1. John E. Silvia, Chief Economist February 21, 2013 Economic Outlook: Cyclical Recovery, Structural Challenges Global Competiveness Summit

2. Global Competitiveness Summit 2 Where Are We Now? Source: Five benchmarks for good decision making Inflation Interest Rates Growth Profits The Dollar

3. Global Competitiveness Summit 3 Expectations for the Future Wells Fargo vs. Consensus How do we differ from consensus?  Sustained below-trend growth  Still cautious on consumer segments  Housing improving—multifamily especially  State and local governments—still restructuring  Employment—cyclical and structural change

4. Global Competitiveness Summit 4 What We Get Versus What We Expect Sustained recovery in 2013, but still below historical experience Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

5. Global Competitiveness Summit 5 Global Competitiveness How can we measure the competitiveness of an economy?  Institutions—Property Rights  Infrastructure  Macroeconomy  Education  Market Efficiency—open/exit & entry  Technology  Innovation

6. Global Competitiveness Summit 6 Top 10 Global Competitiveness Where do the nations stack up in terms of competitiveness? Other Rankings Switzerland Finland Sweden Denmark Singapore United States Japan Germany Netherlands United Kingdom 11. Hong Kong 16. Canada 24. Korea 43. India 54. China 58. Mexico Source: World Economic Forum and Wells Fargo Securities, LLC

7. Global Competitiveness Summit 7 What We Get Versus What We Expect: Global Growth Global growth should pick up, although below long-run average Source: International Monetary Fund and Wells Fargo Securities, LLC

8. Global Competitiveness Summit 8 Global Growth The global recovery is being driven by emerging markets Source: International Monetary Fund and Wells Fargo Securities, LLC

9. Global Competitiveness Summit 9 Economic Activity Factory production in many developed economies has stalled Source: IHS Global Insight and Wells Fargo Securities, LLC

10. Global Competitiveness Summit 10 Germany: Economic Activity Economic activity in Germany has slowed over the past year and turned negative in Q4 Source: IHS Global Insight and Wells Fargo Securities, LLC

11. Global Competitiveness Summit 11 Eurozone: Economic Sentiment Economic activity in the Eurozone may be beginning to stabilize, albeit at low levels Source: IHS Global Insight and Wells Fargo Securities, LLC

12. Global Competitiveness Summit 12 Eurozone: Real GDP Growth Growth in the Eurozone will likely pick up over the next year Source: IHS Global Insight and Wells Fargo Securities, LLC

13. Global Competitiveness Summit 13 Eurozone Financial Markets Tensions in European financial markets have subsided, at least for now Source: IHS Global Insight and Wells Fargo Securities, LLC

14. Global Competitiveness Summit 14 ECB Policy Rate The ECB has cut its main policy rate to only 0.75 percent, but it is probably on hold now Source: Bloomberg LP and Wells Fargo Securities, LLC

15. Global Competitiveness Summit 15 Bank Exposure to Peripheral European Countries Many European countries have significant exposure to sovereign debt in peripheral European countries Source: Bank for International Settlements and Wells Fargo Securities, LLC

16. Global Competitiveness Summit 16 Bank Exposure to Western European Countries The financial linkages within the European banking system are very extensive Source: Bank for International Settlements and Wells Fargo Securities, LLC

17. Global Competitiveness Summit 17 U.S. Bank Exposure to Europe U.S. banks have relatively little bank exposure to the European periphery Source: Bank for International Settlements and Wells Fargo Securities, LLC

18. Global Competitiveness Summit 18 U.S. Dollar Exchange Rates On net, the exchange rate of the dollar remains unchanged Source: IHS Global Insight, Bloomberg LP and Wells Fargo Securities, LLC

19. Global Competitiveness Summit 19 U.K. Real GDP Growth Economic growth in the U.K. was flat in 2012—significant headwinds remain Source: IHS Global Insight and Wells Fargo Securities, LLC

20. Global Competitiveness Summit 20 Japan Economic Activity The Japanese factory sector has yet to recover Source: IHS Global Insight and Wells Fargo Securities, LLC

21. Global Competitiveness Summit 21 China Economic Activity Industrial production is strengthening with improved domestic demand Source: IHS Global Insight and Wells Fargo Securities, LLC

22. Global Competitiveness Summit 22 Brazil Real GDP Growth Economic growth should strengthen in the coming years as a strong middle class spurs domestic demand Source: IHS Global Insight and Wells Fargo Securities, LLC

23. Global Competitiveness Summit 23 Global Inflation Prices remain well contained as growth is sluggish Source: IHS Global Insight and Wells Fargo Securities, LLC

24. Global Competitiveness Summit 24 Commodity Prices Crude oil prices remain relatively contained Source: IHS Global Insight and Wells Fargo Securities, LLC

25. Global Competitiveness Summit 25 Commodity Prices Commodity prices are strengthening as world economies appear stronger Source: Bloomberg LP and Wells Fargo Securities, LLC

26. Global Competitiveness Summit 26 Global Economies: A Strong Dollar Policy? Economic fundamentals and risks abroad will drive the dollar Source: Federal Reserve Board and Wells Fargo Securities, LLC

27. Global Competitiveness Summit 27 Real Effective Exchange Rates Competitiveness has slowly improved in most of the highly indebted countries Source: IHS Global Insight and Wells Fargo Securities, LLC

28. Global Competitiveness Summit 28 Real Exchange Rates Relative exchange rates are stabilizing Source: IHS Global Insight and Wells Fargo Securities, LLC

29. Global Competitiveness Summit 29 U.S. Forecast Source: U.S. Department of Commerce, IHS Global Insight and Wells Fargo Securities, LLC

30. Global Competitiveness Summit 30 Potential Challenges to the Outlook Outlook Risks What are the primary risks to the outlook?  Easier monetary policy brings questions for the dollar, inflation and interest rate outlook  Fiscal policy: tax increases and/or spending cuts  Housing: unable to sustain growth on its own if rates rise  European debt crisis weighs on global growth  A rise in oil and gasoline prices helps to lower real consumption  Weak employment growth means less-than-expected real income and spending growth

31. Global Competitiveness Summit 31 U.S. Forecast Wells Fargo U.S. Economic Outlook Source: U.S. Department of Commerce, U.S. Department of Labor, Federal Reserve Board, Freddie Mac and Wells Fargo Securities, LLC

32. Appendix

33. Global Competitiveness Summit 33 Recent Special Commentary Wells Fargo Economics Group Publications To join any of our research distribution lists please visit our website: http://www.wellsfargo.com/ economics

34. Global Competitiveness Summit Wells Fargo Securities, LLC Economics Group 34 John Silvia …....................... … john.silvia@wellsfargo.comjohn.silvia@wellsfargo.com Global Head of Research and Economics Diane Schumaker-Krieg ………………… …… ….diane.schumaker@wellsfargo.comdiane.schumaker@wellsfargo.com Global Head of Research & Economics Chief Economist Mark Vitner, Senior Economist……………....………... mark.vitner@wellsfargo.com mark.vitner@wellsfargo.com Jay Bryson, Global Economist …………………....………. jay.bryson@wellsfargo.com jay.bryson@wellsfargo.com Eugenio Aleman, Senior Economist ……………. eugenio.j.aleman@wellsfargo.com eugenio.j.aleman@wellsfargo.com Sam Bullard, Senior Economist…………………………. sam.bullard@wellsfargo.com sam.bullard@wellsfargo.com Anika Khan, Senior Economist.…. anika.khan@wellsfargo.comanika.khan@wellsfargo.com Senior Economists Sarah Watt, Economic Analyst ……………………………. sarah.watt@wellsfargo.com sarah.watt@wellsfargo.com Kaylyn Swankoski, Economic Analyst kaylyn.swankoski@wellsfargo.comkaylyn.swankoski@wellsfargo.com Zachary Griffiths, Economic Analyst zachary.griffiths@wellsfargo.comzachary.griffiths@wellsfargo.com Sara Silverman, Economic Analyst sara.silverman@wellsfargo.comsara.silverman@wellsfargo.com Economists Azhar Iqbal, Econometrician………………………………azhar.iqbal@wellsfargo.comazhar.iqbal@wellsfargo.com Tim Quinlan, Economist …………………………………..tim.quinlan@wellsfargo.comtim.quinlan@wellsfargo.com Michael A. Brown, Economist ………………… michael.a.brown@wellsfargo.commichael.a.brown@wellsfargo.com Economic Analysts Administrative Assistants Wells Fargo Securities Economics Group publications are produced by Wells Fargo Securities, LLC, a U.S broker-dealer registered with the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority, and the Securities Investor Protection Corp. Wells Fargo Securities, LLC, distributes these publications directly and through subsidiaries including, but not limited to, Wells Fargo & Company, Wells Fargo Bank N.A., Wells Fargo Advisors, LLC, Wells Fargo Securities International Limited, Wells Fargo Securities Asia Limited and Wells Fargo Securities (Japan) Co. Limited. Wells Fargo Securities, LLC. (“WFS”) is registered with the Commodities Futures Trading Commission as a futures commission merchant and is a member in good standing of the National Futures Association. Wells Fargo Bank, N.A. (“WFBNA”) is registered with the Commodities Futures Trading Commission as a swap dealer and is a member in good standing of the National Futures Association. WFS and WFBNA are generally engaged in the trading of futures and derivative products, any of which may be discussed within this publication. The information and opinions herein are for general information use only. Wells Fargo Securities, LLC does not guarantee their accuracy or completeness, nor does Wells Fargo Securities, LLC assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sales of any security or as personalized investment advice. Wells Fargo Securities, LLC is a separate legal entity and distinct from affiliated banks and is a wholly owned subsidiary of Wells Fargo & Company © 2013Wells Fargo Securities, LLC. SECURITIES: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE Important Information for Non-U.S. Recipients For recipients in the EEA, this report is distributed by Wells Fargo Securities International Limited (“WFSIL”). WFSIL is a U.K. incorporated investment firm authorized and regulated by the Financial Services Authority. The content of this report has been approved by WFSIL a regulated person under the Act. WFSIL does not deal with retail clients as defined in the Markets in Financial Instruments Directive 2007. The FSA rules made under the Financial Services and Markets Act 2000 for the protection of retail clients will therefore not apply, not will the Financial Services Compensation Scheme be available. This report is not intended for, and should not be relied upon by, retail clients. This document and any other materials accompanying this document (collectively, the “Materials”) are provided for general informational purposes only. Peg Gavin, Executive Assistant. peg.gavin@wellsfargo.com peg.gavin@wellsfargo.com Cyndi Flowe, Administrative Assistant cyndi.h.flowe@wellsfargo.comcyndi.h.flowe@wellsfargo.com