National Economic Conditions

Ray Owens

April 12, 2011

-8-7-6-5-4-3-2-1012345678

-8-7-6-5-4-3-2-1012345678

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

2

Q43.1

Real Gross Domestic Product

Source: Bureau of Economic Analysis/Haver Analytics

Percent change from previous quarter at annual rate

3

Real Gross Domestic Product

Source: Bureau of Economic Analysis/Haver Analytics

2009 Q4 Q1 Q2 Q3 Q4

CHANGE FROM PREVIOUS QUARTER AT COMPOUND ANNUAL RATE [Percent]:

Gross Domestic Product 5.0 3.7 1.7 2.6 3.1

Personal Consumption Expenditures 0.9 1.9 2.2 2.4 4.0

Nonresidential Fixed Investment -1.4 7.8 17.2 10.0 7.7Structures -29.2 -17.8 -0.5 -3.5 7.6Equipment & Software 14.6 20.4 24.8 15.4 7.7

Residential Fixed Investment -0.8 -12.3 25.7 -27.3 3.3

Exports of Goods & Services 24.4 11.4 9.1 6.8 8.6Imports of Goods & Services 4.9 11.2 33.5 16.8 -12.6

Final Sales to Domestic Purchasers 0.2 1.3 4.3 2.6 3.2

LEVEL IN QUARTER AT SEASONALLY ADJUSTED ANNUAL RATE [Billions of Chained (2005) Dollars]:

Change in Private Inventories -36.7 44.1 68.8 121.4 16.2

Net Exports of Goods & Services -330.1 -338.4 -449.0 -505.0 -397.7

2010

Government Consumption Expenditures & Gross Investment

-1.4 -1.6 3.9 3.9 -1.7

4

Personal Saving Rate

Source: Bureau of Economic Analysis/Haver Analytics

0

1

2

3

4

5

6

7

8

9

0

1

2

3

4

5

6

7

8

9

2005 2006 2007 2008 2009 2010 2011 2012

Percent of disposable personal income

Feb.5.8%

5

-4

-3

-2

-1

0

1

2

3

4

5

6

-4

-3

-2

-1

0

1

2

3

4

5

6

2005 2006 2007 2008 2009 2010 2011 2012

Year over Year % Change

Real PersonalIncome

Real Personal Consumption Expenditures

Feb.

Personal Income & Expenditures

Source: Bureau of Economic Analysis/Haver Analytics

Month over Month % Change

Dec. Jan. Feb.Income 0.2 0.8 -0.1Expenditures 0.1 0.0 0.3

6

DIFFUSION INDEXES: Numbers above 50 percent indicate a preponderance of expanding firm activity.

ISM: Business Survey Indexes

Source: Institute for Supply Management/Haver Analytics

MANUFACTURING BUSINESS: NONMANUFACTURING BUSINESS:

Feb. Mar. Feb. Mar.

Purchasing Managers Index 61.4 61.2 NonManufacturing Index 59.7 57.3

Production 66.3 69.0 Business Activity 66.9 59.7

New Orders 68.0 63.3 New Orders 64.4 64.1

Employment 64.5 63.0 Employment 55.6 53.7

Supplier Deliveries 59.4 63.1 Supplier Deliveries 52.0 51.5

Inventories 48.8 47.4 Inventories 55.5 55.5

Prices 82.0 85.0 Prices 73.3 72.1

Backlog of Orders 59.0 52.5 Backlog of Orders 52.0 56.0

New Export Orders 62.5 56.0 New Export Orders 56.5 59.0

Imports 55.0 56.5 Imports 53.5 50.0

7

Housing Vacancy Rate

Source: Census Bureau/Haver Analytics

10

11

12

13

14

15

16

10

11

12

13

14

15

16

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Percent

Q414.1%

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2005 2006 2007 2008 2009 2010 2011 2012

8

Housing Starts

Single-Family Building Permits & Housing Starts

Source: Census Bureau/Haver Analytics

Millions of Units

Building Permits

Feb.

9

Multi-Family Building Permits & Housing Starts

Source: Census Bureau/Haver Analytics

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

2005 2006 2007 2008 2009 2010 2011 2012

BuildingPermits

Housing Starts

10

CoreLogic House Price Indices

Source: CoreLogic/Haver Analytics

-25

-20

-15

-10

-5

0

5

10

15

20

25

-25

-20

-15

-10

-5

0

5

10

15

20

25

2005 2006 2007 2008 2009 2010 2011 2012

Year over Year % Change

Including Distressed Sales

Excluding Distressed Sales

Februay Incl. Distressed Sales -6.6% Excl. Distressed Sales 0.0%

-50

-40

-30

-20

-10

0

10

20

30

40

50

-250

-200

-150

-100

-50

0

50

100

150

200

250

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Net Absorptions & Employment

Source: Torto Wheaton, Bureau of Labor Statistics, & Haver Analytics

Thousands of Employees, Quarterly Averages Millions of Square Feet

Changes inEmployment(Left Axis)

Net Absorptions,Office Buildings

(Right Axis)

Notes: Office employment is the sum of employment in information, financial activities, and professional and business services.

11

-800

-700

-600

-500

-400

-300

-200

-100

0

100

200

300

400

500

-800

-700

-600

-500

-400

-300

-200

-100

0

100

200

300

400

500

2005 2006 2007 2008 2009 2010 2011 2012

12

Quarterly average of monthly changes, thousands of persons

Q1 Avg.

Nonfarm Payroll Employment

Source: Bureau of Labor Statistics/Haver Analytics

Mar. 216Feb. 194Jan. 68Dec. 152Nov. 93

Monthly Change

13

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

10.5

11.0

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

10.5

11.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Percent

Mar.8.8%

Civilian Unemployment Rate

Source: Bureau of Labor Statistics, Board of Governors, Haver Analytics

Notes: FOMC forecast is the central tendency for the Q4 levels, from the January 25-26 meeting.

FOMC Forecast

14

-3

-2

-1

0

1

2

3

4

5

6

-3

-2

-1

0

1

2

3

4

5

6

2005 2006 2007 2008 2009 2010 2011 2012

All Items

Core CPI

Feb.2.1%

Consumer Price IndexesYear over Year % Change

Source: Bureau of Labor Statistics/Haver Analytics

1.1%

15

0.00

0.25

0.50

0.75

0.00

0.25

0.50

0.75

April 27 June 22 August 9

March 10, 2011

April 11, 2011

CurrentTarget Range for Federal Funds Rate

Expected Federal Funds RatePercent

Source: Chicago Board of Trade

Notes: Derived from Fed funds futures contracts.

16

Federal Reserve System Assets

Source: Board of Governors/Haver Analytics

Miscellaneous: $156

Treasury Securities:$476

Notes: PDCF is the Primary Dealer Credit Facility. AMLF is the Money Market Liquidity Facility.

Treasury Securities:$1,072

Miscellaneous: $175

Miscellaneous: $176

Foreign Currency Swaps: $553

Term Auction Facility:$450

Commercial PaperFacility (CPFF): $332

Treasury Securities:$790

Miscellaneous: $110

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2200

2400

2600

12/26/2007 12/31/2008 12/30/2009 12/29/2010

Treasury Securities: $755

Treasury Securities: $476

Treasury Securities: $777

Treasury Securities:

$1,010

Misc.: $133

Misc: $176

Misc.: $153

Misc.: $161Commercial

Paper Facility (CPFF): $332

PDCF: $38

Term Auction Facility (TAF):

$450

AIG & Bear Sterns: $114

AIG & Bear Sterns: $111

AIG & Bear Sterns: $113

Agency MBS: $910

Agency MBS: $1,001

Foreign Currency Swaps:

$553AMLF: $24

Discount Window: $87

Agency Debt: $160

Agency Debt: $147

TAF: $76

Term ABS Lending Facility

(TALF): $25

TALF: $48

Total: $922

Total: $2,250 Total: $2,235

Total: 2,457

TAF: $20

Virginia Industry Structure

Source: Bureau of Labor Statistics/Haver Analytics

0.6

4.3

8.9

19.0

2.1

5.8

12.8

15.0

10.1

4.1

17.3

0.3

4.9

6.3

17.1

2.1

4.9

17.8

12.7

9.4

5.3

19.2

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0

Natural Resources & Mining

Construction

Manufacturing

Trade, Transportation & Utilities

Information

Financial Activities

Professional & Business Services

Education & Health Services

Leisure & Hospitality

Other Services

Government

Employment Share (Percent)

2010U.S.

Virginia

Virginia Payroll Employment

-6.0

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

YoY

% C

hg

U.S.

Virginia

February 2011US: 1.0%VA: 1.4%

Source: Bureau of Labor Statistics/Haver Analytics

Virginia Unemployment Rate

Source: Bureau of Labor Statistics/Haver Analytics

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Perc

ent

U.S.

Virginia

February 2011US: 8.8%VA: 6.4%

Virginia Real Personal Income

Source: BEA/Haver Analytics

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

YoY

% C

hg

U.S.

Virginia

4Q: 2010US: 2.7%VA: 2.9%

Virginia Single-Family Building Permits

-60.0

-40.0

-20.0

0.0

20.0

40.0

60.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

YoY

% C

hg3-

mon

th m

ovin

g av

erag

e

U.S.

Virginia

February 2011US: -17.0%VA: -11.0%

Source: US Census Bureau/Haver Analytics

Virginia Existing Home Sales

Source: National Association of Realtors/Haver Analytics

-30.0

-20.0

-10.0

0.0

10.0

20.0

30.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

YoY

% C

hg

U.S.

Virginia

4Q: 2010US: -19.5%VA: -18.9%

Virginia House Prices—FHFA HPI

Source: Federal Housing Finance Agency/Haver Analytics

-9.0

-6.0

-3.0

0.0

3.0

6.0

9.0

12.0

15.0

18.0

21.0

24.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

YoY

% C

hg

U.S.

Virginia

4Q: 2010US: -1.3%VA: -1.4%