1. Economics Update October 20, 2009

2. Effects of the Cash for Clunkers Program Housing Starts Employment Statistics CPI PPI Imports/Exports Topics

3. Total: –July 2009: 344,688 –August 2009: 349,885 –September 2009: 342,489 Total Excluding Automobiles: –July 2009: 288,452 –August 2009: 287,120 –September 2009: 284,270 (+0.5%) Cash for Clunkers

4. Housing Starts

5. Housing Starts Contd.

6. Second week of October decreased to 514,000 from 524,000 during the first week Better than analysts expected (530,000) Employment

7. Mixed Results The slowing was due to a dip in food prices and a dramatically slower gain in energy costs. –Food component declined 0.1 percent after a 0.1 percent rise the month before. –Energy component slowed to a 0.6 percent boost in September, following a 4.6 percent jump in August. The moderately faster pace for the core rate was due to gains in lodging away from home, medical care, new vehicles, used cars and trucks, and public transportation. Sluggish unless energy costs pickup. CPI

8. CPI %Change Graphs

9. Signs of inflation have disappeared—but PPI report is still lagging the recent rise in oil prices The decline was due in part to a drop in prices for light trucks, gasoline, and computer prices. Inflation smothered by weak demand and an earlier dip in oil prices. May see a rise from recent oil prices. PPI

10. PPI %Change Graphs

11. Import prices are posing evidence that the weak dollar is increasing inflation pressures. Pressures may find their way to finished goods with prices for consumer goods excluding autos up 0.1 Petroleum reading for October is likely to show an upswing. Import/Export Prices