Garrett County Total Non-Agricultural Employment First Quarter 1996 through First Quarter 2003

By: Anirban BasuSage Policy Group, Inc.

September 13th, 2013

Going Up for the ReboundOn Behalf ofMD-DC Utilities Association

Mission ImpossibleHoney, We Shrunk OurselvesMixed NutsAs Good as it GetsPay it forwardReality BitesPoint BreakDeep Impact

1First PitchHistoric and Projected World Output Growth 2004 through 2014*Source: International Monetary Fund*2013-2014 data are projections2013-14 reflects the July 2013 updates.

http://www.imf.org/external/pubs/ft/weo/2013/update/02/index.htm

http://www.imf.org/external/pubs/ft/weo/2013/01/weodata/index.aspx3Real GDP Growth, 20 Fastest and Slowest Growing CountriesEstimated 2013, Annual Percent Change (for available nations)Source: IMFRankCountryRegion%RankCountryRegion%1South SudanAfrica32.1166BarbadosCaribbean0.52LibyaMiddle East20.2167Bosnia and HerzegovinaEastern Europe0.53Sierra LeoneAfrica17.1168GrenadaCaribbean0.54MongoliaAsia14.0169Czech RepublicEurope0.35ParaguaySouth America11.0170BelgiumEurope0.26Timor-LesteSoutheast Asia10.0171VenezuelaSouth America0.17IraqMiddle East9.0172LuxembourgEurope0.17PanamaCentral America9.0173SwazilandAfrica0.09The GambiaAfrica8.9174HungaryEurope0.010MozambiqueAfrica8.4175FranceEurope-0.111Dem. Rep. of the CongoAfrica8.3176CroatiaEastern Europe-0.212ChadAfrica8.1177NetherlandsEurope-0.513ChinaAsia8.0178Islamic Republic of IranMiddle East-1.313Lao P.D.R.Southeast Asia8.0179ItalyEurope-1.513Cte d'IvoireAfrica8.0180SpainEurope-1.616ZambiaAfrica7.8181SloveniaEastern Europe-2.017TurkmenistanCentral Asia7.7182Equatorial GuineaAfrica-2.118RwandaAfrica7.6183PortugalEurope-2.319LiberiaAfrica7.5184San MarinoEurope-3.520Kyrgyz RepublicCentral Asia7.4185GreeceEurope-4.2April 2013 updates4Estimated Growth in Output by Select Global Areas2013 ProjectedSource: International Monetary FundJuly 2013 Updateshttp://www.imf.org/external/pubs/ft/weo/2013/update/02/index.htm

5Debt by Selected Country2012Source: IMFTop 12 Stock Exchanges 2011 GrowthRankExchangeIndex% Change1NYSE Group DJI A 5.5%2Nasdaq NASDAQ Composite -1.8%3London SE FTSE 100 -5.6%12Swiss Exchange Swiss Market Index-7.8%9TSX Group S&P TSX Composite -9.2%8Bolsa De Medrid IGBM-14.6%6Frankfurt SE DAX -14.7%5Euronext CAC 40 -17.0%4Tokyo SE Nikkei 225 -17.3%11Hong Kong Exchanges Hang Seng Index -20.0%7Shanghai SE Shanghai Composite -21.7%10Borsa Italiana FTSE MIB-25.2%Source: Yahoo! FinanceTop 12 Stock Exchanges 2012 GrowthRankExchangeIndex% Change6Frankfurt SE DAX 29.1%11Hong Kong Exchanges Hang Seng Index 22.9%4Tokyo SE Nikkei 225 22.9%2Nasdaq NASDAQ Composite 15.9%5Euronext CAC 40 15.2%12Swiss Exchange Swiss Market Index14.9%10Borsa Italiana FTSE MIB7.8%1NYSE Group DJI A 7.3%3London SE FTSE 100 5.8%9TSX Group S&P TSX Composite 4.0%7Shanghai SE Shanghai Composite 3.2%8Bolsa De MadridIBEX 35-4.7%Source: Yahoo! FinanceRankExchangeIndex% Change4Tokyo SE Nikkei 225 31.3%2NasdaqNASDAQ Composite 19.3%12Swiss Exchange Swiss Market 16.7%1NYSE Group DJI A 15.1%5Euronext CAC 40 13.3%6Frankfurt SE DAX 10.2%3London SE FTSE 100 10.2%10BorsaItalianaFTSE MIB8.6%8Bolsa De MadridMadrid General 8.0%9TSX Group S&P TSX Composite 2.4%11Hong Kong Exchanges Hang Seng Index -0.6%7Shanghai SE Shanghai Composite -8.8%Top 12 Stock Exchanges Year to date Growth Thru 8/16/139S&P Select Sector Performance2012Source: Dow Jones, Standard & PoorsSecond Quarter Earnings for Select CorporationsEarnings per Share Source: Dow Jones, Standard & PoorsSymbolQ2 2012 Q2 2013 Estimated Q2 2013 Reported SurpriseSymbolQ2 2012 Q2 2013 Estimated Q2 2013 Reported SurpriseCOF $2.20 $1.74 $2.13 $0.39 GE $0.38 $0.35 $0.36$0.01 BTU $0.73 ($0.05)$0.33$0.38 VZ$0.64 $0.72 $0.73$0.01 VFC $1.11 $1.17 $1.27$0.10 CMG $2.56 $2.81 $2.82 $0.01 YHOO $0.27 $0.26 $0.35$0.09 COH $0.86 $0.89 $0.89$0.00 UTX $1.58 $1.57 $1.65$0.08 MMM $1.66 $1.71 $1.71$0.00 HON $1.14 $1.21 $1.28$0.07 UPS $1.15 $1.14 $1.13($0.01)XRX $0.26 $0.24 $0.27$0.03 MCD $1.32 $1.40 $1.38($0.02)STI $0.50 $0.66 $0.68$0.02 TXN $0.44 $0.44 $0.42($0.02)AMD $0.05 ($0.12)($0.10)$0.02 MSFT ($0.05)$0.74 $0.59 ($0.15)DD $1.48 $1.27 $1.28$0.01 FCX $0.80 $0.46 $0.22($0.24)DOW$0.55 $0.63 $0.64$0.01 CAT $2.54 $1.70 $1.45($0.25)11Federal Reserve Balance Sheet v. S&P 500 IndexApril 2008 August 2013Source: Federal Reserve Bank; Yahoo FinanceS&P 500 index depicted in orangeThrough 8/21/2013

Should we convert this to a line graph?

Fed balance-weekly-wednesdays

Reserve Bank credit is the sum of securities held outright, repurchase agreements, term auction credit, other loans, net portfolio holdings of Commercial Paper Funding Facility LLC, net portfolio holdings of LLCs funded through the Money Market Investor Funding Facility, net portfolio holdings of Maiden Lane LLC, net portfolio holdings of Maiden Lane II LLC, net portfolio holdings of Maiden Lane III LLC, float, central bank liquidity swaps, and other Federal Reserve assets.

12Source: Moodys EconomyRecession Watchas of September 2013

13Industrial ProductionMarch 2001 through July 2013Source: Federal ReserveThe industrial production index measures the real output of the manufacturing, mining, and electric and gas utilities industries.Gross Domestic Product1990Q1 through 2013Q2Source: Bureau of Economic Analysis15Contributions to GDP Growth by Component Q2 2012 Q2 2013Source: Bureau of Economic Analysis16Red Card/Pink SlipNet Change in U.S. Jobs, BLSJanuary 2002 through August 2013Source: Bureau of Labor Statistics August 2013: +169K18Source: Bureau of Labor StatisticsNational Nonfarm Employmentby Industry SectorAugust 2012 v. August 2013All told 2,206 K Jobs gained19Cumulative Job Growth Since December 2007: Full-time v. Part-timeDecember 2007 August 2013Source: Bureau of Labor Statistics, Current Population SurveyFull-time: - 5.40 millionPart-time: +3.25 million20Maryland Nonfarm Employmentby Industry Sector Groups (SA)July 2013 v. July 2012Absolute ChangeSource: Bureau of Labor StatisticsMD Total: +39.0K; +1.5%US Total (SA): +2,276K; +1.7%July 2013 PreliminarySeries ID are in excel linked to chart21Baltimore-Towson MSA Nonfarm Employmentby Industry Sector Groups (NSA)July 2013 v. July 2012Absolute ChangeSource: Bureau of Labor StatisticsBaltimore MSA Total: +24.5K; +1.9%MD Total (NSA): +47.5K; +1.8%US Total (SA): +2,276K; +1.7%July 2013 PreliminarySeries ID are in excel linked to chart22Washington, DC-Arlington-Alexandria MSA Nonfarm Employmentby Industry Sector Groups (NSA)July 2013 v. July 2012Absolute ChangeSource: Bureau of Labor StatisticsDC MSA Total: +50.6K; +1.7%US Total (SA): +2,276K; +1.7%Series ID are in excel linked to chart23Source: Bureau of Labor StatisticsU.S. Year-over-year Percent Change: 1.7%Employment Growth, U.S. States (SA) July 2012 v. July 2013 Percent ChangeRankState%RankState%RankState%1Utah3.217Iowa1.735Hawaii12Arizona3.117Michigan1.735Illinois13Georgia2.817North Carolina1.735Kentucky14Colorado2.717Oregon1.735New Mexico14Idaho2.722California1.639Alabama0.94North Dakota2.723Maryland1.539New York0.94Texas2.723Vermont1.539Wisconsin0.98Washington2.325Connecticut1.439Wyoming0.99Mississippi2.225Virginia1.443Maine0.810Minnesota227Nevada1.343West Virginia0.810South Carolina228Arkansas1.245Nebraska0.712Florida1.928Kansas1.245Ohio0.712Indiana1.928Louisiana1.247Oklahoma0.612Montana1.928Massachusetts1.248District of Columbia0.512New Jersey1.928Tennessee1.248Pennsylvania0.516Missouri1.833New Hampshire1.150Rhode Island0.217Delaware1.733South Dakota1.151Alaska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: Bureau of Labor StatisticsU.S. Unemployment Rate: 7.4%Unemployment Rates, U.S. States (SA) July 2013RankStateRateRankStateRateRankStateRate1North Dakota318Texas6.535Arizona82South Dakota3.919Idaho6.635Oregon83Nebraska4.220Wisconsin6.837Connecticut8.14Hawaii4.521Maine6.937South Carolina8.15Utah4.621New Mexico6.939Indiana8.45Vermont4.621Washington6.940Kentucky8.55Wyoming4.624Louisiana740Mississippi8.58Iowa4.825Colorado7.140Tennessee8.59New Hampshire5.125Florida7.143District of Columbia8.610Minnesota5.225Maryland7.143New Jersey8.611Montana5.325Missouri7.145California8.711Oklahoma5.329Massachusetts7.246Georgia8.813Virginia5.729Ohio7.246Michigan8.814Kansas5.931Arkansas7.448North Carolina8.915West Virginia6.231Delaware7.448Rhode Island8.916Alabama6.333New York7.550Illinois9.216Alaska6.333Pennsylvania7.551Nevada9.5July 2013 preliminary25Unemployment Rates, 20 Largest Metros (NSA)July 2013Source: Bureau of Labor StatisticsRankMSAURRankMSAUR1Minneapolis-St. Paul-Bloomington, MN-WI Metropolitan Statistical Area4.910Baltimore-Towson, MD Metropolitan Statistical Area7.52Washington-Arlington-Alexandria, DC-VA-MD-WV Metropolitan Statistical Area5.712San Diego-Carlsbad-San Marcos, CA Metropolitan Statistical Area7.83Seattle-Tacoma-Bellevue, WA Metropolitan Statistical Area5.813St. Louis, MO-IL Metropolitan Statistical Area17.94Dallas-Fort Worth-Arlington, TX Metropolitan Statistical Area6.414New York-Northern New Jersey-Long Island, NY-NJ-PA Metropolitan Statistical Area85Houston-Sugar Land-Baytown, TX Metropolitan Statistical Area6.515Philadelphia-Camden-Wilmington, PA-NJ-DE-MD Metropolitan Statistical Area8.46Boston-Cambridge-Quincy, MA-NH Metropolitan NECTA6.616Atlanta-Sandy Springs-Marietta, GA Metropolitan Statistical Area8.67San Francisco-Oakland-Fremont, CA Metropolitan Statistical Area6.917Chicago-Joliet-Naperville, IL-IN-WI Metropolitan Statistical Area9.67Phoenix-Mesa-Glendale, AZ Metropolitan Statistical Area6.918Los Angeles-Long Beach-Santa Ana, CA Metropolitan Statistical Area9.89Tampa-St. Petersburg-Clearwater, FL Metropolitan Statistical Area7.319Detroit-Warren-Livonia, MI Metropolitan Statistical Area10.410Miami-Fort Lauderdale-Pompano Beach, FL Metropolitan Statistical Area7.520Riverside-San Bernardino-Ontario, CA Metropolitan Statistical Area1126MD County Unemployment RatesJuly 2013Source: Bureau of Labor StatisticsRankJurisdictionURRankJurisdictionUR1Montgomery County5.312Kent County7.22Howard County5.512Harford County7.23Frederick County5.915Baltimore County7.44Carroll County6.216Worcester County7.65Queen Anne's County6.417Caroline County86Calvert County6.518Cecil County8.27Anne Arundel County6.619Washington County8.47St. Mary's County6.619Wicomico County8.49Charles County6.721Allegany County8.610Talbot County6.822Dorchester County1011Prince George's County7.123Somerset County10.412Garrett County7.224Baltimore City10.827Pad Save15-Year & 30-Year Fixed Mortgage Rates January 1995 through August 2013Source: Freddie MacAugust:30-year: 4.46%15-year: 3.49%29Messages from Federal Open Market Committee, July 2013(T)he Committee decided to continue adding policy accommodation by purchasing additional MBS at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month . . .

. . . the Committee reaffirmed its intention to keep the target federal funds rate at .00 to percent . . . exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6 percent.Source: Federal Reserve Bank, Bloomberg. (June. 28th, 2013). Lacker Says Markets to Stay Volatile as Fed Debates TaperingNumbers above unchanged in July 30-31 minutesCan change title to July?

July 30-31 Minutes:http://www.federalreserve.gov/monetarypolicy/files/fomcminutes20130731.pdf

Dismal:Bets on the Fed to begin tapering in September may rise, as the minutes noted that almost all participants confirmed that they were broadly comfortable with the contingent plan for QE laid out by Fed Chairman Ben Bernanke in the June post-meeting press conference. Bernanke said that QE could end when the unemployment rate approaches 7%, which could be around mid-2014.

Missing from the minutes was discussion about the composition of QE after the Fed begins to taper. Initially, we thought the Feds first taper would be in the ballpark of $20 billion, evenly split between Treasuries and mortgage-backed securities. Given the tightening in financial markets, the Fed may start smaller and focus on Treasuries; there is the view that MBS purchases have had a greater impact on long-term rates.

The Fed described Junes employment gain as solid. The job market has improved since the Fed began QE3, and policymakers appear more confident in where the labor market is headed. This is important, as it would factor into any decision to taper.

30U.S. New Home SalesJanuary 1999 through July 2013Source: Economy.com, Census Bureau31U.S. Housing StartsJanuary 1999 through July 2013Source: Census BureauS&P/Case-Shiller Home Price Indices for Select Metros June 2013, 12-Month Percentage ChangeSource: Standard & PoorsJune 2013: U.S. National Index-1-year % change: 10.1%

http://www.spindices.com/index-family/real-estate/sp-case-shiller33Put me in, Coach34Conference Board Consumer Confidence Index2005 August 2013Source: Conference Board35U.S. Retail and Food Service SalesJanuary 2002 through August 2013Source: Census Bureau36Sales Growth by Type of Business August 2012 v. August 2013*Source: Census Bureau*August 2013 advanced estimate37National Vehicle Sales June 2004 through August 2013 (SAAR)Source: Autodata Corp.38Conference Board Leading Economic Indicators IndexAugust 2007 through July 2013Source: Conference Board39Fourth QuarterAs predicted, first half of year was quite soft in terms of economic expansion as sequestration and tax hikes make their mark;

Second half of year should be better, with growth likely to average a shade above 2 percent;.

Many headwinds remain and the recovery could easily falter;

Black swan threats: (1) Iran (2) Israel/Iran (3) Europe;

Maryland has held its own to date, but there are major discrepancies between the household survey and the establishment survey one of them is probably wrong; and

We are an increasingly part-time nation that looks like a problem.

40Thank YouYou can always reach me at abasu@sagepolicy.comPlease look for updates of information at www.sagepolicy.com.Also, if you need us in a hurry, we are at 410.522.7243 (410.522.SAGE)Please contact us when you require economic research & policy analysis.41