1. Michael A. Brown, Economist October 6, 2015 Economic Outlook for 2016 and Beyond

2. Wells Fargo Economics 2 Overview LaborMarket Inflation & Interest Rates FiscalPolicy BusinessInvestment 2015Growth

3. Wells Fargo Economics 3 Where Are We Now? Economic growth should continue at a modest pace over the coming quarters Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

4. Wells Fargo Economics 4 Real Final Sales Growth in domestic spending clearly has strengthened Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

5. Wells Fargo Economics 5 Capital Spending Growth in business fixed investment spending will support growth in the coming quarters Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

6. Wells Fargo Economics 6 Nonresidential Construction Commercial construction spending will help to perpetuate business investment in the year ahead Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

7. Wells Fargo Economics 7 Small Businesses Small business optimism has finally turned around Source: National Federation of Independent Businesses, Gallup, Wells Fargo Bank and Wells Fargo Securities, LLC

8. Wells Fargo Economics 8 Small Businesses Recovery in home equity values has supported small business activity Source: Federal Reserve Board, Wells Fargo Bank, Gallup and Wells Fargo Securities, LLC

9. Wells Fargo Economics 99 U.S. Housing Market Despite some recent setbacks, we continue to look for a gradual recovery in homebuilding. The homeownership rate continues to come down. Source: NAR, CoreLogic, U.S. Department of Commerce and Wells Fargo Securities, LLC Owners vs. RentersHomeownership

10. Wells Fargo Economics 10 A Shifting Demographic Profile Higher student debt burdens are hindering young adults’ ability to form new households Source: Federal Reserve Board, U.S. Department of Commerce and Wells Fargo Securities, LLC Household FormationStudent Loans

11. Wells Fargo Economics 11 The Consumer Food away from home, entertainment, and apparel spending have improved over the past year as the economy has picked up Source: U.S. Department of Labor and Wells Fargo Securities, LLC

12. Wells Fargo Economics 12 The Consumer Consumer spending growth will continue to average around 2.5 percent Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

13. Wells Fargo Economics 13 Unemployment Rates Alternative measures of unemployment show an historically high level of underemployment Source: U.S. Department of Labor and Wells Fargo Securities, LLC

14. Wells Fargo Economics 14 Employment Rate The employment rate is picking up, but structural issues remain Source: U.S. Department of Labor and Wells Fargo Securities, LLC

15. Wells Fargo Economics 15 The Employment Situation The employment picture is mixed across different levels of education Source: U.S. Department of Labor and Wells Fargo Securities, LLC

16. Wells Fargo Economics 16 Employment: Structural A large proportion of the jobs created over the past four years have been part-time, which has weighed on wage & salary growth Source: U.S. Department of Labor and Wells Fargo Securities, LLC

17. Wells Fargo Economics 17 Personal Income Income growth has finally begun to turn around but still lags prior recoveries Source: U.S. Department of Labor and Wells Fargo Securities, LLC

18. Wells Fargo Economics 18 Inflation Inflation remains in check Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

19. Wells Fargo Economics 19 Yield Curve: Rates Rise Without Fed The yield curve is expected to flatten further as the Fed begins to raise short-term interest rates in December of this year Source: Bloomberg LP and Wells Fargo Securities, LLC

20. Wells Fargo Economics 20 Key Issues Fiscal Policy Outlook What to watch for in the 114 th Congress  Oct. 29 th - Funding for Highway Trust Fund expires  How will the gap be filled?  November 5 th - Re-establishment of debt ceiling  How will Congress increase the borrowing limit?  December 11 th - FY 2016 budget debate  Current funding runs out  Corporate tax reform  Both sides agree action is needed, but what will be done?  International trade agreements (TPP, TTIP)  Don’t expect immediate action, but progress is being made

21. Wells Fargo Economics 21 Global Industrial Production It would take a sharp downturn in the rest of the world to have a meaningful effect on U.S. economic growth Source: IHS Global Insight and Wells Fargo Securities, LLC

22. The Idaho Economy

23. Wells Fargo Economics 23 Idaho – Current Economic Conditions Economic activity in Idaho is downshifting Source: Federal Reserve Bank of Philadelphia and Wells Fargo Securities, LLC

24. Wells Fargo Economics 24 Idaho– Employment Growth & Unemployment Rate Employment is growing modestly, while the unemployment rate is below the national rate Source: U.S. Department of Labor and Wells Fargo Securities, LLC Unemployment Rate Employment

25. Wells Fargo Economics 25 Idaho: Employment Overall employment growth has been strong over the past year Source: U.S. Department of Labor and Wells Fargo Securities, LLC

26. Wells Fargo Economics 26 Idaho: Personal Income Personal income growth has steadily rebounded since the recession ended Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

27. Wells Fargo Economics 27 Idaho– Home Prices and Construction Home prices are growing modestly in the state as building activity has begun to pick up Source: CoreLogic, Inc., U.S. Department of Commerce and Wells Fargo Securities, LLC Housing PermitsHome Prices

28. Wells Fargo Economics 28 Idaho – Economic Outlook The leading index signals somewhat stronger economic growth ahead Source: Federal Reserve Bank of Philadelphia and Wells Fargo Securities, LLC Outlook  Economic growth will likely remain modest given the state’s exposure to commodities and manufacturing.  The state’s manufacturing sector may face some challenges associated with slower global growth and reduced business investment.  Idaho’s unemployment rate remains well below the national average.  Manufacturing employment growth in the state will be challenging over the next several years due to changing tastes and preferences.  Job growth will be driven by the service sector. Leading Index

29. Wells Fargo Economics 29 Headwinds to Economic Growth Potential Headwinds to Economic Growth Effects of Monetary Policy Changes? Slower Pace of Business Investment Slower Global Growth Environment Fiscal Policy Uncertainty Modest Income Growth

30. Wells Fargo Economics 30 Outlook Summary Source: IHS Global Insight and Wells Fargo Securities, LLC

31. Appendix

32. Wells Fargo Economics 32 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: https://wellsfargo.mworld.com/ econ/alerts.asp A Sampling of Our Recent Special, Regional & Industry Commentary

33. Wells Fargo Economics Wells Fargo Securities, LLC Economics Group 33 John E. 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.commark.vitner@wellsfargo.com Jay H. Bryson, Global Economist …………………....…… …. jay.bryson@wellsfargo.com jay.bryson@wellsfargo.com Sam Bullard, Senior Economistsam.bullard@wellsfargo.comsam.bullard@wellsfargo.com Nick Bennenbroek, Currency Strategist……nicholas.bennenbroek@wellsfargo.comnicholas.bennenbroek@wellsfargo.com Eugenio J. Alemán, Senior Economist… …………eugenio.j.aleman@wellsfargo.comeugenio.j.aleman@wellsfargo.com Anika R. Khan, Senior Economist …. anika.khan@wellsfargo.comanika.khan@wellsfargo.com Senior Economists Erik Nelson, Economic Analyst erik.f.nelson@wellsfargo.comerik.f.nelson@wellsfargo.com Alex Moehring, Economic Analyst alex.v.moehring@wellsfargo.comalex.v.moehring@wellsfargo.com Misa Batcheller, Economic Analyst misa.n.batcheller@wellsfargo.commisa.n.batcheller@wellsfargo.com Michael Pugliese, Economic Analyst michael.d.pugliese@wellsfargo.commichael.d.pugliese@wellsfargo.com Economists Azhar Iqbal, Econometrician………………… ……………azhar.iqbal@wellsfargo.comazhar.iqbal@wellsfargo.com Tim Quinlan, Economist …………………… ……………..tim.quinlan@wellsfargo.comtim.quinlan@wellsfargo.com Eric J. Viloria, Currency Strategist eric.viloria@wellsfargo.comeric.viloria@wellsfargo.com Sarah House, Economist …………… ………… sarah.house@wellsfargo.comsarah.house@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, Wells Fargo Securities International Limited, Wells Fargo Securities Asia Limited and Wells Fargo Securities (Japan) Co. Limited. Wells Fargo Securities, LLC. ("WFS") is registered with the Commodities Futures Trading Commission as a futures commission merchant and is a member in good standing of the National Futures Association. Wells Fargo Bank, N.A. 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