 trillion 2006 2007 Personal Income

6. Total retail sales in billions of dollars, seasonally adjusted. Source: U.S. Commerce Department Nov. 2007: $385.8 billion ’06 2007 Retail Sales

7. In billions of dollars, seasonally adjusted Source: Commerce Department Construction Spending 2006 2007 Nov. 2007: $1.17 trillion

8. Nonfarm business productivity, percent change from previous quarter at annual rate, seasonally adjusted Source: U.S. Department of Labor ’03 2004 2005 2006 2007 Productivity

9. Oiloholics

10. Twin Concerns

11. History Lesson

12. Source: U.S. Department of Commerce Deficit in International Goods & Services Trade Billions of dollars, seasonally adjusted. Import figures exclude shipping and insurance. 2006 2007 Oct. 2007: $57.8 billion

13. Index, 2002=100, seasonally adjusted Source: Federal Reserve Board Industrial Production Nov. 2007: 113.9

14. Bigger Role in Economy

15. Falling Dollar, Smaller Deficits Source: U.S. Census Bureau, JPMorgan Chase

17. New private housing starts during the month, in millions, at seasonally adjusted annual rates. Source: Dept. of Commerce; Dept. of H.U.D.; Census Bureau Housing Starts 2006 2007 Nov. Starts: 1.19

18. Single-family homes (in thousands) Source: Commerce Department New-Home Sales Nov. 2007: 647,000

19. Annual rate, in millions of dwelling units. Source: The National Association of Realtors Existing-Home Sales Nov. 2007: 5.0 million

20. Source: Wall Street Journal, Oct. 11, 2007

22. Highest Subprime Exposure Source: Wall Street Journal, Oct. 11, 2007

23. Subprime Loans in 2006 Source: Wall Street Journal, Oct. 11, 2007 Number of Loans % of Total Loans High Rate Loan Volume High Rate Loans as % of Total Loans Dallas-Plano- Irving 47,207 (15)29.0% (130)$5.162 b (27)22.4% (176) Fort Worth- Arlington 24,638 (37)29.7 % (109)$2.330 b (57)24.0% (135) U.S.3,995,90328.8%$632.5 b24.3%

24. Dip in Household Ownership

25. Home Value Decline

26. Construction Lending And Sub Prime Loans

27. Percentage change from previous month, seasonally adjusted. Source: Labor Department Producer Prices ’05 2006 2007

28. Percentage change, month to month (seasonally adjusted) Source: Bureau of Labor Statistics Consumer Prices 2006 2007 0

31. From a monthly survey of 5,000 U. S. households, 1987 = 100 Source: The Conference Board Consumer Confidence Index 2006 2007 Nov. 2007: 87.3

32. Index of 10 indicators designed to “lead,” or predict overall economic activity; 1996 = 100. Source: The Conference Board Leading Indicators Nov. 2007: 136.3 ’05 2006 2007

34. Source: Texas Workforce Commission Unemployment Rate, U. S., Texas, & D/FW U. S. Dec. 2007 = 5.0% Texas Nov. 2007 = 4.1% D/FW Nov. 2007 = 4.0% U. S. & Texas Seasonally Adjusted *D/FW not Seasonally Adjusted

35. Payroll Employment in Dallas- Plano-Irving Metropolitan Division 1999-2006 (annual averages) *Through October 2007 Source: Texas Workforce Commission