1. U.S. Economic Outlook Mark Vitner, Managing Director & Senior Economist August 28, 2015

2. Economic Outlook 2 After a Slow Start, U.S. Growth Should Strengthen During the Second Half of the Year Overall Outlook Monetary Policy  The Fed is poised to raise interest rates but monetary policy will remain expansionary. We expect the Fed to move cautiously amid slower global economic growth. Inflation  Slowing growth in China is pulling down commodity prices and will likely restrain consumer prices. Lower inflation will hold down long-term interest rates. Fiscal Policy  The drag from government spending cuts is lessoning in the US and major decisions need to be made on the highway bill, corporate tax rates and federal budget. Global Economy  Slower growth in China is weighing on growth in other emerging economies, pushing up the value of the dollar and presenting a threat to exports and earnings.  U.S growth remains solid but unspectacular. Hiring is improving but wage growth is lacking and there are still huge pockets of underemployment.

3. Overall Growth

4. Economic Outlook 4 Economic Growth Revisions to previously published data slightly boosted estimates of economic growth for the first half of 2015 but slightly reduced economic growth over the past three years. Inventory building added to growth during the first half of the year and will reduce real GDP growth in the current quarter. Consumer spending, homebuilding and commercial construction are all improving. Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

5. Economic Outlook 55 Employment Situation Nonfarm employment growth has picked up over the past year and the unemployment rate has fallen sharply. Wages are only rising modestly, however, as productivity growth remains exceptionally weak. Broader measures of wages only show modestly stronger growth. Source: U.S. Department of Labor and Wells Fargo Securities, LLC Unemployment RateNonfarm Employment

6. Economic Outlook 6 Unemployment The unemployment rate is slowly but steadily improving. The broader U6 unemployment rate has done a better job of capturing the excess slack in the labor market in this recovery. U6 improved relative to the overall unemployment rate during the past year, suggesting that some of the headwinds in the labor market are lessening Source: U.S. Department of Labor and Wells Fargo Securities, LLC

7. Economic Outlook 7 Employment: Structural Full-time employment has only recently risen back to its previous peak. Full-time jobs have been rising more rapidly over the past year and more part-time workers are seeing their hours increase. Source: U.S. Department of Labor and Wells Fargo Securities, LLC

8. Economic Outlook 88 Small Business Survey Small Business Confidence has pulled back since the start of the year. Business owners appear to be most concerned about slower revenue growth. Source: NFIB, Gallup, Wells Fargo Bank and Wells Fargo Securities, LLC Revenue Gap Small Business Optimism

9. Economic Outlook 99 Energy Oil prices collapsed in late 2014 and early 2015. The number of active oil rigs has subsequently fallen sharply. While there are some tentative signs that the rig count has bottomed, another slide in energy prices and another downturn in the rig count cannot be ruled out. Source: IHS Global Insight, Baker-Hughes, U.S. Department of Energy, U.S. Department of Labor and Wells Fargo Securities, LLC Production & EmploymentWTI

10. Inflation and Interest Rates

11. Economic Outlook 11 Inflation Global disinflation has led more aggressive easing moves by the ECB and BOJ. We expect the Fed to look through this transitory slowdown, however, and raise the federal funds rate. Source: U.S. Department of Labor, IHS Global Insight and Wells Fargo Securities, LLC Eurozone CPI U.S. CPI

12. Economic Outlook 12 Global Yields U.S. yields have tended to follow Eurozone yields. The bounce back from earlier lows reflects greater comfort with the growth and inflation outlooks. The latest iteration of the Greek crisis led to only a modest pullback in yields but growth and inflation prospects have been scaled back a bit. Source: IHS Global Insight and Wells Fargo Securities, LLC

13. Economic Outlook 13 FOMC The FOMC is slightly more optimistic about the economy’s near-term prospects than the financial markets but has consistently expressed caution about long-term growth prospects. Source: Federal Reserve Board and Wells Fargo Securities, LLC Long Term Forecast Fed’s Dot Plot

14. Housing

15. Economic Outlook 15 Housing Mortgage purchase applications and pending home sales both point to further strengthening in new and existing home sales. Most other leading indicators also remain positive. Source: U.S. Department of Commerce, MBA, National Association of Realtors and Wells Fargo Securities, LLC Existing Home Sales New Home Sales

16. Economic Outlook 16 Housing We continue to look for a gradual recovery in homebuilding. Apartment demand remains exceptionally strong but supply is catching up with demand. Single-family housing starts are beginning to ramp back up. Gains will be more modest than in past building cycles. Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

17. Economic Outlook 17 Home Prices Household formations have picked up in a significant way in recent quarters, likely reflecting improving labor market conditions. Stronger demand and tight inventories are resulting in higher home prices, at least as measured by median sales prices. Source: U.S. Department of Commerce, National Association of Realtors, S&P and Wells Fargo Securities, LLC Home Prices Household Formation

18. Global Economies

19. Economic Outlook 19 U.S. Dollar The appreciation in the dollar is likely to continue, which has created headwinds for U.S. firms competing internationally. Source: IHS Global Insight, Institute for Supply Management and Wells Fargo Securities, LLC ManufacturingDollar

20. Economic Outlook 20 S&P Revenues Earned Abroad IT and Materials earn the highest share of their revenues abroad, making those industries the most at risk to the stronger dollar. Source: Bloomberg LP and Wells Fargo Securities, LLC

21. Economic Outlook 21 Global Economies: China Slowdown It is clear that economic growth in China has slowed recently. Source: IHS Global Insight and Wells Fargo Securities, LLC

22. Regional

23. Economic Outlook 23 Florida Florida’s economy grew 2.7 percent in 2014, comfortably outpacing the national average. Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

24. Economic Outlook 24 Florida - Employment Nonfarm payrolls continue to outpace the nation by a considerable margin. Source: U.S. Department of Labor and Wells Fargo Securities, LLC Unemployment Rate Nonfarm Employment

25. Economic Outlook 25 Cape Coral-Fort Myers Employment in Cape Coral increased rose 3.9 percent over the year. Large gains were seen in leisure & hospitality sector, trade, transportation & utilities and education & healthcare. Source: U.S. Department of Labor and Wells Fargo Securities, LLC Employment by Industry Nonfarm Employment

26. Economic Outlook 26 Cape Coral-Fort Myers The housing market has been slow to recover. Permits continue to trend upwards, however, and the underlying fundamentals of the housing market have improved considerably. Source: U.S. Department of Commerce, CoreLogic and Wells Fargo Securities, LLC Home Prices Housing Permits

27. Economic Outlook 27 Naples Naples continues to see healthy employment gains. Nonfarm payrolls rose 4.4 percent over the past year, with all major sectors reporting solid gains. Source: U.S. Department of Labor and Wells Fargo Securities, LLC Employment by Industry Nonfarm Employment

28. Economic Outlook 28 Naples Housing construction in Naples has risen significantly over the past year. This positive trend is likely to continue, driven by accelerating population growth and improving fundamentals. Source: U.S. Department of Commerce and Wells Fargo Securities, LLC Population Housing Permits

29. Economic Outlook 29 Five Critical Key Takeaways Economic Outlook Weaker Global Growth is Weighing on Commodity Prices  The stronger gains seen in Europe earlier this year likely were a short-term response to the plunging value of the euro. China’s economy also appears to be slowing and will weigh further on commodity prices. Interest Rates Will Rise This Year  We still look for the Fed to raise the federal funds rate this fall but the pace and ultimate magnitude of rate hikes now looks to be less than previously thought. The Housing Recovery Will Gain Momentum  Demand for single-family homes is reviving, with first- time homebuyers finally coming back into the market. Apartment construction is close to peaking. The Mix of Growth is Shifting More Toward Consumption  The economy is better for consumers than producers. Areas of the country exposed to Agriculture, Energy, Mining and Manufacturing will likely see growth slow.  The economy should weather the recent slide in oil prices and turmoil in Europe. Look for real GDP to rise 2.1 percent in 2015 and 2.5 percent in 2016.

30. Economic Outlook 30 Our Forecast

31. Appendix

32. Economic Outlook 32 Economic Outlook Group Publications To view any of our past research please visit: http://www.wellsfargo.com/ economics To join any of our research distribution lists please visit: http://www.wellsfargo.com/ economicsemail A Sampling of Our Recent Special, Regional & Industry Commentary

33. Economic Outlook Wells Fargo Securities, LLC Economics Group 33 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.commark.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.comeugenio.j.aleman@wellsfargo.com Anika R. Khan, Senior Economist …. anika.khan@wellsfargo.comanika.khan@wellsfargo.com Senior Economists 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 Misa Batcheller, Economic Analyst misa.n.batcheller@wellsfargo.commisa.n.batcheller@wellsfargo.com Michael Pugliese, Economic Analyst michael.d.pugliese@wellsfargo.commichael.d.pugliese@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 House, Economist …………… ………… sarah.house@wellsfargo.comsarah.house@wellsfargo.com Michael A. 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