1. Financial Market and Economic Outlook Richard Kaglic April 15, 2010

2. 2 Federal Reserve System Assets Source: Board of Governors/Haver Analytics $, Billions Treasury Securities: $777 Agency Debt: $169 Agency MBS: $1,069 Discount Window: $7 Notes: CPFF is the Commercial Paper Funding Facility. AIG & Bear Stearns: $116 TAF: $3 CPFF: $8 Term ABS Lending Facility (TALF): $47 Total: $2,349 Miscellaneous: $154 Treasury Securities: $777 Agency Debt: $168 Agency MBS: $1,067 Discount Window: $11 AIG & Bear Stearns: $115 CPFF: $8 TALF: $48 Total: $2,352 Miscellaneous: $155 Term Auction Facility (TAF): $3

3. 3 Apr. 9 10-Yr. Treasury Bond Rate Corporate BBB Bond Rate 30 Year Conventional Mortgage Rate Corporate AAA Bond Rate Capital Market Rates Percent Source: Merrill Lynch, Board of Governors, Haver Analytics

4. 4 S&P 500 Volatility Index Imputed Volatility Source: CBOE, Haver Analytics

5. 5 2002 = 100 Feb. 99.1 Industrial Production Index: Manufacturing Source: Board of Governors/Haver Analytics

6. 6 DIFFUSION INDEXES: Numbers above 50 percent indicate a preponderance of expanding firm activity. ISM: Business Survey Indexes Source: Institute for Supply Management/Haver Analytics

7. 7 Quarterly average of monthly changes, Thousands of persons Q1 Avg. Nonfarm Payroll Employment Source: Bureau of Labor Statistics/Haver Analytics

8. 8 Millions of persons Nonfarm Payroll Employment Source: Bureau of Labor Statistics/Haver Analytics Total (Right Axis) Temporary Help (Left Axis)

9. 9 All Items Core CPI Mar. 2.3% Consumer Price Indexes Year over Year % Change Source: Bureau of Labor Statistics/Haver Analytics 1.1%

10. 10 Month over Month % Change Income Expenditures Year over Year % Change Real Personal Income Real Personal Consumption Expenditures Feb. Personal Income & Expenditures Source: Bureau of Economic Analysis/Haver Analytics Notes: December 2004 real personal income figure excludes the Microsoft dividend. Dec Jan Feb 0.3 0.1 0.0 0.2 0.2 0.3

11. 11 Feb. 0.50 mil. Average Annual Building Permits: 1990 through 1999 Residential Single-Family Building Permits Source: Census Bureau/Haver Analytics Millions of Permits

12. 12 Percent Retailers Manufacturers Total Business Business Inventory/Sales Ratio Source: Census Bureau/Haver Analytics

13. 13 Current $, Billions Shipments Feb. New Orders Source: Census Bureau/Haver Analytics Core Capital Goods Notes: Core capital goods are nondefense capital goods excluding aircraft.

14. 14 Millions of $ (SAAR) Construction Put In Place Source: Census Bureau/Haver Analytics

15. 15 Current $, Millions Exports Source: Census Bureau/Haver Analytics

16. 16 MA Forecast Real Gross Domestic Product Source: Bureau of Economic Analysis/Haver Analytics Percent change from previous quarter at annual rate Q4 5.6%

17. 17 Percent of Working Age Population Alternate Measures of Labor Underutilization Source: Bureau of Labor Statistics/Haver Analytics

18. 18 Small Business Sentiment Index Source: National Federation of Independent Businesses

19. Recovery continues to firm, pace of growth is muted Financial markets healing Business activity continues to gain traction… …jobs recovery likely in second half, adds more durable support to economic recovery Second quarter may be the “acid test” Price pressures remain subdued Excess capacity keeps pressure off inflation Near term outlook for fed funds rate unchanged Extraordinary policy operations winding down 19 The Outlook

20. 20 Questions/Comments?