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<br />AREA OVERVIEW
<br />
<br />11-2
<br />
<br />
<br />Relative Employment Performance (1991=100)
<br />
<br />135
<br />130
<br />125
<br />120
<br />115
<br />110
<br />105
<br />100
<br />95
<br />91 92 93 94 95 9Ci 97 98 99
<br />
<br />
<br />
<br />
<br />Forecast
<br />
<br />01 02 03 04 05 06 07 08 09 10
<br />
<br />-us
<br />
<br /> II' .1 't. I' II; II' I I
<br />9.4 70 9.817 9.891 10.049 10.301 10.704 11.049 Gross Domestic Product. CSB 11.409 11.709 12.070 12.443 12.823
<br />45 3.7 0.8 1.6 2.5 39 3.2 C/Janyc 33 26 3.1 31 3.1
<br />129.0 131.8 1318 130.3 130.0 131.4 133.5 Total Employment (Mil) 135.3 136.7 1381 139.9 141.8
<br />24 22 00 .U -0,3 1.1 1.5 14 10 1.0 1.3 1.4
<br />42 4.0 47 5.8 6.0 5.5 5.1 Unemployment Rate 4.7 4.9 4.9 4.7 4.6
<br />51 80 35 1.8 32 6.2 5.2 Personal Income Growth 71 5.4 52 5.1 5.0
<br />279.0 2822 285.1 288.0 290.9 293.7 296.4 Population (Mil) 299.1 3018 3045 307.2 309.8
<br />13 12 13 1.4 15 16 1.7 Single-Family Starts (Mil) 1.5 1.3 13 1.3 13
<br />03 0.3 0.3 0.3 0.3 0.3 0.4 Multitamily Starts (Mil) 0.3 03 03 0.4 0.4
<br />1.279 1062 2.121 2.818 4.067 2.761 3.105 Mortgage Originations (BiIS) 2.804 2.287 2,003 2.041 2,137
<br />1.282 1,218 1.452 1.539 1.625 1563 2,039 Personal Bankruptcies (000) 971 1.279 1,335 1360 1.445
<br />4.6 58 3.4 1.6 1.0 1.4 3.1 91.Day Treasury Bill ('/,) 4.7 47 4.6 4,6 44
<br />5.6 60 5.0 4.6 4.0 4.3 43 10.Year Treasury Bond C%) 4.8 5.0 5.3 5.6 5.6
<br /> ANALYSIS
<br />
<br />STRENGTHS
<br />. Continued higl, rate of technological change
<br />. Broad-based global growth.
<br />. Record corporate profits and pnsline corporate
<br />balance sheets
<br />
<br />WEAKNESSES
<br />. High debt service burdens and negative
<br />personal savmg rales
<br />. Skewecllncome and wealth dlstnbutlon
<br />. Large current account deficit
<br />. large rederal govemmenl deficits
<br />
<br />CURRENT EMPLOYMENT TRENDS
<br />
<br />October 2006 Employment Growth
<br />% change year ago. 3 mo. MA
<br />
<br />
<br />FORECAST RISKS
<br />
<br />-
<br />
<br />UPSIDE
<br />. Labor productiVity growth remams strong,
<br />supportIng strong growth and low mOatlol1.
<br />
<br />DOWNSIDE
<br />. Another terronst attack
<br />. Consumers pull back under the weight of high
<br />debt loads
<br />. Global investors pamc due to wtdenlng current
<br />account deficit and sell U.S, assets,
<br />
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<br />('olkdt'd In 111<' (f('thl !l\ll' ,Ill I qllJ1ii'\. 1111'
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<br />mongOlgt'S has lI1tT(,~bn! 1)\ h.ish 11' ;]:1...
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<br />slrOll1-: hclw...l ot l't'glll;tllll'" . tI:-'1 1 Ilil.1I1\ (ip
<br />pear to be lI,i~hh'llini-~ !no:t.~~,j.Y IllU II'!"..'. ! r~Jl,!'.
<br />sland;lrd.... \\l1l1t. ulrlllldl,'1\ I!H'J".1!Wlllli 111('
<br />
<br />11;;11<11 illljJml \\ III tw 10 funht'r crimp how;,.
<br />11l;-'. dl'IH.:IIHI and IIHTt'aSI' cn'dH probll'm""
<br />110lenltd gro\\1b,\1 tht' ....;mH' Irmt! tlw t'tOIlO
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<br />1l'~llldl. Ih;.1I potl'llll;d appear... to 1)(' ....lippin'~. ,\n
<br />1'1 (j!lomy.... pot('llll;ll i.... ttw ral(' of gro\\th IOf)
<br />...1StI'lIt \\ ilh st;tblc lllH'l11plo~ Itwnt ilud lat Ion
<br />ill ni/.llttJll ral('.... Ill'; ('qual to Ill(' ....urn of under
<br />II :ng pl'Odlldl\ II) ;llld J;111Or t'on..t' growlh,
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<br />',,, !lat slmH'f ~~nJ\\ th in hOlh pnlductl\'i'~ ,nul
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<br />dlJ\\n JrwIlL~l"" (ltlrlll~~ tht, IiI'" hdll flllhi"i
<br />dl'l.lde. POlt'lllhd 1'" ("lH'l lnllo toll I lurlhl'l',
<br />II) !H'al' .!.-l','" 0\('[" Iht' next (h'Cl\(h'.
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<br />t'\! h) the ht'I~~hl(,lll'(llWI'd 10 1II\!"st III i'IH'll~~
<br />Ilig l.'qlllpllH'1l1 .:Iml St'fUI'JI~ ,In' \\t'J1<111l1g on
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<br />dlh' to tIlt' str()n~~j'r gloh.1i t'((jTlom~
<br />tighh:r I .S, "t'~'lIrity 1JIt'<l'ures. fUll! 0.1 J1at
<br />IditOl' tOl\e parrinpal1un r"lt' ;Irt' \\('lgfung on
<br />i,dlor lorn' grO\\lh, Tlw h~llI;'lh' p;\r1lcip,ltIClll
<br />1;11\' IS no Illn,:I'l' n....lng;md ltw hTlhlgi' pdr11U
<br />pdtlllll nile U)lJlHlllt''\ 10 d('dl1H',
<br />Mondy's EUHlOllll'.{'(JIll expens growth
<br />to J"('ludin below lhe ('uJIlomy's :{'.\~ re.;,lI
<br />(;DP growth potentialthruug:h next spring:.
<br />I hc llllcmploymcnt ratc will edl(c highl,r
<br />Ihmugh Ihc middle of ncxt ycar. risinl( 10
<br />near :l%. This- higlu:r lU1CJllploymcnl r~Uc.
<br />.dong with continued low el1('r~)-' prin~s
<br />dnd lethered inllalion expc('latiol1s, will be
<br />...uftkiel1t to ensure that und('rlring infla.
<br />lion peaks in early 2007. Core ('PI intliuiol1
<br />j,,,, expected to top out at :~,\;,
<br />\Jl/d,: M. Idl1dl
<br />\(n '1.'I1l!ll'r _'J JOtl
<br />
<br />Moody's Economy.com. lnc, . www.ecooomy.com.halpqteconomy.com.Pr.Qcis METRO
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