On behalf of our Major Investorsand Briefing Sponsors, welcome!

Anthony PuglieseChair

Chapel Hill-Carrboro Chamber of Commerce

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@carolinachamber#EOB2016

Thank you, briefing sponsors!

Our Presenting Sponsor

Our Keynote Sponsor

Our Q & A Sponsor

Our Economic Forecast Sponsor

Thank you to our 2016 Major Investors!Community Champions

Thank you to our 2016 Major Investors!Community Investors

Thank you to our 2016 Major Investors!Platinum Sponsors

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Thank you to our 2016 Major Investors!Gold Sponsors

Thank you to our 2016 Major Investors!Gold Sponsors

Thank you to our 2016 Major Investors!Gold Sponsors

Thomas MillerSenior Vice President, Private Financial Advisor at

SunTrust Investment Services, Inc.

Our Presenting Sponsor

Aaron NelsonPresident & CEO

Chapel Hill-Carrboro Chamber of Commerce

Our Economic Forecast Sponsor

Our Keynote Sponsor

Dr. Harry DavisProfessor of Banking, Appalachian State University

Economist, North Carolina Bankers Association

“How Long Can This Economic Recovery Last?”Presented to Carolinas Association of Chamber of

Commerce ExecutivesChapel Hill, NC

Presented byHarry M. Davis, Ph.D

davishm@appstate.eduNCBA Professor of Banking and Economist

Appalachian State UniversityOctober 20, 2016

The U.S. EconomyRecovery was 7 years old in June

This expansion is now the 4th longest in the post WWII period at 87 months in October 2016

GDP growth was 2.4% for 2015

GDP growth slowed to 0.8% and 1.4% for the first two quarters of this year, respectively

The U.S. EconomyThis recovery is the slowest in the post WWII

period

Economic growth has been very slow but employment growth has been relatively strong in this recovery. Why?

In this expansion, productivity growth has been the slowest in 60 years

The U.S. EconomyProductivity has been negative 3 consecutive

quarters through the 3rd quarter of 2016 – last time this occurred was in 1979

Business Investment has been anemic in this expansion

Demographics and ProductivityRetirements are reducing the labor force

participation rate

A new study found retirement lower productivity due to lost experience

Output per hour drops with younger inexperienced workers

Experience peaks at 50 years of age

We need to raise the retirement age and use tax incentives to keep people in the labor force longer

Consumers

Both the real personal income and consumer spending rates of growth have increased to almost 3% in the last 12 months as opposed to annual rates of approximately 2-2.5%

Real median household income has now risen to nearly the level it was 8 years ago

U.S. Economy - Positive

The value of the dollar remains relatively high, which hurts the manufacturing sector

Corporate earnings have declined for the past 6 quarters

U.S. Economy - PositiveWith interest rates at record low, corporations

borrow money to buy back stock and pay dividends

This action greatly increases the wealth of the wealthy

Wealth

Wealth declined $13 trillion in “Great Recession”

Wealth has risen $30 trillion in last 5 years

Must own a house and/or be in the stock market

HousingExisting home sales were 5.33M in August

New residential construction was the best in 2015 since 2007 and this year will be better than the last

Even so, home construction is only at recession levels

Inventories of unsold homes are at record lows, Charlotte at 1.9 months

Millennials – rent or buy

Housing

Existing home prices are rising around 5.5% year over year

Home prices are just 2% below the peak reached in 2006

The home ownership rate(62.9%) is at its lowest since 1965

New single family home sales were above 600,000 in July and August

HousingThe share of first time home purchasers remains at

a three decade low

Student loans and bad credit

Many are forced to rent

Renters and wealth

U.S. Employment - Positive

The unemployment rate rose to 5.0% in September

Created an average of 229,000 new jobs per month in 2015

Created an average of 178,667 new jobs each month this year through September

The labor participation rate hit a 38-year low in 2015 and has risen slightly during 2016

Employment

Bureau of Labor Statistics estimates that about 6.8 million jobs unfilled due in part to a lack of qualified workers

What jobs: computer software engineers, nurses, math and science teachers, truck drivers, machinists, welders

North Carolina EmploymentNC needs to create 62,500 jobs per year to keep

up with projected population growth for the next 20 years

Almost 60% 0f all jobs created in NC since the “Great Recession” were created in: (1) Raleigh/Durham-RTP, and (2) Charlotte

NC Employment SituationThe unemployment rate for August was 4.6%

Grew about 74,800 jobs in the last 12 months through August

NC job growth in the last year has been slightly better than that of the U.S.

SC Employment SituationThe unemployment rate dropped in August to

5.1%, which is the 4th consecutive monthly drop

Grew 54,553 jobs over the last 12 months

What To Do?!Regulation Czar – moratorium on new

regulations

Build Infrastructure – regulations

Immigration reform

Simplify and flatten the tax code for businesses and individuals

The FEDIn a box

All Central Bankers are looking for one thing which is not around – a 2% rate of inflation

FED should forget about raising rates until the 10-year bond rate rises above 2.2% and stays there for more than 30 days

The FED has over-estimated economic growth 13 out of the last 15 years - Why?

The Outlook

While GDP growth has been growing slightly above 2% each year, it is now expected to grow less than 2% this year and the next

The US, NC, and SC unemployment rates should remain around 5.0%

The value of the dollar will continue to cause headaches for manufacturing

The Outlook

Wage and salary growth will remain at about 3% and consumer spending growth will increase to 3%

Housing will continue to be a bright spot - with a slight shift in construction to single family homes

The FED may raise rates later this year by .25%

Interest rates will remain at very low levels for years

Our Q & A Sponsor

Dr. Bill IngramPresident

Durham Technical Community College

Our Q & A Sponsor

Aaron NelsonPresident & CEO

Chapel Hil-Carrboro Chamber of Commerce

2016 Economic Conditions Survey Results

(Q3 2016 - 77 responses)

How Has the Current State of the Economy Effected Your Organization

Q4 2008 Q2 2009 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q3 20160.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

43.6%

56.4%

22.4%

8.1%

50.4% 49.9%

35.2%

6.1%

27.6%

56.5%

Negatively Not Much Positively

Good Growth

Moderate Growth

Remain Flat

Decline

14.5%

61.3%

22.6%

1.6%

Given the state of the local economy, how do you expect your organization to perform over the next 12

months

Increase No Change Decrease0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

68.9%

23.0%

8.2%

How do you expect your organization's sales to change during the next 12 months

Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q3 20160.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

35.8%39.7%

29.8%

39.7%46.1%

5.3%14.0%

0.0% 0.0% 1.5%

58.9% 58.9%

70.2%

60.3%52.3%

Do You Have Plans to Increase or Reduce Your Workforce in the next 12 Months?

Add workers Reduce WorkforceNo reduction or addition

Very Pro-Business

Somewhat Pro-Business

Neutral on Business

Somewhat Anti-Business

Very Anti-Business

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%

10.5%

42.1%

21.1%

22.8%

3.5%

Thinking About the Local Business Climate, Would You Say the Local Government Here is

innovate

deliver value

NANCY WILLIAMSINVESTMENT ADVISERCAROLINA CAPITAL SOLUTIONS919-943-5577NANCY@NANCYWILLIAMSADVISOR.COM

CAROLINA.TAGRESOURCES.COM

Upcoming Events

Performance Golf Classic Nov. 7, 8:30 a.m.-5 p.m.Chapel Hill Country Club

PRIMETIME Business Expo4-7:30 p.m., Nov. 10,

UNC Friday Center

www.carolinachamber.org/events

Salute to Community Heroes presented by AT&TDec. 8, 6-8 p.m.University Place

Submit nominations by Monday, Oct. 24

You’re invited to SUPERPOWER our economy at Orange County’s largest business expo: PRIMETIME

PRIMETIME Business Expo4:00-7:30 p.m., Thursday, Nov. 10 at the UNC Friday Center

Thank you