Slide 1

By: Anirban Basu Sage Policy Group, Inc. September 13th, 2013 Going Up for the Rebound On Behalf of MD-DC Utilities Association

Slide 2

First Pitch

Slide 3

Historic and Projected World Output Growth 2004 through 2014* Source: International Monetary Fund *2013-2014 data are projections

Slide 4

Real GDP Growth, 20 Fastest and Slowest Growing Countries Estimated 2013, Annual Percent Change (for available nations) Source: IMF RankCountryRegion% RankCountryRegion% 1South Sudan Africa 32.1166Barbados Caribbean 0.5 2Libya Middle East 20.2167Bosnia and Herzegovina Eastern Europe 0.5 3Sierra Leone Africa 17.1168Grenada Caribbean 0.5 4Mongolia Asia 14.0169Czech Republic Europe 0.3 5Paraguay South America 11.0170Belgium Europe 0.2 6Timor-Leste Southeast Asia 10.0171Venezuela South America 0.1 7Iraq Middle East 9.0172Luxembourg Europe 0.1 7Panama Central America 9.0173Swaziland Africa 0.0 9The Gambia Africa 8.9174Hungary Europe 0.0 10Mozambique Africa 8.4175France Europe -0.1 11Dem. Rep. of the Congo Africa 8.3176Croatia Eastern Europe -0.2 12Chad Africa 8.1177Netherlands Europe -0.5 13China Asia 8.0178Islamic Republic of Iran Middle East -1.3 13Lao P.D.R. Southeast Asia 8.0179Italy Europe -1.5 13Cte d'Ivoire Africa 8.0180Spain Europe -1.6 16Zambia Africa 7.8181Slovenia Eastern Europe -2.0 17Turkmenistan Central Asia 7.7182Equatorial Guinea Africa -2.1 18Rwanda Africa 7.6183Portugal Europe -2.3 19Liberia Africa 7.5184San Marino Europe -3.5 20Kyrgyz Republic Central Asia 7.4185Greece Europe -4.2

Slide 5

Estimated Growth in Output by Select Global Areas 2013 Projected Source: International Monetary Fund

Slide 6

Debt by Selected Country 2012 Source: IMF

Slide 7

Top 12 Stock Exchanges 2011 Growth RankExchangeIndex% Change 1NYSE GroupDJI A5.5% 2NasdaqNASDAQ Composite-1.8% 3London SEFTSE 100-5.6% 12Swiss ExchangeSwiss Market Index-7.8% 9TSX GroupS&P TSX Composite-9.2% 8Bolsa De MedridIGBM-14.6% 6Frankfurt SEDAX-14.7% 5EuronextCAC 40-17.0% 4Tokyo SENikkei 225-17.3% 11Hong Kong ExchangesHang Seng Index-20.0% 7Shanghai SEShanghai Composite-21.7% 10Borsa ItalianaFTSE MIB-25.2% Source: Yahoo! Finance

Slide 8

Top 12 Stock Exchanges 2012 Growth RankExchangeIndex% Change 6Frankfurt SEDAX 29.1% 11Hong Kong ExchangesHang Seng Index 22.9% 4Tokyo SENikkei 225 22.9% 2NasdaqNASDAQ Composite 15.9% 5EuronextCAC 40 15.2% 12Swiss ExchangeSwiss Market Index 14.9% 10Borsa ItalianaFTSE MIB 7.8% 1NYSE GroupDJI A 7.3% 3London SEFTSE 100 5.8% 9TSX GroupS&P TSX Composite 4.0% 7Shanghai SEShanghai Composite 3.2% 8Bolsa De MadridIBEX 35 -4.7% Source: Yahoo! Finance

Slide 9

RankExchangeIndex% Change 4Tokyo SENikkei 225 31.3% 2NasdaqNASDAQ Composite 19.3% 12Swiss ExchangeSwiss Market 16.7% 1NYSE GroupDJI A 15.1% 5EuronextCAC 40 13.3% 6Frankfurt SEDAX 10.2% 3London SEFTSE 100 10.2% 10BorsaItalianaFTSE MIB 8.6% 8Bolsa De MadridMadrid General 8.0% 9TSX GroupS&P TSX Composite 2.4% 11Hong Kong ExchangesHang Seng Index -0.6% 7Shanghai SEShanghai Composite -8.8% Top 12 Stock Exchanges Year to date Growth Thru 8/16/13

Slide 10

S&P Select Sector Performance 2012 Source: Dow Jones, Standard & Poors

Slide 11

Second Quarter Earnings for Select Corporations Earnings per Share Source: Dow Jones, Standard & Poors SymbolQ2 2012 Q2 2013 Estimated Q2 2013 Reported SurpriseSymbolQ2 2012 Q2 2013 Estimated Q2 2013 Reported Surprise COF$2.20$1.74$2.13$0.39GE$0.38$0.35$0.36$0.01 BTU$0.73($0.05)$0.33$0.38VZ$0.64$0.72$0.73$0.01 VFC$1.11$1.17$1.27$0.10CMG$2.56$2.81$2.82$0.01 YHOO$0.27$0.26$0.35$0.09COH$0.86$0.89 $0.00 UTX$1.58$1.57$1.65$0.08MMM$1.66$1.71 $0.00 HON$1.14$1.21$1.28$0.07UPS$1.15$1.14$1.13($0.01) XRX$0.26$0.24$0.27$0.03MCD$1.32$1.40$1.38($0.02) STI$0.50$0.66$0.68$0.02TXN$0.44 $0.42($0.02) AMD$0.05($0.12)($0.10)$0.02MSFT($0.05)$0.74$0.59($0.15) DD$1.48$1.27$1.28$0.01FCX$0.80$0.46$0.22($0.24) DOW$0.55$0.63$0.64$0.01CAT$2.54$1.70$1.45($0.25)

Slide 12

Federal Reserve Balance Sheet v. S&P 500 Index April 2008 August 2013 Source: Federal Reserve Bank; Yahoo Finance S&P 500 index depicted in orange

Slide 13

Source: Moodys Economy Recession Watch as of September 2013

Slide 14

Industrial Production March 2001 through July 2013 Source: Federal Reserve The industrial production index measures the real output of the manufacturing, mining, and electric and gas utilities industries.

Slide 15

Gross Domestic Product 1990Q1 through 2013Q2 Source: Bureau of Economic Analysis

Slide 16

Contributions to GDP Growth by Component Q2 2012 Q2 2013 Source: Bureau of Economic Analysis

Slide 17

Red Card/ Pink Slip

Slide 18

Net Change in U.S. Jobs, BLS January 2002 through August 2013 Source: Bureau of Labor Statistics August 2013: +169K

Slide 19

Source: Bureau of Labor Statistics National Nonfarm Employment by Industry Sector August 2012 v. August 2013 All told 2,206 K Jobs gained

Slide 20

Cumulative Job Growth Since December 2007: Full-time v. Part-time December 2007 August 2013 Source: Bureau of Labor Statistics, Current Population Survey Full-time: - 5.40 million Part-time: +3.25 million

Slide 21

Maryland Nonfarm Employment by Industry Sector Groups (SA) July 2013 v. July 2012 Absolute Change Source: Bureau of Labor Statistics MD Total: +39.0K; +1.5% US Total (SA): +2,276K; +1.7%

Slide 22

Baltimore-Towson MSA Nonfarm Employment by Industry Sector Groups (NSA) July 2013 v. July 2012 Absolute Change Source: Bureau of Labor Statistics Baltimore MSA Total: +24.5K; +1.9% MD Total (NSA): +47.5K; +1.8% US Total (SA): +2,276K; +1.7%

Slide 23

Washington, DC-Arlington-Alexandria MSA Nonfarm Employment by Industry Sector Groups (NSA) July 2013 v. July 2012 Absolute Change Source: Bureau of Labor Statistics DC MSA Total: +50.6K; +1.7% US Total (SA): +2,276K; +1.7%

Slide 24

Source: Bureau of Labor Statistics U.S. Year-over-year Percent Change: 1.7% Employment Growth, U.S. States (SA) July 2012 v. July 2013 Percent Change RankState%RankState%RankState% 1Utah3.217Iowa1.735Hawaii1 2Arizona3.117Michigan1.735Illinois1 3Georgia2.817North Carolina1.735Kentucky1 4Colorado2.717Oregon1.735New Mexico1 4Idaho2.722California1.639Alabama0.9 4North Dakota2.723Maryland1.539New York0.9 4Texas2.723Vermont1.539Wisconsin0.9 8Washington2.325Connecticut1.439Wyoming0.9 9Mississippi2.225Virginia1.443Maine0.8 10Minnesota227Nevada1.343West Virginia0.8 10South Carolina228Arkansas1.245Nebraska0.7 12Florida1.928Kansas1.245Ohio0.7 12Indiana1.928Louisiana1.247Oklahoma0.6 12Montana1.928Massachusetts1.248District of Columbia0.5 12New Jersey1.928Tennessee1.248Pennsylvania0.5 16Missouri1.833New Hampshire1.150Rhode Island0.2 17Delaware1.733South Dakota1.151Alaska-0.5

Slide 25

Source: Bureau of Labor Statistics U.S. Unemployment Rate: 7.4% Unemployment Rates, U.S. States (SA) July 2013 RankStateRateRankStateRateRankStateRate 1North Dakota318Texas6.535Arizona8 2South Dakota3.919Idaho6.635Oregon8 3Nebraska4.220Wisconsin6.837Connecticut8.1 4Hawaii4.521Maine6.937South Carolina8.1 5Utah4.621New Mexico6.939Indiana8.4 5Vermont4.621Washington6.940Kentucky8.5 5Wyoming4.624Louisiana740Mississippi8.5 8Iowa4.825Colorado7.140Tennessee8.5 9New Hampshire5.125Florida7.143District of Columbia8.6 10Minnesota5.225Maryland7.143New Jersey8.6 11Montana5.325Missouri7.145California8.7 11Oklahoma5.329Massachusetts7.246Georgia8.8 13Virginia5.729Ohio7.246Michigan8.8 14Kansas5.931Arkansas7.448North Carolina8.9 15West Virginia6.231Delaware7.448Rhode Island8.9 16Alabama6.333New York7.550Illinois9.2 16Alaska6.333Pennsylvania7.551Nevada9.5

Slide 26

Unemployment Rates, 20 Largest Metros (NSA) July 2013 Source: Bureau of Labor Statistics RankMSAUR RankMSAUR 1 Minneapolis-St. Paul-Bloomington, MN-WI Metropolitan Statistical Area4.9 10 Baltimore-Towson, MD Metropolitan Statistical Area7.5 2 Washington-Arlington-Alexandria, DC-VA- MD-WV Metropolitan Statistical Area5.7 12 San Diego-Carlsbad-San Marcos, CA Metropolitan Statistical Area7.8 3 Seattle-Tacoma-Bellevue, WA Metropolitan Statistical Area5.8 13 St. Louis, MO-IL Metropolitan Statistical Area17.9 4 Dallas-Fort Worth-Arlington, TX Metropolitan Statistical Area6.4 14 New York-Northern New Jersey-Long Island, NY-NJ-PA Metropolitan Statistical Area8 5 Houston-Sugar Land-Baytown, TX Metropolitan Statistical Area6.5 15 Philadelphia-Camden-Wilmington, PA-NJ- DE-MD Metropolitan Statistical Area8.4 6 Boston-Cambridge-Quincy, MA-NH Metropolitan NECTA6.6 16 Atlanta-Sandy Springs-Marietta, GA Metropolitan Statistical Area8.6 7 San Francisco-Oakland-Fremont, CA Metropolitan Statistical Area6.9 17 Chicago-Joliet-Naperville, IL-IN-WI Metropolitan Statistical Area9.6 7 Phoenix-Mesa-Glendale, AZ Metropolitan Statistical Area6.9 18 Los Angeles-Long Beach-Santa Ana, CA Metropolitan Statistical Area9.8 9 Tampa-St. Petersburg-Clearwater, FL Metropolitan Statistical Area7.3 19 Detroit-Warren-Livonia, MI Metropolitan Statistical Area10.4 10 Miami-Fort Lauderdale-Pompano Beach, FL Metropolitan Statistical Area7.5 20 Riverside-San Bernardino-Ontario, CA Metropolitan Statistical Area11

Slide 27

MD County Unemployment Rates July 2013 Source: Bureau of Labor Statistics RankJurisdictionURRankJurisdictionUR 1Montgomery County5.312Kent County7.2 2Howard County5.512Harford County7.2 3Frederick County5.915Baltimore County7.4 4Carroll County6.216Worcester County7.6 5Queen Anne's County6.417Caroline County8 6Calvert County6.518Cecil County8.2 7Anne Arundel County6.619Washington County8.4 7St. Mary's County6.619Wicomico County8.4 9Charles County6.721Allegany County8.6 10Talbot County6.822Dorchester County10 11Prince George's County7.123Somerset County10.4 12Garrett County7.224Baltimore City10.8

Slide 28

Pad Save

Slide 29

15-Year & 30-Year Fixed Mortgage Rates January 1995 through August 2013 Source: Freddie Mac

Slide 30

Messages from Federal Open Market Committee, July 2013 ( T)he Committee decided to continue adding policy accommodation by purchasing additional MBS at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month...... the Committee reaffirmed its intention to keep the target federal funds rate at.00 to percent... exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6 percent. Source: Federal Reserve Bank, Bloomberg. (June. 28 th, 2013). Lacker Says Markets to Stay Volatile as Fed Debates Tapering

Slide 31

U.S. New Home Sales January 1999 through July 2013 Source: Economy.com, Census Bureau

Slide 32

U.S. Housing Starts January 1999 through July 2013 Source: Census Bureau

Slide 33

S&P/Case-Shiller Home Price Indices for Select Metros June 2013, 12-Month Percentage Change Source: Standard & Poors

Slide 34

Put me in, Coach

Slide 35

Conference Board Consumer Confidence Index 2005 August 2013 Source: Conference Board

Slide 36

U.S. Retail and Food Service Sales January 2002 through August 2013 Source: Census Bureau

Slide 37

Sales Growth by Type of Business August 2012 v. August 2013* Source: Census Bureau *August 2013 advanced estimate

Slide 38

National Vehicle Sales June 2004 through August 2013 (SAAR) Source: Autodata Corp.

Slide 39

Conference Board Leading Economic Indicators Index August 2007 through July 2013 Source: Conference Board

Slide 40

Fourth Quarter As predicted, first half of year was quite soft in terms of economic expansion as sequestration and tax hikes make their mark; Second half of year should be better, with growth likely to average a shade above 2 percent;. Many headwinds remain and the recovery could easily falter; Black swan threats: (1) Iran (2) Israel/Iran (3) Europe; Maryland has held its own to date, but there are major discrepancies between the household survey and the establishment survey one of them is probably wrong; and We are an increasingly part- time nation that looks like a problem.

Slide 41

Thank You You can always reach me at abasu@sagepolicy.com abasu@sagepolicy.com Please look for updates of information at www.sagepolicy.com. www.sagepolicy.com Also, if you need us in a hurry, we are at 410.522.7243 (410.522.SAGE) Please contact us when you require economic research & policy analysis.