The document summarizes economic trends in the US from 1990-2010, with a focus on the housing market boom and bust. It shows that the housing market experienced strong growth from 2000-2005, with rising home sales, construction, prices and ownership. However, prices began to outstrip incomes, affordability declined, and demand started to fall after 2005, indicating the housing boom could not last.

1. Hopeful Prospects
Navigating the US and Regional Economies in 2009
P te C. Burle CRE
e r y,
Vic P s e Re e rc Sim s n Ho ingLLLP
e re id nt s a h, po us
Denver – February 12, 2009

2. An Important Disclaimer
The opinions expressed
are those of the Speaker
And do not necessarily reflect the
views of
Simpson Housing LLLP, its Related
Entities, Properties, Partners, Senior
Management, Maintenance
Personnel, Parking Attendants, or
Human Resources Staff,
None of whom are likely to
Agree with me anyway…

3. Another Important Disclaimer
Data and Analyses are
Compiled from
Sources Deemed
Reliable
But Not Guaranteed
No Offer or Solicitation
Implied …
Subject to Change Without
Notice…

4. In Nominal Terms, A $14 Trillion Economy
Total Gross Domestic Product (Nominal $Bil)
16000
14000 $14.4 Trillion
2008
12000
10000
8000
6000
$237 Bil
4000 1947
2000
0
1947Q1 1959Q3 1972Q1 1984Q3 1997Q1 2009Q3
Source: Moody's Economy.com; Bureau of Economic Analysis

5. Consumers & Government Make up the Lion’ s Share
Nominal Contribution to GDP (Pct, Q1:2009)
70
60
50
40
30
20
10
0
-10
on en
t ies rts nt
pti tm tor po me
um nv
es
nv
en t Ex v ern
ns dI I Ne Go
Co xe ate
al F i riv
rson nP
Pe ei
ang
Ch
Source: BEA, Moody's Economy.com

6. Consumers & Government Make up the Lion’ s Share
Nominal Contribution to GDP (Pct, Q1:2009)
72
70
Personal Consumption
68
66
64
62
60
1947Q1 1959Q3 1972Q1 1984Q3 1997Q1
Source: BEA, Moody's Economy.com

7. In Inflation Adjusted Terms, an $11 Trillion Economy
Total Gross Domestic Product (Bil 2000 $, SAAR)
12000
11500 Tech Slump
11000 and 9/11
10500
10000 The
Current
9500 Unpleasantness
9000
1990-91
8500 Recession
8000
7500
7000
1990Q1 1992Q3 1995Q1 1997Q3 2000Q1 2002Q3 2005Q1 2007Q3 2010Q1
Source: Moody's Economy.com; Bureau of Economic Analysis

8. Trends in the US Economy Over Time
8
Gross Domestic Product (Annualized %)
6
4
60-Year
Average
2
0
1990-91
-2
Recession Tech Slump Current
Post 9/11 Recession
-4
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
Q1 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
90 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
19
Source: Moody's Economy.com; BEA

9. A 140 Million Job Economy
The Current
Recession
140
Total Nonfarm Employment (Mil., SA)
Tech Slump
135 Jobless Recovery
90s
130 Expansion
125
1990-91
120 Recession
115
110
105
100
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
Q1 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
90 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
19
Source: Moody's Economy.com; BLS

10. Job Growth & Decline over the Past 20 Years
1.5 Change in Employment (Mil, Qtr)
The Current
1 Recession
0.5
0
90s Expansion
-0.5
1990-91
Recession
-1 Tech Slump
Jobless Recovery
-1.5
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
91Q 92Q 93Q 94Q 95Q 96Q 97Q 98Q 99Q 00Q 01Q 02Q 03Q 04Q 05Q 06Q 07Q 08Q 09Q 10Q
19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20
Source: Moody's Economy.com; BLS

11. Unemployment Trends
Unemployment Rate (%)
10
1990-91
9 Recession The Current
Recession
8
Tech Slump
7 Jobless Recovery
90s
Expansion
6
5
4
3
3 1 Q3 1 3 Q1 Q3 Q1
Q1 2Q 5Q 97 0Q 2Q 05 07 10
90 99 99 19 00 00 20 20 20
19 1 1 2 2
Source: Moody's Economy.com; BLS, CPS

12. Unemployment Trends
Unemployment Rate (%)
10
9% -plus
9
7.6%
8
7
6
5
4
3
3 1 Q3 1 3 Q1 Q3 Q1
Q1 2Q 5Q 97 0Q 2Q 05 07 10
90 99 99 19 00 00 20 20 20
19 1 1 2 2
Source: Moody's Economy.com; BLS, CPS

13. Unemployment Trends
Unemployment Rate (%)
11
10.7%
10 9% -plus
8.8%
9 7.6% 7.6%
8
7
6
5
4
3
2
8Q
1
0 Q3 3 Q1 5 Q3 8 Q1
19
4 1 96 1 97 1 98 1 99
Source: Moody's Economy.com; BLS, CPS

14. Some Important Unemployment Definitions
•“Officially” Unemployed – In the Labor Force
and working or actively looking for work
•Discouraged Workers – Have a Job-market
Related reason for not currently looking
•Marginally Attached – Have Worked Recently,
Aren’t Looking, But are Available
•Underemployed - P.T. for Economic Reasons;
Have Settled for Part Time Work, Prefer Full-Time

15. Unemployment Trends
Unemployment Rate (%)
15
14 Official Unemployment Rate++ Discouraged Workers +
Officially Unemployed
Marginally Attached + Underemployed
Discouraged Workers +
13 P.T. for Economic Reasons
12
11
10
9 Official Unemployment Rate + Discouraged Workers
Officially Unemployed +
8 Discouraged Workers
7
6
Officially Unemployed
5 Official Unemployment Rate
4
'JUL 08 'AUG 08 'SEP 08 'OCT 08 'NOV '08 'DEC 08 'JAN 09
Source: Bureau of Labor Statistics

16. Critical Dynamics in the Economy
The US Housing Market – Boom to Bust
The Subprime Crisis & Mortgage Market Meltdown
The Business Environment
Workers & Households
A Consumer Crisis

17. Critical Dynamics in the Economy
The US Housing Market
BOOM

18. Things Were Simply Wonderful: Sales Kept Rising
9
Units Sold (Mil, SAAR)
8.5
8 Existing New
7.5
7
6.5
6
5.5
5
4.5
4
1 1 1 1 1 1
9 Q1 00Q 01Q 02Q 03Q 04Q 0 5Q
199 20 20 20 20 20 20
Source: Moody's Economy.com; NAR; Census

19. Things Were Simply Wonderful: Builders Kept Building
Total Housing Starts (Mil Units, SAAR)
2.2
2.1
2
1.9
1.8
1.7
1.6
1.5
2000Q1 2001Q2 2002Q3 2003Q4 2005Q1
Source: Moody's Economy.com; Census

20. Things Were Simply Wonderful: Lenders Kept Lending
Real Estate Loans ($Bil., SA)
2800
2600
2400
2200
2000
1800
1600
1400
2000Q1 2001Q2 2002Q3 2003Q4 2005Q1
Source: Moody's Economy.com; Federal Reserve

21. Things Were Simply Wonderful: Ownership Kept Rising
Homeownership Rate (%,SA)
69.5
69
68.5
68
67.5
67
2000Q1 2001Q2 2002Q3 2003Q4 2005Q1
Source: Moody's Economy.com; Census

22. Things Were Simply Wonderful: Rates Kept Falling
Mortgage Interest Rates (%,, NSA)
18
16
14
30-Year Fixed
12
10
35-year average = 9.1%
8
6
4
1971Q2 1976Q2 1981Q2 1986Q2 1991Q2 1996Q2 2001Q2 2006Q2
Source: Moody's Economy.com; Freddie Mac

23. Things Were Simply Wonderful: Rates Kept Falling
Mortgage Interest Rates (%,SA)
8.5
8
7.5
7
6.5
6
5.5
30-Year Fixed
5
4.5
4 Adjustable
3.5
2000Q1 2001Q2 2002Q3 2003Q4 2005Q1
Source: Moody's Economy.com; Freddie Mac

24. Things Were Simply Wonderful: Buying Was Cheap
Percent Adjustable Rate Mortgages (%,NSA)
40
35
30
25
20
15
10
2000Q1 2001Q2 2002Q3 2003Q4 2005Q1
Source: Moody's Economy.com; FHFB

25. Things Were Simply Wonderful: Prices Kept Rising
Median Existing Home Price ($Ths, SAAR)
240
220
200
135%
180
1990-2005
160
140
120
100
80
Q 1 Q3 Q1 7 Q3 0 Q1 Q3 Q1
90 99
2 95 99 00 00
2
00
5
19 1 19 1 2 2 2
Source: NAR; Moody's Economy.com

26. Things Were Simply Wonderful: Prices Kept Rising
Median Existing Home Price ($Ths, SAAR)
240
220
60%
200
1999-2005
180
160
140
120
100
80
Q 1 Q3 Q1 7 Q3 0 Q1 Q3 Q1
90 99
2 95 99 00 00
2
00
5
19 1 19 1 2 2 2
Source: NAR; Moody's Economy.com

27. Critical Dynamics in the Economy
The US Housing Market
BUST

28. It Couldn’ t Last: Prices Outstrip Incomes
Annualized Growth Income vs Home Prices
25
20
15
Median Home Price
10
5
0
Median Household Income
-5
2000Q1 2001Q2 2002Q3 2003Q4 2005Q1
Source: Moody's Economy.com;NAR;Census

29. It Couldn’ t Last: Affordability Began to Slide
140
Housing Affordability Index
135
130
125
120
115
110
105
100
2000Q1 2001Q2 2002Q3 2003Q4 2005Q1 2006Q2
Source: Moody's Economy.com; NAR

30. It Couldn’t Last: Demand Began to Ebb
9 New & Existing Home Sales (Mil Units, SAAR)
8.5
8 Mil Units
.5
8 Q3 0 5
:2 0
7.5
5 Mil Units
.3
7 Q1:2 0
09
6.5
6
5.5
5
4.5
Existing New
4
1 1 1 1
04
Q 5Q 6Q 7Q Q1 9Q
1
0Q
1
20 00 20
0
20
0 08 00 01
2 20 2 2
Source: Moody's Economy.com; NAR; Census

31. It Couldn’t Last: Sales Slowed Across the Country
2.8
Existing Home Sales (Mil. Units, SAAR)
2.6
2.4
2.2
2
1.8
South
1.6
1.4
West
1.2
1 Midwest
0.8 Northeast
0.6
2005 2007 Nov Jan Mar May Jul Sept Nov p
Source: Nat'l Assoc Realtors

32. And Mortgage Activity is Has Slowed
Mortgage Originations ($Trillion, SAAR)
4.5
4
Re-Fi
3.5
3
2.5
2
1.5
1
Purchase
0.5
0
2000Q1 2001Q2 2002Q3 2003Q4 2005Q1 2006Q2 2007Q3 2008Q4
Source: Moody's Economy.com; FRB

33. The US Housing Market: The Drop in Prices
Median Existing Home Price ($Ths, SAAR)
230
220
210
-22.5%
2005-2009
200
190
180
170
-7.8%
2009-2010
160
Q 1 Q2 Q3 Q4 Q1
04 05 06 00
7 09
20 20 2 0 2 20
Source: NAR; Moody's Economy.com

34. The US Housing Market: Prices Around the USA
Boston
Chicago % change year ago
% change from peak
Denver
Las Vegas
Los Angeles
Miami
New York
San Diego
San Francisco
Washington
-40 -35 -30 -25 -20 -15 -10 -5 0
Change in Home Prices (Pct, Year Ago, Peak)
Source: Moody's Economy.com; S&P/Case Shiller

35. The US Housing Market: Prices Around the USA
Boston
Chicago % change year ago
% change from peak
Denver
Las Vegas
Los Angeles
Miami
New York
San Diego
San Francisco
Washington
-40 -35 -30 -25 -20 -15 -10 -5 0
Change in Home Prices (Pct, Year Ago, Peak)
Source: Moody's Economy.com; S&P/Case Shiller

36. Inventories of Unsold Homes Have Risen Sharply
12
Months of Supply Existing Home Inventory
10
8
6
4
2
0
l t
20
05 2006 2007 v c n b r r y
No De Ja Fe Ma Ap Ma Ju
n Ju Aug Sep ct r ov p
O N
Soure: Nat'l Assoc Realtors

37. Builders Have Pulled Back … Way Back
2.4
Starts & Permits (Mil. Units, SAAR)
2.2
2
1.8
1.6
Permits
Starts
1.4
1.2
1
0.8
0.6
2000Q1 2001Q2 2002Q3 2003Q4 2005Q1 2006Q2 2007Q3 2008Q4
Soure: Moody's Economy.com; Census

38. Builders Have Pulled Back … Way Back
7.8
Construction Employment (Mil, SA)
7.6
7.4
7.2
7
6.8
6.6
6.4
6.2
6
Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1
02 03 04 05 06 07 08 09
20 20 20 20 20 20 20 20
Source: Moody's Economy.com; BLS

39. Critical Dynamics in the Economy
The Subprime Crisis

40. Subprime Lending Made Home Buying Easy
•Credit to borrowers who do not meet prime underwriting guidelines.
•Heightened perceived risk of default due to:
history of loan delinquency or default
bankruptcy
limited debt experience
•Almost All Made as ARMs, Subject to Reset
•Most Packaged and Traded as High-Yield Asset-Backed Securities

41. Subprime Lending Made Home Buying Easy
350
Subprime Mortgage Originations ($Bil)
300
250
200
150
100
50
0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Source: Fed. Res. Bank NY

42. Until Adjustable Rate Mortgages Started to Reset
Mortgage Interest Rates (%,, NSA)
7
30-Year Fixed
6.5
6
5.5
Adjustable
5
4.5
4
3.5
2003Q1 2004Q2 2005Q3 2006Q4 2008Q1
Source: Moody's Economy.com; Freddie Mac

43. And Some Borrowers Were Not Prepared
Total Loans Overdue (%,SA)
22
20
18
16
14
Subprime
12
10
8
6
All Loans
4
2000Q1 2001Q2 2002Q3 2003Q4 2005Q1 2006Q2 2007Q3 2008Q4
Source: Moody's Economy.com; MBA

44. And Homes Were Being Lost
Subprime Loans in Foreclosure (%,SA)
5
4.5
4
3.5
3
2.5
2
1.5
1
1998Q1 1999Q2 2000Q3 2001Q4 2003Q1 2004Q2 2005Q3 2006Q4 2008Q1
Source: Moody's Economy.com; MBA

45. Subprime Lending And Convoluted Debt Swaps
"With this complicated intertwining of bets of great magnitude,
no one could be sure of the financial position of anyone else-or
even of one's own position.
Not surprisingly, the credit markets froze."
Joseph Stiglitz

46. Critical Dynamics in the Financial & Economic Crisis
Excess Inventory Price Declines Refinancing Issues
Bank Capital Bank Losses Mtg Foreclosures
Depleted
Bank Failures Liquidity Crunch
Fed Actions
Econ Stim '08
Hope Now
TARP More Fed Action
Other H.O. Programs

47. Critical Dynamics in the Economy
The Investor Response

48. Some Mortgage Backed Securities Issuance Stopped
3500
Mortgage Securities Issuance ($Bil)
3000
2500
Agency
NonAgency
2000
1500
1000
500
0
96 97 98 99 00 01 02 03 04 05 06 07
08
*
19 19 19 19 20 20 20 20 20 20 20 20 20
Source: Securities Industry and Financial Markets Assoc

49. Issuers and Holders of Mortgage Backed Debt Weakened
Bear Stearns (daily closing price, $/Share)
180
$171.50
160
140
120
100
80
60
40
20 JP Morgan Offer
$2.00 (later $10)
0
05 05 06 06 07 07 07
/20 1/ 20 8/ 20 8/ 20 2/ 20 7/ 20 6/ 20
0 9/ 2/
6/3 11/2 4/1 6/2 11/1
NYSE

50. Issuers and Holders of Mortgage Backed Debt Weakened
Countrywide Financial Corp (daily close, $/shr)
50
45
40
35
30
25
20
15
10
5
0
0 5 0 05 0 06 0 06 0 06 0 07 0 07 0 08
/ 20 3/ 2 7/ 2 9/ 2 1/ 2 8/ 2 0/ 2 1/ 2
4/ 1 8/ 2 1/ 1 6/
10
/3 3/ 2 8/ 2 1/ 1
NYSE

51. Critical Dynamics in the Economy
The Lender Response

52. Banks Have Clamped Down
Net % of Banks Tightening Standards for Mortgage Loans
80
70
60
50
40
30
20
10
0
-10
2000Q1 2001Q2 2002Q3 2003Q4 2005Q1 2006Q2 2007Q3 2008Q4
Source: Moody's Economy.com; FRB

53. Banks Have Clamped Down
C&I, RE Loans (% Chg)
8
7
C&I
6
5
4
3
2
1
RE
0
-1
2005Q4 2006Q2 2006Q4 2007Q2 2007Q4 2008Q2 2008Q4
Source: Moody's Economy.com;FRB

54. Banks Have Clamped Down
Consumer Credit Outstanding (% Chg)
2
1.5
1
0.5
0
-0.5
-1
-1.5
2006Q1 2006Q3 2007Q1 2007Q3 2008Q1 2008Q3
Source: Moody's Economy.com;FRB

55. Critical Dynamics in the Economy
The Business Environment

56. Profits Have Slumped
Corporate Profits Before Taxes ($Bil., SAAR)
1950
1900
1850
1800
1750
1700
1650
2006Q1 2006Q3 2007Q1 2007Q3 2008Q1 2008Q3
Source: Moody's Economy.com;BEA

57. And, Financial Markets Remain Wary….and Weary
Dow Jones Industrial Average
15000
14000
13000
12000
11000
10000
9000
8000
7000
1/3/2005 10/18/2005 8/4/2006 5/23/2007 3/10/2008 12/22/2008
Source: NYSE

58. Businesses have grown pessimistic….
Moody's Economy.com Survey of Business Confidence (Index)
15
10
5
0
-5
-10
-15
-20
-25
-30
-35
8 8 08 08 -09 -09 -09
p -08 ep
-0 t-0 t- ec- n n n
-Se -S - Oc 4- Oc - D -Ja -Ja -Ja
12 26 10 2 19 2 16 30
Source: Moody's Economy.com

59. Cutting Back, Preserving Workforce, Reducing Costs
Pay Cuts
Salary Freezes
Reduced Raises
Reduced Hours, Overtime
Unpaid Furloughs
Pension Contribution Freezes/Cuts
401(k) Contribution Freezes/Cuts

60. Cutting Back, Preserving Workforce, Reducing Costs
Pay Cuts
FedEx
Caterpillar
Gymboree
YRC Worldwide Trucking

61. Cutting Back, Preserving Workforce, Reducing Costs
Salary Freezes
Dow Jones & Co. Publishing

62. Cutting Back, Preserving Workforce, Reducing Costs
Reduced Raises
Half of 620 Companies surveyed
By Hewitt Associates
Report that average raises will
Drop below 3%
Source: L.A. Times, 1/ 2009
15/

63. Cutting Back, Preserving Workforce, Reducing Costs
Unpaid Furloughs
State of California
Gannett Co. Publishing

64. Layoffs Remain the Favored Strategy
Major Layoff Annoucements (#)
2400
Mass Layoff Events – All Industries (#,SA)
2200
2000
1800
1600
1400
1200
1000
Source: Moody’ s Economy.com; BLS
800
06 N 07 N 08 N C
'20 JU '20 JU '20 JU DE
Source: Bureau of Labor Statistics

65. Who is Laying Off This Month ?
Selected Layoff Announcements in January/February 2009
Circuit City – 30,000 Saks – 1,100
Caterpillar – 20,000 Walgreens – 1,000
Nissan – 20,000 Schlumberger – 1,000
Pfizer – 19,500 Cummins - 800
Alcoa – 13,500 Autodesk - 750
Boeing – 10,000 Logitech - 500
GM – 10,000 Neiman Marcus - 375
TDK – 8,000 Ethan Allen - 350
Sprint Nextel – 8,000 New York & Co - 350
Home Depot – 7,000 Barnes & Noble - 100
ING – 7,000 Google - 100
Macy’ s – 7,000 World Wrestling Ent - 60
Philips Electronics – 6,000
Motorola – 4,000
Hertz – 4,000
Honda – 3,100
EMC – 2,400
Barclay’ s – 2,100
Cessna – 2,000
Source: CNN/
Reuters
MeadWestvaco Corp – 2,000
Cigna – 1,100

66. The Result of Mounting Layoffs is Mounting UE Claims
Initial Claims for Unemployment Benefits (#/Wk,
600000
550000
500000
450000
400000
350000
300000
250000
1 01 02 v-0
3
v-0
4 05 06 p-0
7
p-0
8
a n-0 ec- ec- o o ct- ct- e e
7-J 23
-D 8-D 23-N 7-N 23
-O 8-O 23-S 7-S
Source: Moody's Economy.com; Employment Training Admin.

67. Employers are Cutting Back
300 Thousands of Jobs
200
100
0
-100
-200
-300
-400
-500
-600
5 9 1 5 9 1 5 9 1
6M 6M 07
M
07
M 7 M
08
M
08
M 8M 9 M
2 00 2 00 20 20 2 00 20 20 2 00 2 00
Source: Moody's Economy.com

68. Critical Dynamics in the Economy
The Household Environment

69. Wages, Salaries Have Swooned
Wages & Salaries (Year-Over-Year Pct)
3.4
3.2
3
2.8
2.6
2.4
2.2
2004Q1 2005Q2 2006Q3 2007Q4 2009Q1
Source: Moody's Economy.com; BLS

70. Household Assets Have Crashed
Household Net Worth ($Bil2000, SA)
56000
54000
52000
50000
48000
46000
44000
42000
2004Q1 2005Q2 2006Q3 2007Q4 2009Q1
Source: Moody's Economy.com; FRB

71. Household Liabilities Remain at All-Time Highs
Household Liabilities ($Bil SA)
15000
14500
14000
13500
13000
12500
12000
11500
11000
10500
10000
2004Q1 2005Q2 2006Q3 2007Q4 2009Q1
Source: Moody's Economy.com; FRB

72. Household Debt Burdens Remain High
Household Debt Service Burden (% of Disposable Income, SA)
14.5
14.4
14.3
14.2
14.1
14
13.9
13.8
13.7
13.6
13.5
13.4
2004Q1 2005Q2 2006Q3 2007Q4 2009Q1
Source: Moody's Economy.com; FRB

73. Household Cash Flow Has Shrunk
Household Cash Flow ($Bil 2000 SA)
9900
9800
9700
9600
9500
9400
9300
9200
9100
9000
2004Q1 2005Q2 2006Q3 2007Q4 2009Q1
Source: Moody's Economy.com; FRB; IRS

74. Consumers Are Running Behind
Pct of Accounts Delinquent 30 Days ($ Volume)
2.4
2.2
2
1.8
1.6
1.4
1.2
1
2004Q1 2005Q2 2006Q3 2007Q4 2009Q1
Source: Moody's Economy.com; ABA

75. Consumer Confidence has Collapsed
Consumer Confidence (Index)
110
100
90
80
70
60
50
40
2004Q1 2005Q2 2006Q3 2007Q4 2009Q1
Source: Moody's Economy.com; Conference Board

76. Retail Sales Have Hit The Skids
Total Retail Sales (% Chg)
4
3
2
1
0
-1
-2
-3
-4
-5
-6
2004Q1 2005Q2 2006Q3 2007Q4 2009Q1
Source: Moody's Economy.com; BOC

77. Retailers Are Discounting Like Crazy
Consumer Price Index (YOY%)
5.5
5
4.5
4
3.5
3
2.5
2
1.5
2004Q1 2005Q2 2006Q3 2007Q4 2009Q1
Source: Moody's Economy.com; BLS

78. But, Discounting Isn’ t Helping A Whole Lot
Vehicle Sales (Mil Units, SAAR)
18
17
16
15
14
13
12
11
10
2004Q1 2005Q2 2006Q3 2007Q4 2009Q1
Source: Moody's Economy.com; BEA

79. Monetary Policy Actions: A Near Zero Funds Rate
Federal Funds Rate (%)
7
6
5
4
3
2
1
0
2000Q1 2001Q2 2002Q3 2003Q4 2005Q1 2006Q2 2007Q3 2008Q4
Source: Moody's Economy.com; FRB

80. The Troubled Asset Relief Program (TARP)
Designed to Provide Relief to Financial Institutions
by Acquiring Troubled Mortgage-Backed Assets,
Guaranteeing Assets,
And Recapitalizing Banks Through Preferred Stock
(or Not…..)
$700 Billion
($350 Billion X 2)

81. The Troubled Asset Relief Program (TARP)
Outlays Through January 30, 2009
Citigroup - $50 B in Preferred Stock; $306 B Guarantees
B of A - $45 B in Preferred Stock; $118B in Guarantees
AIG - $40B in Preferred Stock
JP Morgan Chase - $25B In Preferred Stock
Wells Fargo - $25B in Preferred Stock
Goldman Sachs - $10B in Preferred Stock
Morgan Stanley - $10B in Preferred Stock
PNC Fin Svcs - $7.5B in Preferred Stock
US Bancorp - $6.6B in Preferred Stock
GMAC - $5 B in Preferred Stock
Capital One - $3.5B in Preferred Stock
American Express - $3.4B in Preferred Stock
Bank of New York Mellon - $3B in Asset Guarantees

82. The Troubled Asset Relief Program (TARP)
Oh, Yeah…..
General Motors - $13.4 B in Preferred Stock
Chrysler - $4 B in Preferred Stock

83. Term Asset-Backed Securities Loan Facility (TALF)
Designed to Stimulate Credit Markets
By Issuing Loans on Asset-Backed Securities
Loans May be Auto Loans, Student Loans,
Credit Card Loans or Small Business Loans
$200 Billion
(beginning February 2009)

84. American Recovery and Reinvestment Act of 2009
Combined Direct Stimulus and Tax Cuts To:
 Generate Renewed Demand
Create Employment
Invest in Economic Growth
$800 - $900 Billion

85. American Recovery and Reinvestment Act of 2009
Proposed Elements of the Stimulus Plan
• Infrastructure Improvements
• (Education Facilities Modernization)
• Renewable Energy Investment
• (Health Care Records Modernization)
• Science, Research Technology
• Medicaid Assistance to States
• Unemployment Benefits Extensions
• COBRA Credits
• Food Stamps
• Household Tax Cuts/Credits
• Business Tax Credits and Offsets

86. The Likely Effects of the Stimulus Plan
•
Create Jobs, Boost Incomes
•
Hiring Incentives w/ Business Tax Cuts, Credits, etc.
•
Boost Spending

87. The Likely Effects of the Stimulus Plan: Employment Growth
1
Employment Change (Mil.,SA)
0.5
0
-0.5
-1
-1.5
1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Q4 Q
06 2007 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010
20
Source: Moody's Economy.com

88. The Likely Effects of the Stimulus Plan: Unemployment
Unemployment Rate (%)
9.5
9
8.5
8
7.5
7
6.5
6
5.5
5
4.5
2007Q1 2007Q3 2008Q1 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3
Source: Moody's Economy.com

89. The Likely Effects of the Stimulus Plan: Housing Markets
7.5
Total Home Sales (Mil Units, SAAR)
7
6.5
6
5.5
5
4.5
4
2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1
Q1 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
07 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012
20
Source: Moody's Economy.com; NAR; BOC

90. The Likely Effects of the Stimulus Plan: Spending
Total Retail Sales ($Bil., SAAR)
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000
2007Q1 2008Q2 2009Q3 2010Q4 2012Q1
Source: Moody's Economy.com; Census

91. The Likely Effects of the Stimulus Plan: GDP Growth
8
GDP (Annualized %)
6
4
2
0
-2
-4
-6
2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1
Q1 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
07 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012
20
Source: Moody's Economy.com

92. The Likely Effects of NO Stimulus Plan: Employment Growth
1
Employment Change (Mil.,SA)
0.5
0
-0.5
-1
w/Stimulus
-1.5 w/o Stimulus
-2
1 Q2 Q 3 Q4 Q1 Q 2 Q3 Q 4 Q1 Q 2 Q3 Q4 Q1 Q2 Q3 Q 4
Q4 Q
06 2007 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010
20
Source: Moody's Economy.com

93. The Likely Effects of NO Stimulus Plan: Unemployment
Unemployment Rate (%)
12
w/o Stimulus
11
10
9
w/Stimulus
8
7
6
5
4
2007Q1 2007Q3 2008Q1 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3
Source: Moody's Economy.com

94. The Likely Effects of the Stimulus Plan: Housing Markets
7.5
Total Home Sales (Mil Units, SAAR)
7
With Stimulus
6.5 Without Stimulus
6
5.5
5
4.5
4
2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1
Q1 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
07 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012
20
Source: Moody's Economy.com; NAR; BOC

95. The Likely Effects of the Stimulus Plan: Spending
Total Retail Sales ($Bil., SAAR)
5000
4900
4800
4700
4600
4500
4400
w/Stimulus
4300
w/o Stimulus
4200
4100
4000
2007Q1 2008Q2 2009Q3 2010Q4 2012Q1
Source: Moody's Economy.com; Census

96. The Likely Effects of the Stimulus Plan: GDP
8
GDP (Annualized %)
6
4
2
0
-2
w/Stimulus
-4
w/o Stimulus
-6
2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1
Q1 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
07 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012
20
Source: Moody's Economy.com

97. The View from Denver: Employment Trends Similar to US
Employment Growth (Ann %)
3
2
Denver
1
US
0
-1
-2
-3
-4
-5
-6
-7
2001Q2 2002Q3 2003Q4 2005Q1 2006Q2 2007Q3 2008Q4
Source: Moody's Economy.com; BLS

98. The View from Denver: Mirroring, Bettering the US
Relative Employment Trends (Index, 1997Q3=100)
120
115
110
105
Forecast
100
95
90
1995Q1 1997Q3 2000Q1 2002Q3 2005Q1 2007Q3 2010Q1
Source: Moody's Economy.com; BLS

99. The View from Denver: Unemployment Rises Rapidly
Unemployment Rate (%)
8
7
6
5
US
4
Denver
3
2
2000Q1 2001Q2 2002Q3 2003Q4 2005Q1 2006Q2 2007Q3 2008Q4
Source: Moody's Economy.com;BOC

100. The View from Denver: A Well-Diversified Economy
Constrn
Mfg
TCU
Wholesale
Denver
Retail
Information US
Financial
Pro/Bus Svc
Edu/Hlth Svc
Leisure Svc
Other Svc
Govt
0 2 4 6 8 10 12 14 16 18
Percent of Total Employment
Source: Moody's Economy.com; BLS

101. The View from Colorado: Denver Is a Popular Destination
Survey says Denver is most popular place to live
Percentage of Americans who say they want to live in this city or metropolitan area:
Most popular Least popular
Denver: 43% Detroit: 8%
San Diego: 40% Cleveland: 10%
Seattle: 38% Cincinnati: 13%
Orlando: 34% Kansas City: 15%
San Francisco: 34% Pittsburgh: 17%
Tampa: 34% Minneapolis: 16%
Source: Pew Research Center

102. The View from Denver: A Popular Destination
35 Net Migration (Ths., SAAR)
30
25
20
15
10
5
0
Forecast
-5
1 1 1 1 1 1 1 1 1 1 1 1 1
0 0Q 001Q 002Q 003Q 004Q 005Q 006Q 007Q 008Q 009Q 010Q 011Q 012Q
20 2 2 2 2 2 2 2 2 2 2 2 2
Source: OED/Policy Group, March 2008

103. The View from Denver: Wages Remain Barely Positive
Wages, Salaries, Disposable Income (YOY%)
16
14
12
10
Disposable Income
8
6
4
2
0
Wages & Salaries
-2
-4
2000Q1 2001Q2 2002Q3 2003Q4 2005Q1 2006Q2 2007Q3 2008Q4
Source: Moody's Economy.com; BEA; BOC

104. The View from Denver: Incomes Swing Cyclically
Median Household Income (YOY%)
12
10
Denver
8
6
US
4
2
0
-2
-4
2000Q1 2001Q2 2002Q3 2003Q4 2005Q1 2006Q2 2007Q3 2008Q4
Source: Moody's Economy.com;BOC

105. The View from Denver: Home Sales Track Nation
Single Family Home Sales (YOY%)
30
20
Denver
10
US
0
-10
-20
-30
2000Q1 2001Q2 2002Q3 2003Q4 2005Q1 2006Q2 2007Q3 2008Q4
Source: Moody's Economy.com; NAR;BOC

106. The View from Denver: Home Prices Did Not Boom
Median Single Family Home Price (YOY%)
20
15
US
10
5
0
Denver
-5
-10
-15
-20
2000Q1 2001Q2 2002Q3 2003Q4 2005Q1 2006Q2 2007Q3 2008Q4
Source: Moody's Economy.com; NAR

107. The View from Denver: Foreclosures Briefly Spiked Here
6000
Foreclosure Filings
5000
4000
3000
2000
1000
0
88 0 0 06 007
19 20 20 2
Source: OED/Policy Group, March 2008

108. A Denver Forecast

109. A Denver Forecast: Employment Growth
15
Employment Change (Ths., SAAR)
10
5
0
-5
-10
-15
Forecast
-20
5 Q2 6 Q1 7 Q1 8 Q1 9 Q1 0 Q1 1 Q1 2 Q1
2 00 2 00 2 00 2 00 2 00 2 01 2 01 2 01
Source: Moody's Economy.com

110. A Denver Forecast: Employment Growth
10
Major Sector Employment Change (Ths., SA)
5
0
-5
Tourism
Education & Health Services,
Professional & Business Services
-10 Information
Transportation & Utilities
Manufacturing
-15
-20
Q1 Q1 Q1 Q1 Q1 1Q1 Q1
00
6
00
7
00
8
00
9 10 01 01
2
2 2 2 2 20 2 2
Source: Moody's Economy.com; BLS

111. A Denver Forecast: Unemployment
Unemployment (%)
9
8
7
6
Forecast
5
4
3
2
1 2 3 4 1 2 3 4 1 2
0 0Q 001Q 002Q 003Q 005Q 006Q 007Q 008Q 010Q 011Q
20 2 2 2 2 2 2 2 2 2
Source: Moody's Economy.com;BLS

112. A Denver Forecast: Unemployment
Unemployment (%)
10
9
8
US
7
Denver
6
5
Forecast
4
3
3 1 3 1 3 1 3
Q1 7Q 08
Q
08
Q
09
Q 9Q 0Q 0Q
07 20
0
20 20 20 20
0
20
1
20
1
20
Source: Moody's Economy.com;BLS

113. A Denver Forecast: Wages & Salaries
Wages & Salaries (YOY%)
16
14
12
10
8
6
4
2
0
Forecast
-2
-4
1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2
Q 01 02 03 05 06 07 08 10 11
00 20 20 20 20 20 20 20 20 20
20
Source: Moody's Economy.com; BLS