1. TRI-COUNTY ECONOMIC FORECAST CONFERENCE California Economic Outlook Nancy D. Sidhu, Ph.D. VP & Senior Economist January 11, 2007

2. THEMES FOR 2007 Slower economic growth Slower economic growth Housing activity declines Housing activity declines Still Strength elsewhere Still Strength elsewhere

3. 3 U.S. ECONOMIC GROWTH % Change in Real GDP, Year-Over-Year Sources: BEA, estimate & forecasts by LAEDC

4. 4 GDP COMPARISONS % Change in Real GDP, Year-Over-Year Source: BEA

5. CONSUMER INFLATION RATE Year/Year % Change Source: Bureau of Labor Statistics

6. SPOT ENERGY PRICES $/Mcf$/Barrel Sources: EIA, Natural Gas Weekly

8. PRICE/COST PRESSURES % Change vs. Previous December Sources: BLS, USDA, Bridge/Commodity Research Bureau

9. LABOR COMPENSATION -- WEST Source: BLS

10. UNEMPLOYMENT HAS COME DOWN Source: BLS, CA EDD % (SA) Latest 4.5% 4.6%

11. AFTER-TAX CORPORATE PROFITS Unadjusted, Yr/Yr % Change Latest Quarter Plotted: 3Q 2006 Year: Quarter Source: Bureau of Economic Analysis

13. BUSINESS SPENDING -- EQUIPMENT Billions of $ 2000 Source: Bureau of Economic Analysis

14. Sources: BLS, CA EDD

15. Source: California Employment Development Dept. CHANGE IN NONFARM EMPLOYMENT -- MAJOR INDUSTRIES IN CALIFORNIA (Nov ‘06 / Nov ‘05) 0

16. 16 REGIONAL GROWTH PATTERN Year/Year % Change (Smoothed) Source: CA Employment Development Dept. Latest month: November 2006

18. Source: CA BOE

19. CALIFORNIA VEHICLE REGISTRATIONS 000s of Passenger-type Vehicles Source: CA DOF

21. MEDIAN HOME PRICE IN CALIFORNIA $ Thousands Nov ‘06 $555,290 Source: California Association of REALTORS®

22. CALIFORNIA NONRESIDENTIAL BUILDING PERMITS

23. PUBLIC CONSTRUCTION Billions of $2005 Source: Construction Industry Research Board

24. AGRICULTURE: BETTER (Gross Cash Income in CA) Billions of $ Sources: CA Dept. of Agriculture

25. DoD PRIME CONTRACT AWARDS $ Billions

27. 27 LOCATION PRODUCTION DAYS 26,698 33,982 43,982 47,669 45,653 46,41046,808 43,976 44,44244,231 52,707 All Others Features Source: FilmLA Inc. 54,904 42,19841,619

28. TECHNOLOGY JOB TRENDS IN CALIFORNIA Thousands of Jobs Source: California Employment Development Department

29. CA EXPORTS BY INDUSTRY Year/Year % Change Source: MISER

30. TOTAL CARGO HANDLED AT LA/LB PORTS TEU in Thousands Sources: Ports of Los Angeles & Long Beach Latest month plotted: November 2006

31. TOTAL CARGO HANDLED AT PORT OF OAKLAND TEUs (000) Source: Port of Oakland Latest month plotted: November 2006

32. HOTEL OCCUPANCY RATES Source: PKF Consulting Occupancy rates (%)

33. HOTEL AVERAGE DAILY ROOM RATES Source: PKF Consulting $

34. CALIFORNIA TAX REVENUES Year/Year % Change Source: CA Department of Finance

35. CALIFORNIA ECONOMIC FORECAST Forecast Source: LAEDC

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