1. Economic Outlook Michael Wolf, Economist November 3, 2014

2. Economics 22 Gross Domestic Product GDP got off to a rocky start at the beginning of the year but has since proved more resilient Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

3. Government

4. Economics 4 Government Purchases The public sector is finally starting to bounce back after years of declines Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

5. Economics 5 U.S. Budget Deficit Deficit is shrinking, but not nearly fast enough Source: U.S. Department of the Treasury and Wells Fargo Securities, LLC

6. Economics 6 U.S. Budget Gap The larger problem is that there is still no credible plan to move back into a surplus Source: Congressional Budget Office and Wells Fargo Securities, LLC

7. Economics 77 Federal Government Spending: Entitlements in the Driver’s Seat Entitlement programs are the main drivers of growing expenditures Source: Congressional Budget Office and Wells Fargo Securities, LLC

8. Business Investment

9. Economics 9 Business Investment Business investment looks to be strengthening after a hiccup earlier in the year Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

10. Economics 10 Business Lending Commercial and industrial lending has surged over the past quarter, helped by easier credit and increased demand Source: Federal Reserve Board and Wells Fargo Securities, LLC

11. Economics 11 Manufacturing Large, Global Businesses: Recent pickup in activity Source: Institute for Supply Management and Wells Fargo Securities, LLC

12. Economics 12 CRE: Industrial A rise in manufacturing and energy production has fueled growth in the industrial real estate market Source: CoStar Portfolio Strategy, LLC and Wells Fargo Securities, LLC

13. Economics 13 Manufacturing: Production and Jobs Gap Rising manufacturing production has not led to huge job gains Source: U.S. Department of Labor, U.S. Department of Commerce and Wells Fargo Securities, LLC

14. Consumption

15. Economics 15 Personal Consumption Expenditures Consumption should rebound during the forecast period but growth is likely to remain somewhat subdued Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

16. Economics 16 Employment Total employment finally breached its prerecession peak… Source: U.S. Department of Labor and Wells Fargo Securities, LLC

17. Economics 17 Employment: Structural …but we still have a ways to go before recovering all of the full- time jobs lost in the most recent recession Source: U.S. Department of Labor and Wells Fargo Securities, LLC

18. Economics 18 Unemployment In addition, the unemployment rate overstates the health of the labor market. Discouraged workers and an abundance of part-time work rein in spending Source: U.S. Department of Labor and Wells Fargo Securities, LLC

19. Economics 19 Wages and Salaries Wage growth is also starting to perk up but still remains rather modest Source: U.S. Department of Labor and Wells Fargo Securities, LLC

20. Economics 20 Consumer Balance Sheet Although consumer leverage remains elevated, it is off its prerecession high Source: Federal Reserve Board and Wells Fargo Securities, LLC

21. Economics 21 Debt Service Ratio The debt serviced ratio has fallen to historical lows, but such strong declines have not been felt uniformly Source: Federal Reserve Board, U.S. Department of Commerce and Wells Fargo Securities, LLC

22. Economics 22 Household Debt Rising student loan debt is crowding out other borrowing, particularly for autos and credit cards Source: Federal Reserve Board and Wells Fargo Securities, LLC 20132003

23. Economics 23 Health Care Employment Health care employment has recently been under pressure Source: U.S. Department of Labor and Wells Fargo Securities, LLC

24. Economics 24 Medical Care Spending Medical care continues to account for an increasing share of household spending Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

25. Economics 25 Consumer Price Growth The cost of medical care has surged over the past 30 years Source: U.S. Department of Labor and Wells Fargo Securities, LLC

26. Economics 26 Medical Care Spending Consumers’ out of pocket health care expenditures are picking up Source: U.S. Department of Labor and Wells Fargo Securities, LLC

27. Housing Market

28. Economics 28 Housing Market: Existing Home Sales Existing home sales have started to rebound but remain lower than a year ago Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

29. Economics 29 Housing Market: New Home Sales New home sales have seen only modest improvement Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

30. Economics 30 Mortgage Rates Although mortgage rates remain low by historical standards, the rise over last year has had a negative effect on homebuying Source: Freddie Mac and Wells Fargo Securities, LLC

31. Economics 31 Home Purchase Expectations But other indicators show that demand remains soft Source: The Conference Board and Wells Fargo Securities, LLC

32. Economics 32 Home Prices Home price gains have moderated considerably Source: Federal Housing Finance Agency, National Association of Realtors, S&P Corp. and Wells Fargo Securities, LLC

33. Economics 33 Housing Market: Distressed Home Sales Fewer distressed homes available at a discount also keep prices moving higher Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

34. Economics 34 Housing Market Fundamentals Are Changing Household formations remain well below their historical norms, and a larger proportion of new households are choosing to rent Source: U.S. Department of Commerce and Wells Fargo Securities, LLC Owners vs. RentersHousehold Formation

35. Economics 35 Housing Market: Home Sales Despite slow growth in new home sales, homebuilders remain a bit more optimistic Source: U.S. Department of Commerce, National Association of Home Builders and Wells Fargo Securities, LLC

36. Economics 36 Housing Market: Apartments Some builders are likely benefitting from growth in the multifamily market, where apartment demand and construction remains strong Source: Reis and Wells Fargo Securities, LLC

37. Economics 37 Housing Market: Condos Existing condo sales had also slipped recently but the upward trajectory is clear Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

38. Economics 38 Housing Market: Residential Construction We expect residential construction to continue to advance, though a full recovery in the housing market is a long way off Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

39. The Carolinas

40. Economics 40 North Carolina: GDP Output in North Carolina bested the national average in 2013… Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

41. Economics 41 South Carolina: GDP …while growth in South Carolina continued to lag behind. Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

42. Economics 42 Carolinas: Employment In 2014, employment growth has closely tracked that of the nation in the region, though the Carolinas are digging themselves out of a larger hole. Source: U.S. Department of Labor and Wells Fargo Securities, LLC

43. Economics 43 North Carolina: Regional Employment Growth in North Carolina has been concentrated in Raleigh and Charlotte, while other regions get left behind. Source: U.S. Department of Labor and Wells Fargo Securities, LLC

44. Economics 44 North Carolina: Employment Growth has been broad based in North Carolina, with gains concentrated in professional & business services and information. The public sector remains a net negative on the state. Source: U.S. Department of Labor and Wells Fargo Securities, LLC

45. Economics 45 North Carolina: High-Tech Employment Technical employers are driving growth in the state, which is far higher than what has been seen nationwide. Source: U.S. Department of Labor and Wells Fargo Securities, LLC

46. Economics 46 North Carolina: Housing Home prices continue their upward march, nearly erasing all the losses felt during the downturn. Residential construction has stalled recently after a sizable rebound earlier in the recovery. Source: CoreLogic, U.S. Department of Commerce and Wells Fargo Securities, LLC Residential ConstructionHome Prices

47. Economics 47 North Carolina: Demographics Population growth remains above average, though it is concentrated in more of the urban areas of the state. Source: U.S. Department of Labor and Wells Fargo Securities, LLC

48. Economics 48 South Carolina: Employment In South Carolina, the unemployment rate fell dramatically and has since turned upward. Source: U.S. Department of Labor and Wells Fargo Securities, LLC

49. Economics 49 South Carolina: Employment Much of the dramatic fall in the unemployment rate is due to a falling labor force participation rate. Source: U.S. Department of Labor and Wells Fargo Securities, LLC

50. Economics 50 South Carolina: Regional Employment Regional growth in South Carolina has been more consistent, though Charleston, Spartanburg and Greenville have posted the largest gains. Source: U.S. Department of Labor and Wells Fargo Securities, LLC

51. Economics 51 South Carolina: Employment Employment gains have been relatively broad based across industries, with financial activities remaining the principal weight. Source: U.S. Department of Labor and Wells Fargo Securities, LLC

52. Economics 52 South Carolina: Manufacturing Manufacturing has been particularly strong, thanks in part to BMW, Boeing and their suppliers. Source: U.S. Department of Labor and Wells Fargo Securities, LLC

53. Economics 53 South Carolina: Manufacturing More manufacturing has led to rising exports in the state. Source: U.S. Department of Labor and Wells Fargo Securities, LLC

54. Economics 54 South Carolina: Manufacturing But manufacturing employment is still a long way from the levels seen in the 90’s. Source: U.S. Department of Labor and Wells Fargo Securities, LLC

55. Economics 55 South Carolina: Manufacturing Related In addition, related industries have picked up to transport and store the goods made in South Carolina. Source: U.S. Department of Labor and Wells Fargo Securities, LLC

56. Economics 56 South Carolina: Income Income growth has been surprising strong in the last few quarters, outpacing the nation and North Carolina. Source: U.S. Department of Labor and Wells Fargo Securities, LLC

57. Economics 57 South Carolina: Housing Home prices are quickly gaining on their prerecession peak, while single-family construction approaches more normal levels. Source: CoreLogic, U.S. Department of Commerce and Wells Fargo Securities, LLC Residential ConstructionHome Prices

58. Economics 58 South Carolina: Demographics Population growth is picking back up, which should help fuel gains in consumer-driven industries. Source: U.S. Department of Labor and Wells Fargo Securities, LLC

59. Economics 59 U.S. Forecast

60. Client/Prospect Name Wells Fargo Securities, LLC Economics Group 60 John E. 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 H. Bryson, Global Economist …………………....…… …. jay.bryson@wellsfargo.com jay.bryson@wellsfargo.com Sam Bullard, Senior Economistsam.bullard@wellsfargo.comsam.bullard@wellsfargo.com Nick Bennenbroek, Currency Strategist……nicholas.bennenbroek@wellsfargo.comnicholas.bennenbroek@wellsfargo.com Eugenio J. Alemán, Senior Economist… …………. eugenio.j.aleman@wellsfargo.com eugenio.j.aleman@wellsfargo.com Anika R. Khan, Senior Economist …. anika.khan@wellsfargo.comanika.khan@wellsfargo.com Senior Economists Zachary Griffiths, Economic Analyst zachary.griffiths@wellsfargo.comzachary.griffiths@wellsfargo.com Mackenzie Miller, Economic Analyst mackenzie.miller@wellsfargo.commackenzie.miller@wellsfargo.com Erik Nelson, Economic Analyst erik.f.nelson@wellsfargo.comerik.f.nelson@wellsfargo.com Alex Moehring, Economic Analyst alex.v.moehring@wellsfargo.comalex.v.moehring@wellsfargo.com Economists Azhar Iqbal, Econometrician………………… ……………azhar.iqbal@wellsfargo.comazhar.iqbal@wellsfargo.com Tim Quinlan, Economist …………………… ……………..tim.quinlan@wellsfargo.comtim.quinlan@wellsfargo.com Eric J. Viloria, Currency Strategist eric.viloria@wellsfargo.comeric.viloria@wellsfargo.com Sarah Watt House, Economist …………… …………sarah.house@wellsfargo.comsarah.house@wellsfargo.com Michael A. Brown, Economist ……………… … michael.a.brown@wellsfargo.commichael.a.brown@wellsfargo.com Michael T. 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