1. ECONOMIC OUTLOOK: SHIFTING TO A HIGHER GEAR? Dr. Mike Walden Reynolds Distinguished Professor North Carolina State University 1

2. AGGREGATE PRODUCTION HAS TOTALLY RECOVERED 2

3. THE JOB MARKET IS ALSO COMING BACK 3

4. BUT JOB MARKET ISSUES LINGER DROP IN LABOR FORCE LONG TERM UNEMPLOYED IMPACT OF TECHNOLOGY 4

5. MANUFACTURING HAS BEEN A BIG PLUS 5

6. ….. AS HAVE EXPORTS billions of real 2009 $ 6

7. CONSUMERS ARE SPENDING MORE (INFLATION-ADJUSTED PERCENTAGE CHANGES) 7

8. HOUSEHOLD FINANCES CONTINUE TO IMPROVE 8

9. HOME PRICES ARE NOW RISING 9

10. HOME INVENTORIES ARE LOW (MONTHS TO SELL EXISTING INVENTORY) 10

11. TOTAL INFLATION HAS BEEN TAME (CPI, total, annual % chg.) 11

12. LONG INTEREST RATES HAVE TAKEN A JUMP (YIELDS ON TREASURY SECURITIES) 12

13. NATIONAL FORECASTS 225,000 – 250,000 JOBS CREATED PER MONTH 2.5% TO 2.75% GDP GROWTH RT UNEMPLOYMENT RATE BETWEEN 6.0% AND 6.5% BY YEAR’S END 13

14. GOVERNMENT POLICY 14

15. THE FED CONTINUES TO BE ACCOMMODATIVE 15

16. THE NEW FED CHAIRWOMAN- DR. JANET YELLEN 16

17. FISCAL POLICY HAS “TIGHTENED” (% of GDP) 17

18. THE CONTINUING FISCAL DEBATE DEMOGRAPHIC PRESSURES ON SPENDING TRANSFERS TAKING THE PLACE OF INVESTMENTS COMPLEX TAX CODE LONG-RUN FISCAL PLAN NEEDED 18

19. NORTH CAROLINA ECONOMY 19

20. N.C. IS OUT-PERFORMING THE NATION (% CHANGE IN SEAS. ADJ. NON-FARM EMPLOYMENT) 20

21. TWO MONTHLY JOB SURVEYS HOUSEHOLD SURVEY ESTABLISHMENT SURVEY FEDERAL GOV’T FEDERAL GOV’T CONTACTS HH’S CONTACTS FIRMS SMALL SAMPLE LARGER SAMPLE EMPLOYED OR NOT COUNTS JOBS HOUSEHOLD IN STATE JOB IN STATE INFO ABOUT JOB SEARCH WAGES, HRS, INDUSTRY 21

22. ESTIMATED NORTH CAROLINA EMPLOYMENT HOUSEHOLD AND ESTABLISHMENT SURVEYS, SEASONALLY-ADJUSTED 22

23. TRENDS IN NATIONAL AND NORTH CAROLINA “HEADLINE” UNEMPLOYMENT RATE 23

24. ALTERNATIVE MEASURES OF THE NORTH CAROLINA UNEMPLOYMENT RATE 2007: HEADLINE, 4.5%; U5, 5.6%; U6, 8.5% 24

25. JOB GROWTH HAS ACCELERATED (ANNUAL GAINS IN PAYROLL JOBS) 25

26. INFORMATION, GENERAL BUSINESS, AND ENTERTAINMENT LEAD IN GROWTH 26

27. MEDIAN ANNUAL EARNINGS PER WORKER (2012 $) 27

28. NORTH CAROLINA AND THE NATION ARE LOSING MIDDLE-PAYING JOBS 28

29. THE HOUSING MARKET HAS REBOUNDED IN THE STATE 29

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31. STATE TAX REVENUES HAVE BEEN TRENDING HIGHER 31

32. Area NC Job Gains Since Bottom of Recession Charlotte 11.7% Raleigh/Cary9.7% Durham/CH 7.5% North Carolina 6.7% Asheville 6.6% Greenville 6.3% Burlington 6.1% Wilmington 5.3% Greensboro/HP 4.2% Winston-Salem 3.6% Jacksonville 3.6% Hickory2.2% Fayetteville1.9% Goldsboro 1.9% Rocky Mount -2.6% 32

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34. NORTH CAROLINA GROWTH PROSPECTS 100,000 NET NEW PAYROLL JOBS JOBLESS RATE AT END OF 2014 BETWEEN 6.5% & 7.0% 70% OF JOB CREATION IN CHARLOTTE, TRIANGLE, & TRIAD COMPETITIVE COSTS, AMENITIES, DYNAMICS OF URBAN AREAS 34

35. NORTH CAROLINA CHALLENGES EDUCATION ATTAINMENT $ FOR ROADS – WHERE? MANFACTURING SHIFT FROM LABOR TO CAPITAL URBAN – RURAL DIVIDE 35

36. RALEIGH-CARY METRO ECONOMY 36

37. RALEIGH/CARY JOBS HAVE RETURNED (thousands of payroll jobs) Metro-area jobs are now at an all-time high 37

38. ANNUAL RALEIGH/CARY JOB GROWTH STILL BELOW HIGHS OF 2000’s 38

39. AREA HOUSEHOLD INCOME IS COMING BACK (2012 REAL $) RALEIGH/CARY MEDIAN HOUSEHOLD INCOME HAS RISEN FOR THE PAST TWO YEARS 39

40. RALEIGH/CARY AVERAGE HOUSE PRICE (ANNUALIZED PRICE CHANGE, FEDERAL HOUSING FINANCE AGENCY) 40

41. TRIANGLE HOME SALES (EXISTING AND NEW, 2013 THROUGH OCTOBER) 41

42. RALEIGH/CARY BUILDING PERMITS (2013 THROUGH OCTOBER 42

43. RALEIGH/CARY OUTLOOK FASTER GROWTH IN 2014 * 15,000 TO 20,000 NEW PAYROLL JOBS * 5.2% JOBLESS RATE * IMPROVED SALES AND CONSTRUCTION 43