WEEKLY ECONOMIC & FINANCIAL COMMENTARY February 06, 2009

U.S. Review Nominal GDP

Global Review
Falling Revenues Fuel Layoffs 10.0%
Compound Annual Growth Rate
10.0% Further Monetary Easing Abroad
Employment losses have deepened A number of major central banks
8.0% 8.0%
considerably in recent months and held policy meetings this week and
revisions to previously published 6.0% Forecast 6.0% some, but not all, cut rates further.
data suggest that total job losses for 4.0% 4.0% The Reserve Bank of Australia
this recession will now top 6.5 (RBA) kicked things off on Tuesday
2.0% 2.0%
million. Nonfarm employment by slashing its policy rate by
plunged by 598,000 jobs in January 0.0% 0.0% 100 bps, bringing the total amount
and the unemployment rate rose 0.4 -2.0% -2.0% of easing since September to 400
percentage points to 7.6 percent. bps (see chart at left). Commodity
-4.0% -4.0%
Both numbers were slightly worse Nominal GDP - CAGR: Q4 @ -4.1%
Nominal GDP - Yr/Yr Percent Change: Q4 @ 1.7%
exports are important to the
than consensus estimates. -6.0% -6.0% Australian economy, and the deep
2000 2002 2004 2006 2008 2010
The January employment data also global recession that is in train will
included revisions to previously surely exert a slowing effect on
published data going all the way Central Bank Policy Rates economic activity down-under. The
back to April 2007. The new 9.0% 9.0% RBA is cutting rates to cushion the
US Federal Reserve: Feb @ 0.25%
figures bring total job losses to 8.0% Bank of England: Feb @ 1.00%
ECB: Feb @ 2.00%
8.0% blow to the domestic economy.
slightly over 3.5 million since 7.0%
Reserve Bank of Australia: Feb @ 3.25%
7.0% Despite the deep global downturn,
employment peaked in December the Australian economy appears to
6.0% 6.0%
2007. The heaviest losses by far be holding up better than most
5.0% 5.0%
have occurred during the past five ,o other major economies, at least so
months, a period during which 4.0% 4.0% far. For example, retail sales in
nominal GDP has been negative. 3.0% 3.0% Australia shot up 3.8 percent in
Nominal GDP reflects the volume of 2.0% 2.0%
December from the previous
goods and services produced month, bringing their year-over-
1.0% 1.0%
throughout the economy and the year rise to a respectable
price at which they were sold. In 0.0% 0.0% 5.6 percent. (In contrast, total retail
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
short, nominal GDP is the revenue Please turn to page 4
of the entire economy. With total Recent Special Commentary
revenue declining at its worst pace Date Title Authors
since the late 1950s, many
February-05 “Buy American” Legislation: An Economic Perspective Bryson & Quinlan
businesses and governments are in
February-04 Economic Downturn Challenges State and Local Tax Revenue Vitner & Khan
survival mode and have no choice
but to cut jobs. January-28 State Employment: December 2008 Vitner, York & Whelan
Please turn to page 2 January-27 Employment: Digging Under the Headlines Silvia, York & Whelan

U.S. Forecast INSIDE

Actual Forecast Actual Forecast
2008 2009 2005 2006 2007 2008 2009 2010
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q U.S. Review 2
1
Real Gross Domestic Product 0.9 2.8 -0.5 -5.3 -4.0 -1.9 -0.5 0.9 2.9 2.8 2.0 1.2 -2.3 1.0
Personal Consumption 0.9 1.2 -3.8 -4.0 -1.2 0.0 0.6 1.1 3.0 3.0 2.8 0.3 -1.3 1.2
2
U.S. Outlook 3
Inflation Indicators
"Core" PCE Deflator 2.2 2.3 2.3 1.8 1.4 1.1 0.9 1.2 2.1 2.3 2.2 2.2 1.1 1.6
Consumer Price Index 4.2 4.3 5.3 1.8 0.3 -0.6 -1.5 1.8 3.4 3.2 2.9 3.9 0.0 2.5 Global Review 4
1
Industrial Production 0.4 -3.4 -8.9 -9.2 -9.8 -4.2 -2.0 0.4 3.3 2.2 1.7 -1.6 -6.6 0.9
2
-1.5 -8.3 -9.2 -17.5 -25.0 -24.0 -20.0 -14.0 17.6 15.2 -1.6 -9.1 -21.0 5.2
Corporate Profits Before Taxes
Trade Weighted Dollar Index
3
70.3 71.0 76.1 79.4 85.7 89.8 92.1 93.3 86.0 81.5 73.3 79.4 93.3 81.2
Global Outlook 5
Unemployment Rate 4.9 5.3 6.0 6.8 7.5 8.1 8.7 9.0 5.1 4.6 4.6 5.8 8.3 9.4

Point of View 6
4
Housing Starts 1.05 1.03 0.88 0.67 0.56 0.60 0.64 0.66 2.07 1.81 1.34 0.90 0.61 0.80

Quarter-End Interest Rates

Federal Funds Target Rate 2.25 2.00 2.00 0.25 0.25 0.25 0.25 0.25 4.25 5.25 4.25 0.25 0.25 1.00
10 Year Note 3.45 3.99 3.85 2.25 2.70 3.00 3.10 3.10 4.39 4.71 4.04 2.25 3.10 3.80 Market Data 7
Data As of: January 14, 2009
1
Compound Annual Growth Rate Quarter-over-Quarter 3
Federal Reserve Major Currency Index, 1973=100 - Quarter End
2
Year-over-Year Percentage Change 4
Millions of Units
 U.S. Review Economics Group
U.S. Review
(Continued from Page 1)
Nonfarm Employment Change
Widespread Job Losses Should Continue in Early 2009 Change in Employment In Thousands
Job losses continue to be exceptionally broad based. Virtually 500 500
every major industry category shed jobs in January, a trend that
has become all too common. The heaviest job losses continue to be 300 300
in the goods sector, where construction firms shed 111,000 jobs in
January and factories cut 207,000 positions. Some of the largest
cutbacks were in the motor vehicle sector, where extended plant 100 100

shutdowns led to huge drops in employment and hours worked.

Other areas with particularly large cutbacks in January include -100 -100
fabricated metals and industrial machinery. In all, durable goods
producers slashed 157,000 jobs in January accounting for just over
-300 -300
three-fourths of the loss in manufacturing jobs.
Cutbacks in the durable goods sector are likely to continue.
Factory orders declined more than expected in December. Overall -500 -500
orders fell 3.9 percent, following declines of 6.5 percent in
Nonfarm Employment Change: Jan @ -598,000
November and 6.0 percent in October. Orders for non-defense
-700 -700
capital goods excluding aircraft were down 6.3 percent in 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
December and plunged at a 34.1 percent annual rate over the past
three months. Shipments for this same key category fell at less
than half that pace, declining at a 14.9 percent pace, indicating that
further production cutbacks will be needed to bring production New Orders Non-Defense Capital Goods Ex-Aircraft
Series are 3 Month Moving Averages
and inventories back in line with demand. 40% 40%
There was very little cheer in this week’s other economic reports.
Weekly first time unemployment claims rose by 35,000 to 626,000
in late January, suggesting that February’s employment data will
once again post a hefty drop. Unemployment will also likely trend 20% 20%
higher from January’s 7.6 percent.
Motor vehicle sales came in lower than expected, with cars and
light trucks selling at just a 9.6 million unit annual rate. That pace
0% 0%
was more than half a million units below the consensus estimate
and marked the weakest pace for motor vehicle sales since 1982.
The weakness in sales will make it even more difficult to clear out
bloated inventories of domestic and imported vehicles, which -20% -20%
means declines in production and imports will likely extend for a
few more months. 3 Month Annual Rate: Dec @ -34.1%
The only good news this week is that nonfarm productivity rose at Year/Year Percent Change: Dec @ -7.9%
a 3.2 percent annual rate during the fourth quarter, as businesses -40% -40%
slashed ‘hours worked’ at an even faster rate than output declined. 93 95 97 99 01 03 05 07

While stronger productivity is a generally a good thing, much of

the recent gain is likely coming out of necessity. Moreover, the flip
side of this report is that businesses have been slashing jobs and Productivity - Nonfarm Sector
hours worked. While these cutbacks are a necessary evil in a
12.0% 12.0%
capitalist society, they are a very bitter pill to swallow.
Qtr/Qtr Annual Rate: Q4 @ 3.2%
Selected Current Data 10.0% Year/Year Percent Change: Q4 @ 2.7% 10.0%

Gross Domestic Product - CAGR Q4 - 2008 -3.8% 8.0% 8.0%

GDP Year-over-Year Q4 - 2008 -0.2%
6.0% 6.0%
Personal Consumption Q4 - 2008 -3.5%
Business Fixed Investment Q4 - 2008 -19.1% 4.0% 4.0%

Consumer Price Index December - 2008 0.1%

2.0% 2.0%
"Core" CPI December - 2008 1.8%
"Core" PCE Deflator December - 2008 1.7% 0.0% 0.0%

Industrial Production December - 2008 -7.8% -2.0% -2.0%

Unemployment January - 2009 7.6%
-4.0% -4.0%
Federal Funds Target Rate Feb - 06 0.25% 95 96 97 98 99 00 01 02 03 04 05 06 07 08

2
 U.S. Outlook Economics Group
International Trade Balance • Wednesday
The trade deficit narrowed considerably to $40.4 billion in
November from $56.7 billion, dropping to a five-year low. A U.S. Exports and Imports
collapse in the value of oil imports explains much of the decline. Year-over-Year Percent Change, 3-Month Moving Average
30% 30%
However, non-oil imports weakened sharply as well, reflecting
weakness in the domestic economy. Meanwhile, foreign recessions
are causing exports to decline. 20% 20%

It is clear that the combination of a global recession and the global

credit crunch is causing worldwide trade to dry up. The trade 10% 10%
deficit should continue to improve due in part to the decline in oil
prices. Crude oil prices came off roughly 18 percent in December.
We expect the trade deficit to continue to narrow to $36.0 billion in 0% 0%
December. The real trade balance, which is used to calculate real
GDP, should also narrow.
-10% -10%

Exports: Nov @ 4.0%

Imports: Nov @ -0.1%
Previous: -$40.4 B Wachovia: -$36.0 B -20% -20%
Consensus: -$36.4 B 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

Retail Sales • Thursday

Retail sales plunged 2.7 percent in December, the sixth consecutive
Retail Sales Ex-Motor Vehicles & Gasoline Stations decline. Revisions were substantial with November falling 2.1
3-Month Moving Averages
15.0% 15.0%
percent. Core retail sales, which excludes gasoline stations,
building materials and autos, fell 1.4 percent. The biggest drop was
12.5% 12.5%
in gasoline station sales, which fell 15.9 percent.
10.0% 10.0%

7.5% 7.5% We expect retail sales will decline 0.2 percent in January with motor
vehicle sales continuing to pull down the headline number. Light
5.0% 5.0%
vehicle sales registered 9.6 million units in January, the lowest since
2.5% 2.5% 1982. Same store sales continue to show consumers pulling back on
0.0% 0.0% discretionary items with department store sales down sharply.
-2.5% -2.5%
Retail sales excluding autos should increase 0.6 percent due in part
to a slight uptick in prices at the pump.
-5.0% -5.0%

-7.5% -7.5%
Sales, Year/Year Percent Change: Dec @ -1.1%
-10.0% -10.0%
3-Month Annual Rate: Dec @ -10.0%
-12.5% -12.5% Previous: -2.7% Wachovia: -0.2%
96 97 98 99 00 01 02 03 04 05 06 07 08 Consensus: -0.4%
Business Inventories • Thursday
Business inventories declined for the third consecutive month in
November providing further evidence of a tough fourth quarter for Business Inventories
Total Inventory-to-Sales Ratio
business spending. The inventory-to-sales ratio continued to climb 1.60 1.60
as sales fell faster than business owners could cut production.
1.55 1.55

We expect business inventories to continue to decline in December

1.50 1.50
due to the abruptness and depth of the current economic weakness
which caught many producers, wholesalers and retailers by 1.45 1.45
surprise. As a result, many had far too much raw material, work-
in-process and finished product. Wholesalers and retailers alike 1.40 1.40
will look to curtail orders for new products, and manufacturers will
have to continue to cut back output. Unintentional inventory 1.35 1.35
increases during a weak growth period pose a considerable risk to
production activity. We expect production will fall through the 1.30 1.30
next three quarters.
1.25 1.25
Previous: -0.7% Total Inventory to Sales Ratio: Nov @ 1.41
1.20 1.20
Consensus: -0.6% 92 94 96 98 00 02 04 06 08

3
 Global Review Economics Group
Global Review
(Continued from Page 1)
spending in the United States plunged 9.8 percent in December.) UK Purchasing Managers Indices
Tax rebates that were legislated last autumn helped to boost Diffusion Indices
65 65
Australian retail sales in December. But that’s exactly the point.
Australian policymakers (both monetary and fiscal) are taking 60 60
aggressive steps to stimulate the economy. Although Australia may
yet slip into recession, the downturn down-under probably will be 55 55
less severe than in most other major economies.
50 50
As widely expected, the Bank of England cut its policy rate by
another 50 bps on Thursday. In its statement announcing the move, 45 45
the Bank said that output thus far in the first quarter continues to
contract at a very sharp rate. Indeed, real GDP in the fourth quarter 40 40
declined at an annualized rate of 5.9 percent, the sharpest rate of
contraction since the very deep recession of the early 1980s. As 35 35
shown in the top chart, the purchasing managers’ indices for the
UK Services: Jan @ 42.5
manufacturing, construction and service sectors all edged a bit 30
UK Construction: Jan @ 34.5
30
higher in January. That said, the indices remain in territory that is UK Manufacturing: Jan @ 35.8
25 25
consistent with sharp contraction. In our view, the Bank of England
2000 2002 2004 2006 2008
will cut its main policy rate – which already stands at an all-time
low of 1.00 percent – even further in the months ahead as the
British economy remains mired in deep recession.
The European Central Bank probably has more cutting to do as European Manufacturing
well. However, it did not exercise that option at its policy meeting Purchasing Manager Indices
65 65
this week, choosing instead to keep its policy rate unchanged at
2.00 percent. The ECB said that it had anticipated the sharp drop in
economic activity that has occurred since it last met in early 60 60

January, and it had responded to that anticipation by cutting rates

last month. By that logic, the ECB would be on hold unless the 55 55
economy weakens more than anticipated.
As noted above, we believe the ECB will eventually cut rates 50 50
further. Although the purchasing managers’ indices for the
manufacturing and service sectors edged higher in January, they 45 45
both remain in deep recession territory (see middle chart).
Economic weakness likely will cause CPI inflation to decline 40 40
further. Indeed, the overall rate of CPI inflation fell to 1.6 percent in
December, and the preliminary estimate for January printed at only 35 35
Euro-zone PMI: Jan @ 34.4
1.1 percent, the lowest rate in nearly 10 years. In our view, severe U.K. PMI: Jan @ 35.8
economic weakness and rapidly declining inflation will give the 30 30
ECB scope to ease policy further in the months ahead. 2000 2002 2004 2006 2008

Selected Global Data

Japan GDP Year-over-Year Q3 - 2008 -0.5% Euro-zone Consumer Price Index
CPI December - 2008 0.4% Year-over-Year Percent Change
5.0% 5.0%
Unemployment December - 2008 4.4%
BoJ Target Rate Feb - 06 0.10%
Euro-Zone GDP Year-over-Year Q3 - 2008 0.6% 4.0% 4.0%
CPI December - 2008 1.6%
Unemployment December - 2008 8.0%
ECB Target Rate Feb - 06 2.00% 3.0% 3.0%

UK GDP Year-over-Year Q4 - 2008 -1.8%

CPI December - 2008 3.1% 2.0% 2.0%
Unemployment December - 2008 3.6%
BoE Target Rate Feb - 05 1.00%
Canada GDP Year-over-Year November - 2008 -0.8% 1.0% 1.0%

CPI December - 2008 1.2%

Unemployment January - 2009 7.2% CPI: Dec @ 1.6%
0.0% 0.0%
BoC Target Rate Feb - 06 1.00%
1997 1999 2001 2003 2005 2007 2009

4
 Global Outlook Economics Group
U.K. Unemployment Rate • Wednesday
British real GDP fell at an annualized rate of 5.9 percent in the
fourth quarter, the sharpest sequential rate of contraction since U.K. Unemployment Rate
1980. Indeed, the current slump appears to be the deepest recession 8.0%
Seasonally Adjusted
8.0%
that Great Britain has suffered since the very painful downturn of
the early 1980s. The unemployment rate already exceeds six 7.5% 7.5%
percent, and the only question seems to be: “How high will it go?”
7.0% 7.0%
The Bank of England will also release its quarterly Inflation Report
6.5% 6.5%
on Wednesday. The Bank’s forecasts for GDP growth and CPI
inflation over the next two years will help investors judge how 6.0% 6.0%
much more monetary easing the Bank may undertake. Data on
house prices in January, which are on the docket for Monday, and 5.5% 5.5%
the trade balance in December, which are slated for release on
Tuesday, round out a busy week in terms of U.K. economic data. 5.0% 5.0%

4.5% 4.5%
Unemployment Rate: Oct @ 6.1%
Previous: 6.1% 4.0% 4.0%
1997 1999 2001 2003 2005 2007
Consensus: 6.3%
Euro-zone Real GDP Growth • Friday
Real GDP in the Euro-zone declined 0.2 percent (not annualized) in
Euro-zone Real GDP the third quarter, and most monthly indicators suggest that the rate
5.0%
Bars = Compound Annual Rate Line = Yr/Yr % Change
5.0%
of contraction rose significantly in the fourth quarter. Indeed, we
estimate that real GDP fell one percent in the fourth quarter. Not
only did exports fall sharply, but growth in consumer spending
4.0% 4.0% probably turned negative as well last quarter. The Euro-zone
appears to have slipped into its first recession, which incidentally is
3.0% 3.0% a deep one, since the inception of European Monetary Union in
1999.
2.0% 2.0%
Most major countries in the Euro-zone also release their individual
GDP growth figures on Friday, and the results are not expected to
1.0% 1.0% be pretty. We project that the German, French, and Italian
economies (among others) all contracted markedly in the fourth
0.0% 0.0% quarter.
Compound Annual Growth: Q3 @ -0.8%
Year-over-Year Percent Change: Q3 @ 0.6%
-1.0% -1.0% Previous: -0.2% (not annualized) Wachovia: -1.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008
Consensus: -1.3%
G-7 Meeting • Friday
Finance ministers and central bank governors will gather in Rome
next weekend for their semi-annual meeting. With the global OECD Industrial Production
Year-over-Year Percent Change
economy mired in its worst recession in the post-World War II era, 9% 9%
investors anxiously await steps that governments can take on a
coordinated basis to help bring the current financial crisis to an
6% 6%
end. G-7 meetings often serve as forums in which policymakers
from major countries pledge cooperation to tackle pressing
economic and financial problems. 3% 3%

It is expected in many corners that U.S. policymakers will announce 0% 0%

steps next week to buy toxic assets from U.S. banks and place the
assets in a “bad bank.” If so, pressure will be on other countries to
-3% -3%
announce similar steps. In addition, more fiscal stimulus measures
could be announced next weekend.
-6% -6%

OECD Industrial Production: Oct @ -4.8%

-9% -9%
96 97 98 99 00 01 02 03 04 05 06 07 08

5
 Point of View Economics Group
Interest Rate Watch Topic of the Week
Weak Jobs Suggest Continued Fed Central Bank Policy Rates Economic Downturn Challenges State
Easing 7.5% 7.5% and Local Tax Revenue
Today’s weak employment report US Federal Reserve: Feb - 6 @ 0.25%
ECB: Feb - 6 @ 2.00% The recession is taking a heavy toll on
Bank of Japan: Feb - 6 @ 0.10%
reinforces our view that the Fed will Bank of England: Feb - 6 @ 1.00% state and local tax revenue. With
6.0% 6.0%
keep the funds rate in the 0-25 basis roughly 77 percent of total tax revenue
point range. Moreover, given the nationwide coming from income,
weakness in consumer spending, we 4.5% 4.5%
property and sales tax receipts,
expect that the Fed will continue to revenues are under pressure on nearly
support consumer related asset backed 3.0% 3.0% every front. Layoffs are cutting into
facilities by buying commercial paper income tax receipts, while falling home
and asset backed paper. Financial prices and the faltering stock market
1.5% 1.5%
stability and economic recovery are hitting a whole variety of taxes and
continue to be the primary fees.
intermediate-term policy targets for the 0.0% 0.0%
Personal income tax receipts will likely
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Fed. The recession will continue at be reduced considerably during the
least through the first half of this year. coming year due to a weakened labor
Because of continued economic market. The economy has shed more
weakness we expect that the Fed will Yield Curve than 3.5 million jobs since the recession
maintain its expanded balance sheet to 4.00%
US Treasuries, Active Issues
4.00%
began, with more than 1.5 million jobs
support financial markets. The Fed will eliminated during the fourth quarter
continue with its outright purchases of 3.50% 3.50%
alone. With layoff announcements
Government Sponsored Enterprise 3.00% 3.00% picking up at the start of the year, we
(GSE) debt and Agency mortgage expect total job losses to eventually
2.50% 2.50%
backed securities and asset-backed reach more than five million.
paper. Monetary policy continues to 2.00% 2.00% To meet balanced-budget
adjust to an environment of economic requirements, many state and local
1.50% 1.50%
recession, lower inflation expectations governments are either pulling back on
and the imbalance of asset valuations. 1.00% 1.00% spending, raising taxes or both.
But Weak Jobs Also Raise Credit 0.50%
February 6, 2009
0.50%
Spending cuts are one of the few
January 30, 2009
Concerns January 6, 2009 options open to state and local
Credit quality will be challenged.
0.00% 0.00%
governments in the short term, and
3M 2Y 5Y 10
Y
30
Y
Weak jobs suggest weak consumer many have cut spending dramatically.
spending and rising delinquency rates Unfortunately, more cuts are likely
for all consumer-related debt. For unless funding can be secured from the
many businesses top line revenue Forward Rates federal government. Raising taxes in a
declines will reflect lower consumer 2.25%
90-Day EuroDollar Futures
2.25% recession often creates more problems
spending. For many firms, the hit to than it solves.
cash flow and ultimately profits The recovery for state and local tax
2.00% 2.00%
dictates wider credit spreads in the revenue should lag the overall
marketplace. economic recovery as the
Finally, weaker economic growth
1.75% 1.75% unemployment rate tends to peak well
dictates weaker public sector revenues after the recession ends. We expect the
and thereby a squeeze on public 1.50% 1.50% unemployment rate to peak in early to
finances. Longer dated federal and mid-2010, which means state and local
state debt will begin to reflect this tax revenue will likely remain
1.25% 1.25%
credit/revenue issue in a steeper yield February 6, 2009 challenged until 2010.
January 30, 2009
curve and perhaps even credit January 6, 2009
1.00% 1.00%
downgrades al lá California. Read our report on the topic here.
Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10

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6
 Market Data Economics Group
Market Data ♦ Mid-Day Friday
U.S. Interest Rates Foreign Interest Rates
Friday 1 Week 1 Year Friday 1 Week 1 Year
2/6/2009 Ago Ago 2/6/2009 Ago Ago
3-Month T-Bill 0.28 0.23 2.08 3-Month Euro LIBOR 2.02 2.09 4.36
3-Month LIBOR 1.24 1.18 3.13 3-Month Sterling LIBOR 2.12 2.17 5.59
1-Year Treasury 0.49 0.47 1.82 3-Month Canadian LIBOR 1.50 1.62 3.92
2-Year Treasury 0.96 0.95 1.92 3-Month Yen LIBOR 0.66 0.67 0.87
5-Year Treasury 1.92 1.88 2.65 2-Year German 1.40 1.53 3.25
10-Year Treasury 2.95 2.84 3.59 2-Year U.K. 1.70 1.50 4.13
30-Year Treasury 3.65 3.60 4.35 2-Year Canadian 1.13 1.41 3.05
Bond Buyer Index 4.96 5.16 4.33 2-Year Japanese 0.42 0.41 0.58
10-Year German 3.36 3.30 3.90
Foreign Exchange Rates 10-Year U.K. 3.74 3.70 4.46
Friday 1 Week 1 Year 10-Year Canadian 3.00 3.05 3.79
2/6/2009 Ago Ago 10-Year Japanese 1.34 1.30 1.41
Euro ($/€) 1.287 1.281 1.463
British Pound ($/₤ ) 1.477 1.454 1.962 Commodity Prices
British Pound ( ₤/€) 0.871 0.881 0.746 Friday 1 Week 1 Year
Japanese Yen (¥/$) 91.794 89.920 106.540 2/6/2009 Ago Ago
Canadian Dollar (C$/$) 1.241 1.230 1.006 W. Texas Crude ($/Barrel) 39.43 41.68 87.14
Swiss Franc (CHF/$) 1.168 1.162 1.098 Gold ($/Ounce) 912.31 927.85 900.60
Australian Dollar (US$/A$) 0.670 0.638 0.896 Hot-Rolled Steel ($/S.Ton) 475.00 475.00 670.00
Mexican Peso (MXN/$) 14.168 14.333 10.819 Copper (¢/Pound) 157.20 146.20 330.75
Chinese Yuan (CNY/$) 6.835 6.852 7.184 Soybeans ($/Bushel) 9.73 9.61 12.78
Indian Rupee (INR/$) 48.691 48.875 39.520 Natural Gas ($/MMBTU) 4.64 4.42 7.99
Brazilian Real (BRL/$) 2.259 2.323 1.752 Nickel ($/Metric Ton) 11,386 11,349 26,575
U.S. Dollar Index 85.716 85.999 76.141 CRB Spot Inds. 339.33 331.60 478.12

Next Week’s Economic Calendar

Monday Tuesday Wednesday Thursday Friday
9 10 11 12 13
Wholesale Inventories Trade Balance Retail Sales Univ. of Mich. Confidence
November -0.6% November -$40.4B December -2.7% January 61.2
December -0.7% (c) December -$36.0B (W) January -0.2% (W) February 61.0 (c)
U.S. Data

Retail Sales Less Autos

December -3.1%
January 0.6% (W)
Business Inventories
November -0.7%
December -0.9% (c)

Japan UK Euro-zone
Global Data

Machine Orders (MoM) Unemployment Rate GDP (QoQ)

Previous (Nov) -16.2% Previous (Nov) 6.1% Previous(3Q) -0.2%
China
Trade Balance (USD)
Previous (Dec) $38.98 B
Note: (W) = Wachovia Estimate (c) = Consensus Estimate

7
Wachovia Economics Group

John E. Silvia, Ph.D. Chief Economist (704) 374-7034 john.silvia@wachovia.com

Mark Vitner Senior Economist (704) 383-5635 mark.vitner@wachovia.com

Jay H. Bryson, Ph.D. Global Economist (704) 383-3518 jay.bryson@wachovia.com

Sam Bullard Economist (704) 383-7372 sam.bullard@wachovia.com

Anika Khan Economist (704) 715-0575 anika.khan@wachovia.com

Azhar Iqbal Econometrician (704) 383-6805 azhar.iqbal@wachovia.com

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