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by Gilbert R. Yochum Dean College of Business and Public Administration Old Dominion University March 15, 2012

by Gilbert R. Yochum Dean College of Business and Public Administration Old Dominion University March 15, 2012. The Economy and Financial Markets . U.S. Real GDP and Real Potential GDP (in 2005 dollars). Billions of Dollars.

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by Gilbert R. Yochum Dean College of Business and Public Administration Old Dominion University March 15, 2012

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  1. byGilbert R. YochumDeanCollege of Business and Public AdministrationOld Dominion UniversityMarch 15, 2012 The Economy and Financial Markets

  2. U.S. Real GDP and Real Potential GDP (in 2005 dollars) Billions of Dollars Source: US Department of Commerce, Congressional Budget Office and Federal Reserve Bank

  3. War and Peace in the Credit Markets: Selected Interest Rate Risk Spreads Percent Average Risk Spread (50 Years) 30-Year Mortgage 1.7% Corporate Bond 2.1% Source: Federal Reserve Bank and the Old Dominion University Economic Forecasting Project

  4. Cleaning Out the Skeletons in the Closet: Estimated Mortgage Rate Resets (First reset in billions of $) *Option ARMs show estimated recast schedule based on current negam rate & a 5yr hard recast schedule where data is missing Source: Credit Suisse , LoanPerformance, FH/FN/GN

  5. Net Percentage of U.S. Banks Tightening Standards for Mortgage Loans All residential Source: Federal Reserve Bank. Measures of Supply and Demand for Residential Mortgage Loans

  6. U.S. Existing House Prices: Annual Change Year-over-year percentage change Source: Federal Housing Finance Agency, Standard and Poor’s Case-Shiller Home Price Index (20 cities) and Old Dominion University Economic Forecasting Project . Data are for median price. FHFA data are based on FHA conforming loans for residential resale property. 2011 is estimated.

  7. Commercial Bank Delinquency Rates: Residential and Commercial Real Estate Loans and Total Loans Source: Federal Reserve Bank

  8. Commercial Bank Charge-Off Rates (Percent) Source: Federal Reserve Bank

  9. Bank Credit of All Commercial Banks (Billions of Dollars) Source: Federal Reserve Bank

  10. Bank Excess Reserves (Billions of Dollars) Source: Federal Reserve Bank

  11. U.S. Corporate Profits (1990-2011): Resulting Cash Hoard over $1 Trillion. Billions of $ Source: U.S. Department of Commerce. Undistributed profit with IVA and CCA adjustment.

  12. Checkable Deposits and Currency - Assets - Balance Sheet of Nonfarm Nonfinancial Corporate Business (Billions of Dollars) Source: Federal Reserve Bank

  13. Private Nonresidential Fixed Investment (Billions of Dollars) Source: Federal Reserve Bank

  14. Commercial Real Estate (CRE) Price Index and Business Investment in Structures Billions of $ Fixed Investment in Structures CRE Price Index Sources: U.S. Department of Commerce, MIT Real Estate Center and The National Council of Real Estate Investment Fiduciaries.

  15. Annual CPI and Core Inflation Rate and Long-Run Inflation Objective Upper and Lower Limits (1990 to 2012) Target Rate Source: U.S. Department of Labor and Old Dominion University Economic Forecasting Project

  16. Inflation Expectations: The Government Bond Tips Spread(Ten Year T-Bond Rate minus Ten Year Inflation Protected T-Bond Rate) Expected Inflation Rate Source: Federal Reserve Bank and the Old Dominion University Economic Forecasting Project

  17. Treasury Yield Curve: Operation Twist Source: Federal Reserve Bank and Old Dominion University Economic Forecasting Project

  18. Federal Government Spending, Revenue and Deficit as a Proportion of GDP 1941-2040 (CBO Alternative Scenario) Proportion of GDP Source: Federal Reserve Bank and Congressional Budget Office.

  19. Real GDP(Billion in 2005 dollars) +2.4%

  20. Employment (thousands) + 2.0%

  21. Unemployment Rate 7.95%

  22. CPI +2.3%

  23. CPI Core +2.1%

  24. 3 month T-Bills 0.5%

  25. 10 Year T-Notes 1.9%

  26. 30 Year Mortgage Rate 3.8%

  27. Moody's Seasoned Aaa Corporate Bond Yield 3.7%

  28. Old Dominion University 2012 National Economic Forecast for Selected Categories

  29. Risks to Forecast • Substantial slow down in Eurozone will dampen U.S. growth • Housing market continues to be a drag • Political drift creating more uncertainty • Disruptions in world oil Supply

  30. byGilbert R. YochumDeanCollege of Business and Public AdministrationOld Dominion UniversityMarch 15, 2012 The Economy and Financial Markets

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