1. U.S. Economic Outlook Mark Vitner, Managing Director & Senior Economist November 29, 2012

2. Economic Outlook 2 Economic Growth We are more than three years into the economic recovery and there is still a considerable amount of uncertainty regarding sovereign debt issues in Europe, the federal budget deficit and the willingness of businesses and households to commit to major capital purchases. Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

3. Economic Outlook 3 Financial Crises Are Becoming More Frequent Treasury yields are currently near record low levels. We believe QE and policy uncertainty are the primary drivers of ultra-low interest rates. Source: IHS Global Insight and Wells Fargo Securities, LLC

4. Economic Outlook 44 The Timing of The First Fed Rate Hike The timing for the Fed’s first tightening move has been pushed even further out. Long-term growth estimates have also been scaled back. Source: Federal Reserve Board and Wells Fargo Securities, LLC Individual FOMC Member ForecastsConsensus Fed Funds Rate Hike

5. Economic Outlook 5 Federal Reserve Balance Sheet The massive expansion of the Fed’s balance sheet has lifted asset prices and has also given the economy a boost. But all magic comes with a price! Source: Federal Reserve Board and Wells Fargo Securities, LLC

6. Economic Outlook 6 Output Gap The Great Recession has produced an enormous output gap that will take years to close. Source: Congressional Budget Office, U.S. Department of Commerce and Wells Fargo Securities, LLC

7. Economic Outlook 7 U.S. Budget Deficit The federal budget deficit has come down somewhat but remains at a historically high level. Source: U.S. Department of the Treasury and Wells Fargo Securities, LLC

8. Economic Outlook 8 Labor Market Unemployment is gradually trending down, although much of the improvement has come from unusual forces, including extraordinary seasonal factors and sluggish labor force growth. Source: U.S. Department of Labor and Wells Fargo Securities, LLC

9. Economic Outlook 9 Labor Market Job losses exceeded every post- World War II downturn, and the modest recovery to date has been extremely disappointing. Source: U.S. Department of Labor and Wells Fargo Securities, LLC

10. Economic Outlook 10 Consumer Related This year’s improved stock market has helped bolster consumer spending at a time when real incomes are barely growing, and consumer confidence remains historically low. Source: U.S. Department of Commerce, Conference Board and Wells Fargo Securities, LLC Consumer ConfidenceHousehold Wealth

11. Economic Outlook 11 Consumer Confidence Economic growth is unlikely to accelerate in a meaningful way until consumers feel better about current economic conditions than they do about future economic prospects. Source: Conference Board and Wells Fargo Securities, LLC Confidence GapConsumer Confidence

12. Economic Outlook 12 Homebuilding We believe housing starts have bottomed and will increase modestly over the next few years. Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

13. Economic Outlook 13 Housing Starts Apartment construction accounts for much of the recent improvement in homebuilding. We believe multifamily housing will account for a larger proportion of future starts. Source: U.S. Department of Commerce and Wells Fargo Securities, LLC Multifamily Housing StartsSingle & Multifamily Housing Starts

14. Economic Outlook 14 U.S. Mortgage Rates Mortgage rates are at historic lows and are likely to remain low for some time. Source: FHLMC and Wells Fargo Securities, LLC

15. Economic Outlook 15 Home Prices Home prices have firmed recently as foreclosures have become a smaller portion of overall sales. Prices will likely fluctuate along a low trajectory until more foreclosures clear through the pipeline. Source: Federal Housing Finance Agency, National Association of Realtors, S&P Corp. and Wells Fargo Securities, LLC

16. Economic Outlook 16 NAHB/Wells Fargo Housing Market Index Homebuilder sentiment has risen significantly over the past year, but it is still at a relatively low level. Source: National Association of Home Builders and Wells Fargo Securities, LLC

17. Economic Outlook 17 International Forecast The European financial crisis is dragging global economic growth lower, but we believe growth should pick up by 2014. Source: Congressional International Monetary Fund and Wells Fargo Securities, LLC

18. Virginia

19. Economic Outlook 19 Virginia Employment Picture Virginia’s labor market has seen a relatively strong recovery. Nonfarm payrolls are less than 1.5 percent below their prerecession peak. Source: U.S. Department of Labor and Wells Fargo Securities, LLC

20. Economic Outlook 20 Virginia Employment Picture Education & health services, leisure & hospitality and financial activities have led job growth over the past year. Source: U.S. Department of Labor and Wells Fargo Securities, LLC

21. Economic Outlook 21 Virginia Unemployment Rate The unemployment rate in Virginia has declined modestly over the past two years and remains well below the U.S. rate. Source: U.S. Department of Labor and Wells Fargo Securities, LLC

22. Economic Outlook 22 Metro-Level Employment Source: U.S. Department of Labor and Wells Fargo Securities, LLC

23. Economic Outlook 23 Metro-Level Employment Source: U.S. Department of Labor and Wells Fargo Securities, LLC

24. Economic Outlook 24 Personal Income Personal income growth has picked back up in recent quarters. Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

25. Economic Outlook 25 Population Growth Population growth in Virginia is maintaining its historic pace. Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

26. Economic Outlook 26 China Economic Slowdown Fiscal Cliff Uncertainty Credit Availability & Financial Reform European Debt Crisis Deleveraging Fiscal & Monetary Policy Geopolitical Tensions Energy/Commodity Price Swings Issues to Watch

27. Economic Outlook 27 Our Forecast

28. Appendix

29. Economic Outlook 29 Recent Special Commentary Wells Fargo Economics Group Publications To view any of our past research please visit: http://www.wellsfargo.com/ economics To join any of our research distribution lists please visit: http://www.wellsfargo.com/ economicsemail A Sampling of Our Recent Special, Regional & Industry Commentary

30. Economic Outlook Wells Fargo Securities, LLC Economics Group 30 John Silvia …....................... … john.silvia@wellsfargo.comjohn.silvia@wellsfargo.com Global Head of Research and Economics Diane Schumaker-Krieg ………………… …… ….diane.schumaker@wellsfargo.comdiane.schumaker@wellsfargo.com Global Head of Research & Economics Chief Economist Mark Vitner, Senior Economist……………....………... mark.vitner@wellsfargo.com mark.vitner@wellsfargo.com Jay Bryson, Global Economist …………………....………. jay.bryson@wellsfargo.com jay.bryson@wellsfargo.com Eugenio Aleman, Senior Economist ……………. eugenio.j.aleman@wellsfargo.com eugenio.j.aleman@wellsfargo.com Sam Bullard, Senior Economist…………………………. sam.bullard@wellsfargo.com sam.bullard@wellsfargo.com Anika Khan, Senior Economist.…. anika.khan@wellsfargo.comanika.khan@wellsfargo.com Senior Economists Sarah Watt, Economic Analyst ……………………………. sarah.watt@wellsfargo.com sarah.watt@wellsfargo.com Kaylyn Swankoski, Economic Analyst kaylyn.swankoski@wellsfargo.comkaylyn.swankoski@wellsfargo.com Zachary Griffiths, Economic Analyst zachary.griffiths@wellsfargo.comzachary.griffiths@wellsfargo.com Sara Silverman, Economic Analyst sara.silverman@wellsfargo.comsara.silverman@wellsfargo.com Economists Azhar Iqbal, Econometrician………………………………azhar.iqbal@wellsfargo.comazhar.iqbal@wellsfargo.com Tim Quinlan, Economist …………………………………..tim.quinlan@wellsfargo.comtim.quinlan@wellsfargo.com Michael A. Brown, Economist ………………… michael.a.brown@wellsfargo.commichael.a.brown@wellsfargo.com Economic Analysts Administrative Assistants 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, 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. SECURITIES: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE Important Information for Non-U.S. Recipients For recipients in the EEA, this report is distributed by Wells Fargo Securities International Limited (“WFSIL”). WFSIL is a U.K. incorporated investment firm authorized and regulated by the Financial Services Authority. The content of this report has been approved by WFSIL a regulated person under the Act. WFSIL does not deal with retail clients as defined in the Markets in Financial Instruments Directive 2007. The FSA rules made under the Financial Services and Markets Act 2000 for the protection of retail clients will therefore not apply, not will the Financial Services Compensation Scheme be available. This report is not intended for, and should not be relied upon by, retail clients. This document and any other materials accompanying this document (collectively, the “Materials”) are provided for general informational purposes only. Peg Gavin, Executive Assistant. peg.gavin@wellsfargo.com peg.gavin@wellsfargo.com Cyndi Flowe, Administrative Assistant cyndi.h.flowe@wellsfargo.comcyndi.h.flowe@wellsfargo.com