1. THE ECONOMY IN 2015: LIFT-OFF? Dr. Mike Walden Reynolds Distinguished Professor North Carolina State University 1

2. THE NATIONAL ECONOMY GDP and Employment: back to pre- recessionary levels Growth rates have accelerated Confidence up 2

3. REASONS FOR IMPROVEMENT Rebound from initial slow growth Housing improvement Wealth upswing Continued FED stimulus 3

4. AND, THE PLUNGE IN GAS PRICES Down 50% since summer Like a $225 billion tax cut Doubling of US oil supply in six years Slowing of usage growth in Asia 4

5. THE FUTURE OF GAS PRICES Saudis have not cut their supply Expect US supply to be curtailed Some rebound in price in 2015 5

6. THE HOUSING MARKET IN 2015 IMPROVEMENT HAS SLOWED PRE-RECESSIONARY LEVELS NOT FORESEEN WILL THE MILLENNIALS BUY? 6

7. INFLATION AND INTEREST RATES INFLATION IS STILL TAME (IS IT TOO LOW?) SURPRISE: DROP IN LONG-RATES IN 2015 PERMANENT LOW? 7

8. RISING INTERNATIONAL VALUE OF THE $ WILL INCREASE THE PRICE OF U.S. EXPORTS 8

9. POLICY IN 2015: ALL EYES ON THE FEDERAL RESERVE MORTGAGE BUYING HAS STOPPED RAISING SHORT-TERM INTEREST RATES IS NEXT WHEN? 9

10. NATIONAL OUTLOOK 3% GDP GROWTH 3 MILLION PAYROLL JOBS 5.0% TO 5.5% HEADLINE JOBLESS RATE INFLATION AND INTEREST RATES STILL LOW 10

11. NATIONAL ECONOMIC ISSUES Missing middle income jobs Slow wage and salary gains Technological unemployment Rising dependency rate Federal fiscal balance Infrastructure improvement 11

12. WHAT COULD GO WRONG? EXPANDED UKRANIAN CONFLICT CHINESE REAL ESTATE IMPLOSION MIDDLE EAST: IRAN; TERRORIST ATTACK IN SAUDI ARABIA 12

13. NORTH CAROLINA ECONOMY 13

14. NC PAYROLL JOB GROWTH 14

15. ALTERNATIVE MEASURES OF THE NORTH CAROLINA UNEMPLOYMENT RATE 2007: HEADLINE, 4.5%; U5, 5.6%; U6, 8.5% 15

16. MIDDLE-INCOME JOBS HAVE BEEN THE SLOWEST GROWING DURING THE RECOVERY 16

17. GEOGRAPHIC ECONOMIC INEQUALITY ALSO CONTINUES IN NORTH CAROLINA Raleigh/Cary 15.8% Charlotte14.1% Asheville 10.4% North Carolina 9.5% Durham-CH 8.6% Wilmington 8.2% Burlington 7.9% Greenville 6.3% Greensboro-HP 5.7% Winston-Salem 5.4% Jacksonsville 4.6% Hickory3.2% Goldsboro2.1% Fayetteville 0.6% Rocky Mount -2.0% 17

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19. NORTH CAROLINA OUTLOOK CONTINUED GROWTH 125,000 PAYROLL JOBS 5.0% TO 5.5% HEADLINE JOBLESS RATE AUTO ASSEMBLY PLANT? 19

20. IN SUMMARY 2015 WILL BE A “GOOD YEAR” MORE HOUSEHOLDS AND BUSINESSES WILL “GET AHEAD” CHALLENGES RELATED TO GROWTH RATHER THAN DECLINE! 20