1. Economic Outlook: Beyond the Recession ESICA Spring Conference The Tides Inn – Irvington, VA May 6, 2010 Ann Battle Macheras Federal Reserve Bank of Richmond

2. Overview National Economic Trends GDP Employment Business Activity Construction Indicators Construction Put in Place Commercial Vacancy Rates Property Prices Financial Markets Lending for Commercial Real Estate What to Expect?

3. National Economic Trends

4. US Gross Domestic Product Percent Change, Seasonally Adjusted Annual Rate Source: BEA/Haver Analytics

5. Real Gross Domestic Product Source: BEA/Haver Analytics

6. Real Gross Domestic Product Source: Bureau of Economic Analysis/Haver Analytics

7. Non-Residential Fixed Investment Source: BEA/Haver Analytics

8. Real Non-Residential Fixed Investment Equipment and Software Source: BEA/Haver Analytics

9. Non-Residential Fixed Investment in Structures Source: BEA/Haver Analytics

10. Real Non-Residential Fixed Investment in Structures Source: BEA/Haver Analytics

11. Nonfarm Payroll Employment Average Monthly Change Source: Bureau of Labor Statistics/Haver Analytics

13. Industry Growth in the United States Percent Change in Employment from a Year Ago

14. Unemployment Rate Source: Bureau of Labor Statistics/Haver Analytics

15. Retail Sales Source: BEA/Haver Analytics % Change: Jan: 4.1% Feb: 3.9% Mar: 7.6%

16. Personal Income and Expenditures Source: BEA/Haver Analytics

17. ISM Manufacturing and Non-Manufacturing Surveys Source: Institute of Supply Managers

18. Richmond Manufacturing Composite Index: MD, DC, VA, WV, NC, SC Source: Federal Reserve Board/Haver Analytics

19. Manufacturing Activity – Regional Surveys PhiladelphiaNew York Source: Federal Reserve Bank of Philadelphia and Federal Reserve Bank of New York

20. Industrial Production Index: 2002=100 Source: Federal Reserve Board/Haver Analytics

21. Capacity Utilization Index: 2002=100 Source: Federal Reserve Board/Haver Analytics

22. Core Capital Goods Source: US Census Bureau/Haver Analytics

23. Construction Indicators

24. U.S. Construction Put in Place Total and Private Construction Source: US Census Bureau/Haver Analytics

25. U.S. Construction Put in Place Office and Commercial Construction Source: US Census Bureau/Haver Analytics

26. U.S. Construction Put in Place Power and Manufacturing Construction Source: US Census Bureau/Haver Analytics

27. Regional Construction Put in Place Total Private Construction Source: US Census Bureau/Haver Analytics

28. Regional Construction Put in Place Office Construction Source: US Census Bureau/Haver Analytics

29. Regional Construction Put in Place Commercial Construction Source: US Census Bureau/Haver Analytics

30. Regional Construction Put in Place Manufacturing Construction Source: US Census Bureau/Haver Analytics

31. U.S. Commercial Real Estate Source: CB Richard Ellis/Haver Analytics

32. Regional Commercial Real Estate Office Vacancy Rates Source: CB Richard Ellis/Haver Analytics

33. Regional Commercial Real Estate Industrial Availability Rates Source: CB Richard Ellis/Haver Analytics

34. Employment’s Relationship to Residential and Commercial Property Prices Source: Moody’s/REAL, BLS, Haver Analytics Moody’s/REAL Commercial Property Price Index: Dec. 2000=100

35. Financial Markets

36. Fed Funds Rate

37. Lending for Commercial Real Estate Net Percentage Tightening Standards

38. Lending for Commercial Real Estate Net Percentage Reporting Stronger Demand

39. Possible Future Scenarios?

40. Gross Domestic Product – What to Expect? Note: For the most recent recession, t= 2Q:2009 Source: BEA/Haver Analytics

41. Nonfarm Payroll Employment – What to Expect? Note: For the most recent recession, t= June 2009 Source: BLS/Haver Analytics

42. Private Nonresidential Construction – What to Expect? Note: For the most recent recession, t= June 2009 Source: Census Bureau/Haver Analytics

43. Looking Ahead for 2010: Positive developments: Job losses tapering off and gains setting in Consumer spending strengthening Business investment and increased activity Global markets reinforcing the recovery Risks to the recovery Stubborn unemployment Housing slow to rebound Commercial real estate – continued drag State and local revenue shortfalls – another drag

44. Links for Data: Construction Put In Place: http://www.census.gov/const/www/c30index.html http://www.census.gov/const/www/c30index.html (the links on the lefthand side take you to additional pages with more detail for each category) Senior Loan Officer Survey – Measures of Supply and Demand for Commercial Real Estate Loans: http://www.federalreserve.gov/boarddocs/SnLoanSurvey/default.htm National Indicators, such as GDP, Personal Consumption, etc. – Charts available in pdf files, with sources listed below http://www.richmondfed.org/research/national_economy/national_econo mic_indicators/index.cfm Ann’s email: ann.macheras@rich.frb.org

45. The views and opinions expressed herein are those of the author. They do not represent an official position of the Federal Reserve Bank of Richmond or the Federal Reserve System. Questions? … and thank you!