1. PBCTPBCT Connecticut Economic Overview “Recovery Underway?” May 2002 Todd P. Martin 1st VP & Chief Economist People’s Bank 203.338.4826 tpmarti@peoples.com  Todd P. Martin:

2. PBCTPBCT US Economic Outlook - 2002: The Recession is over - mild recovery underway Fed aggressively cut fed funds to 1.75% last year - lowest since 1961 - Not expected to tighten until the summer of 2002, at the earliest. Economy responding to lower interest rates, stimulative fiscal policy, lower energy costs, and a swing in inventories. Unemployment rate still expected to rise through mid-2002 Risks to the downside: Additional terrorist attack - Escalating unrest in the Middle East - rising oil prices - risk of synchronized global recession - ‘Enronitis’ - weak corporate profits - delayed capital spending

3. PBCTPBCT Recession may have been the mildest on record? Source: BEA, Conference Board People’s Bank Real Chain Weighted Gross Domestic Product Growth - % change SAR 2nd Q 2002-4th Q 2002 are forecast

4. PBCTPBCT CT Economic Outlook - 2002: CT economy not immune to recession but out-performs in terms of income growth & the unemployment rate Do not expect repeat of 1990s recession due to more diversified employment mix (defense a stabilizing factor) - balanced real estate markets - State fiscal position - banks have adequate capital & credit available CT has lost 28,500 jobs since 7/00 (1.7%) - Unemployment rate currently 3.5% rises to 4.0%-4.5% later this year. Risks: National recovery - continued Bear Market - high costs - deteriorating fiscal condition - exposure to energy shocks

5. PBCTPBCT People's Bank Business Barometer stalls Source: People’s Bank, Centerprise Advisors

6. PBCTPBCT PBBB YOY shows worst may be over for CT? Source: People’s Bank, Centerprise Advisors

7. PBCTPBCT Quarterly change in PBBB turned negative in 2001 Source: People’s Bank, Centerprise Advisors

8. PBCTPBCT CT has lost 28,500 jobs since mid-2000 Source: BLS, CT Labor Department  (Thousands)

9. PBCTPBCT Both US & CT employment down 1% YOY Source: BLS, CT Labor Department

10. PBCTPBCT CT has lost over 40% of its man. jobs since 1984 Source: BLS, CT Labor Department  (Thousands)

11. PBCTPBCT CT Service employment is up nearly 80% since 1984 Source: BLS, CT Labor Department  (Thousands)

12. PBCTPBCT Biggest job losses in Hartford & Bridgeport LMA’s Change in non-farm employment Mar. 2002 vs. Mar. 2001 (NSA) Source: CT Labor Dept.

13. PBCTPBCT Hardest hit employment sectors in CT Change in CT Non-Farm Employment Mar. 2002 vs. Mar. 2001 ( Not SA) Source: CT Labor Department

14. PBCTPBCT CT gained jobs in these sectors YOY Change in CT Non-Farm Employment Mar. 2002 vs. Mar. 2001 ( Not SA) Source: CT Labor Department

15. PBCTPBCT CT unemployment rate lower than US rate Source: CT Labor Department % of labor force (SA)

16. PBCTPBCT CT Initial unemployment claims may have peaked? Source: CT Labor Department

17. PBCTPBCT All LMAs have unemployment rates below 5.5% CT Unemployment Rates % by Labor Market Area (NSA. Mar. 2002) Source: CT Labor Dept.

18. PBCTPBCT Housing permits up in most areas YTD Source: CT DECD % Change in CT New Housing Permits Authorized YTD Jan. - Mar. 2002 vs. 2001 by LMA

19. PBCTPBCT Housing not overbuild like the mid-1980s Source:CT DECD, New England Economic Project Total housing permits authorized in CT in units 2002-2005 is forecast

20. PBCTPBCT Auto registrations down 12.4% YTD Source: CT Labor Department Connecticut New Auto Registrations Processed YTD - (Jan. - Mar.)

21. PBCTPBCT Tax revenues are down 5.9% this year (FY 01-02) Source: State of CT Dept. of Revenue Services Year-to-Date % change in CT Tax Revenues ( FY 01-02 vs. FY 00-01 July - Mar. )

22. PBCTPBCT CT projects deficits after 10 years of surpluses Source: CBIA, CT OPM General Fund surplus or deficit from operations - fiscal years - $millions  2002-03 are estimated

23. PBCTPBCT Summary Recession over - mild recovery underway CT economy - not a repeat of the early 1990’s Out-perform US - unemployment & income Under-perform US - population & job growth Pros: Wealth - productivity - tourism - bio-tech Cons: High costs - manufacturing - energy - Wall Street - State fiscal condition

24. PBCTPBCT For more information... Please check out our web site at www.peoples.com for Economic Perspectives and other bank products & services