1. Economic Outlook 2014 Robert Carreira, Ph.D.

2. Real GDP Growth (%)

3. United StatesArizonaCochise County Pre-Recession High 138.4 mil (Jan 08) 2.69 mil (Oct 07) 39,650 (Jun 08) Recessionary Low 129.7 mil (Feb 10) 2.37 mil (Sep 10) 33,825 (Oct 14) Recessionary Job Losses -8.7 mil -6.3% -312,600 -11.6% -5,825 -14.7% Current (Oct 2014) 139.7 mil2.59 mil33,825 From High +1.3 million 1.0% -96,400 -3.4% -5,825 -14.7% From Low +10.0 mil 7.7% +216,200 9.1% 0 0.0% Jobs Needed for 5% Unemployment 1.2 mil 0.8% 54,220 2.1% 1,825 5.4% Jobs

4. Peak Current (Oct 2014) Change from Peak Change from Peak (%) Construction (incl. mining) 2,900 (Jun 2006) 1,175 -1,725-59.4% Manufacturing 925 (Oct 2005) 550 -375-40.5% Trade, Transportation, and Utilities 7,075 (Dec 2006) 5,825 -1,250-17.7% Information 675 (Aug 2009) 350 -325-48.1% Financial Activities 1,150 (Jul 2007) 1,025 -125-10.9% Professional and Business Services 6,100 (Dec 2009) 4,000 -2,100-34.4% Educational and Health Services 5,025 (Mar 2012) 4,775 -250-5.0% Leisure and Hospitality 4,325 (Apr 2008) 3,725 -600-13.9% Other Services 1,100 (Mar 2004) 900 -200-18.2% Federal Government 5,975 (Jun 2006) 5,175 -800-13.4% State and Local Government 7,700 (Jun 2008) 6,525 -1,175-15.3% Cochise County Jobs by Industry

5. Pre- Recession Low Recessionary High One Year Ago (Oct 2013) Current (Oct 2014) United States 4.4% (May 2007) 10.0% (Oct 2009) 7.2%5.8% Arizona 3.5% (Jul 2007) 10.8% (Jan 2010) 7.8%6.8% Cochise County 3.4% (May 2007) 9.4% (Oct 2013) 9.4%7.9% Bisbee 6.1% (May 2007) 10.2% (Oct 2013) 10.5%9.0% Unemployment

6. Upside State/national economy improvement = tourism Emerging threats in Middle East = defense spending Downside Fort Huachuca Government (federal, state & local) Population declines Overall Not looking good Bisbee benefits from state/national recovery Local Labor Market Outlook

7. Retail Sales BisbeeCochise CountyArizona 2014 (Jan-Sep)-5.5% -5.3%3.0% 2013-2.3% 1.5%7.3% 2012-4.5% 4.5% 2.5% 20115.6% -1.2% 7.1% 20101.7% -4.8% -3.1% 2009-6.9% -4.2% -10.7% 2008-0.4% -6.5% -13.1% 20073.4% -1.3% 4.3% Inflation-adjusted to CPI-U

8. Restaurant & Bar BisbeeCochise CountyArizona 2014 (Jan-Sep)3.3% 2.0%6.2% 20138.3% -0.5%2.2% 201213.6% -4.4% 5.0% 2011-8.8% -0.2% 2.1% 20102.8% 0.0% 1.8% 2009-6.8% 0.3% -5.4% 2008-0.6% 0.2% -6.2% 2007-4.8% 0.1% -0.2% Inflation-adjusted to CPI-U

9. Accommodation BisbeeCochise CountyArizona 2014 (Jan-Sep)14.9% 0.9%9.9% 2013-10.8% -12.2%0.4% 20125.6% -17.2% 1.7% 2011-2.7% -13.1% 2.0% 2010-13.2% 8.3% 0.8% 2009-27.3% -9.0% -16.5% 200811.1% 1.0% -8.4% 200720.6% 19.7% 1.4% Inflation-adjusted to CPI-U

10. Retail Struggling in Bisbee & countywide Bisbee: Visitors not spending as much / ALCO closure Countywide: Fort Huachuca declining activity & uncertainty Restaurant & Bar Bisbee: Tourism Countywide: Fort Huachuca Accommodation Bisbee: Strong overnight tourism Countywide: Construction projects, Fort Huachuca Sales Outlook

11. Home Sales (Single-family) Jan-Sep 2014 Cochise County: 1,085 (+4.0%) Bisbee: 67 (-15.6%)

12. Median Home Price * Jan-Sep

13. Foreclosures (% of sales)

14. New Home Construction (Cochise County)

15. Foreclosures Upward pressure on sales Downward pressure on prices Dampened demand for new construction Population declines = downward pressure on new construction Real Estate & Construction Outlook

16. Recession Kept out of 2008-09 recession by Fort Huachuca Cochise County recession began in 2011 Upside Improving state and national economies will help tourism Downside Defense/Fort Huachuca Population declines Foreclosures Conclusion