Dunkelberg

TWO WAYS OUT, NEITHER DESIRABLE

GDP AND EMPLOYMENT GDP(left)

EMPLOYMENT (right)

17000

147000

16000

145000

15000

143000

14000 13000

141000

12000

139000

EMPLOYMENT GAP

11000

137000

14

'1 3

'1 2

'1 1

'1 0

'0 9

135000

'0 8

'0 7

'0 6

'0 5

'0 4

'0 3

'0 2

'0 1

'0 0

10000 HAVER ANALYTICS

HOUSING STARTS UNITS 2000

UNITS 000

1700 1400

MISSING IN GDP 1100 800

HAVER ANALYTICS 500 91

93

95

97

99

'01

'03

'05

'07

'09

'11

'13

HOME OWNERSHIP 96

99

'02

'05

'08

11

70

RENTERS OWNERS 65

60

USA

AGE 35-55

14

PRIVATE SECTOR ESTABLISHMENT BIRTHS AND DEATHS BIRTHS

12

'0 9

'0 6

SEASONALLY ADJUSTED

'0 3

'0 0

250 240 230 220 210 200 190 180 170 160 150

DEATHS

UNEMPLOYMENT RATE U3 RATE 11 10 8 7 6 5 4

(SEASONALLY ADJUSTED)

'1 2

'0 9

'0 6

'0 3

'0 0

97

94

91

88

85

82

79

3

76

Percent

9

INTEREST RATES AND STOCK MARKET I YEAR TREAS

S&P 500

15

1800 1500

10

1200 900

5

600

'12

'09

300 '06

'03

'00

97

94

91

0

HAVER ANALYTICS

INDEX OF CONSUMER SENTIMENT QUARTERLY 110

90 80 70 60

Source: University of Michigan

'1 3

'0 8

'0 3

98

93

88

83

50

78

Index Value

100

REUTERS/UofM CONSUMER CONFIDENCE BY INCOME TERCILE 100

LOWEST

MIDDLE

TOP THIRD

80 70 60

14

'1 2

13

LAST DOT IS EARLY APRIL

50

'1 1

Percent of Firms

90

RATING OF GOVERNMENT POLICY NET % POLICIES ARE GOOD 50

2008-2014

APRIL FIRST HALF

30 20 10 0 -10 -20 -30 -40

Source: University of Michigan

'1 2

'0 9

'0 6

'0 3

-50

'0 0

Percent of Consumers

40

SMALL BUSINESS OPTIMISM INDEX (QUARTERLY, 1986 = 100) SEASONALLY ADJUSTED

110

FEB MAR

105 100 95 90 85

FIRST MONTH IN EACH QUARTER

80

76

79

82

85

88

91

94

97

'00

'03

'06

'09

12

EXPECTATIONS FOR GENERAL BUSINESS CONDITIONS IN 6 MONTHS (PCT “BETTER” - PCT “WORSE”) QUARTERLY

FEB MAR

50 30 10 -10 -30

97 '0 0 '0 3 '0 6 '0 9 '1 2

94

91

85

82

79

-50

88

SEASONALLY ADJUSTED

76

Percent of Firms

70

OUTLOOK FOR BUSINESS EXPANSION (PCT “NOW IS A GOOD TIME”)

QUARTERLY

FEB MAR

“NO” for 24 QUARTERS

25 20 15 10 5

(SEASONALLY ADJUSTED)

'1 2

'0 9

'0 6

'0 3

'0 0

97

94

91

88

85

82

79

0

76

Percent of Firms

30

BAD TIME TO EXPAND DUE TO THE POLITICAL CLIMATE QUARTERLY

FEB MAR

35 30 25 20 15 10 5

(SEASONALLY ADJUSTED)

'1 3

'1 0

'0 4

'0 7

% OF THOSE SAYING “BAD TIME”

0

'0 1

Percent of Firms

40

REPORTED CHANGE IN PAST SALES (last 3 months vs prior 3) QUARTERLY

30

RECESSION ENDS

20 10 0 -10 -20 -30

'1 2

'0 9

'0 6

'0 3

'0 0

97

94

91

88

85

82

79

-40

[% "HIGHER" - % "LOWER", SEAS. ADJ.]

76

Percent of Firms

FEB MAR

EXPECTED REAL SALES QUARTERLY

FEB MAR

50

30 20 10 0 -10 -20

'1 2

'0 9

'0 6

'0 3

'0 0

97

94

91

88

82

79

-30

85

[% "HIGHER" - % "LOWER", SEAS. ADJ.]

76

Percent of Firms

40

LOAN DEMANDS WEAKEN THROUGH THE RECESSION PERCENT OF ALL FIRMS NOT WANTING A LOAN RECESSION STARTS

50 45 40

14

11

'0 8

'0 5

'0 2

99

96

35

93

Percent of Firms

55

FEB MAR

SINGLE MOST IMPORTANT PROBLEM FACING OWNERS INFLATION

45

CREDIT

35 30

FIRST MONTH IN EACH QUARTER + FEB,MAR

25 20 15

CREDIT: NO PROBLEM

10 5

12

'0 9

'0 6

'0 3

'0 0

97

94

91

88

85

82

79

0

76

Percent of Firms

40

AVERAGE CHANGE IN EMPLOYMENT PER FIRM WORKERS PER FIRM

FEB MAR

0

-0.4

-0.8 QUARTERLY: FIRST MONTH IN EACH QUARTER

'0 0 '0 3 '0 6 '0 9 '1 2

97

94

91

88

85

82

-1.2

79

NUMBER OF WORKERS

0.4

PERCENT OF OWNERS INCREASING OR REDUCING EMPLOYMENT INCREASED

30

REDUCED

FIRST MONTH IN EACH QUARTER +FEB MAR

20 15 10 5

'1 2

'0 9

'0 6

'0 3

97 '0 0

91 94

85 88

0

79 82

Percent of Firms

25

JOB CREATION PLANS % PLAN INCREASE - % PLAN DECREASE QUARTERLY

FEB MAR

25

15 10 5 0 -5

'1 2

'0 9

'0 6

'0 3

'0 0

97

94

91

88

85

82

79

-10 76

Percent of Firms

20

PLANNED CAPITAL OUTLAYS (NEXT SIX MONTHS) QUARTERLY

FEB MAR

45

35 30 25 20

'0 1 '0 4 '0 7 '1 0 '1 3

98

95

92

89

86

83

80

15

77

Percent of Firms

40

TRICKLE DOWN

EXACTLY HOW HELPFUL IS TRANSPARENCY AND FORWARD GUIDANCE?

Stein said the dark side of collapsed risk premiums occurs if they return to normal abruptly in a way that causes larger economic effects than the initial compression.

So the language that we used in the statement is considerable period. So I, you know, this is the kind of term it's hard to define.

But, you know, probably means something on the order of around six months, that type of thing.