Michael A. Brown, Economist October 6, 2015 Economic Outlook for 2016 and Beyond

Michael A. Brown, EconomistOctober 6, 2015

Economic Outlook for 2016 and Beyond

Wells Fargo Economics 2

Overview

Labor Market

Inflation &Interest Rates

Fiscal Policy

BusinessInvestment

2015Growth


-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

2000 2002 2004 2006 2008 2010 2012 2014 2016

U.S. Real GDP Bars = CAGR Line = Yr/Yr Percent Change

GDP - CAGR: Q2 @ 3.9%

GDP - Yr/Yr Percent Change: Q2 @ 2.7%

Forecast

Where Are We Now?

Economic growth should continue at a modest pace over the coming quarters

Source: U.S. Department of Commerce and Wells Fargo Securities, LLC


-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

-10%

-8%

-6%

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0%

2%

4%

6%

8%

2000 2002 2004 2006 2008 2010 2012 2014 2016

Real Final Sales to Domestic PurchasersBars = CAGR Line = Yr/Yr Percent Change

Real Fin Sales to Dom. Purch. - CAGR: Q2 @ 3.7%

Real Fin Sales to Dom. Purch. - Yr/Yr Pct Chg: Q2 @ 3.0%

Forecast

Real Final Sales

Growth in domestic spending clearly has

strengthened



-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

2000 2002 2004 2006 2008 2010 2012 2014 2016

Real Equipment InvestmentBars = CAGR Line = Yr/Yr Percent Change

Equipment Investment - CAGR: Q2 @ 0.3%

Equipment Investment - Yr/Yr Percent Change: Q2 @ 3.3%

Forecast

Capital Spending

Growth in business fixed investment spending will

support growth in the coming quarters



-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

2000 2002 2004 2006 2008 2010 2012 2014 2016

Real Nonresidential ConstructionBars = CAGR Line = Yr/Yr Percent Change

Nonres Construction - CAGR: Q2 @ 6.2%

Nonres Construction - Yr/Yr Percent Change: Q2 @ 0.2%

Forecast

Nonresidential Construction

Commercial construction spending will help to perpetuate business

investment in the year ahead



70

75

80

85

90

95

100

105

110

115

-60

-40

-20

0

20

40

60

80

100

120

04 05 06 07 08 09 10 11 12 13 14 15

Wells Fargo Small Business Survey & NFIBOverall Situation, NFIB Small Business Optimism 1986=100

Wells Fargo Overall Situation: Q3 @ 59.0 (Left Axis)

Small Business Optimism: Q2 @ 96.5 (Right Axis)

Small Businesses

Small business optimism has finally turned around

Source: National Federation of Independent Businesses, Gallup, Wells Fargo Bank and Wells Fargo Securities, LLC


-60

-30

0

30

60

90

120

150

180

30%

35%

40%

45%

50%

55%

60%

65%

70%

03 05 07 09 11 13 15

Homeowners' Equity vs. WF Small Business SurveyPercent Share of Home Values, Index

Equity as a Share of Home Value (Left Axis): Q2 @ 56.3%

Wells Fargo Overall Situation (Right Axis): Q3 @ 59.0

Small Businesses

Recovery in home equity values has supported small

business activity

Source: Federal Reserve Board, Wells Fargo Bank, Gallup and Wells Fargo Securities, LLC


U.S. Housing Market

Despite some recent setbacks, we continue to look for a gradual recovery in homebuilding.

The homeownership rate continues to come down.

Source: NAR, CoreLogic, U.S. Department of Commerce and Wells Fargo Securities, LLC

Owners vs. RentersHomeownership

62%

63%

64%

65%

66%

67%

68%

69%

70%

-24%

-18%

-12%

-6%

0%

6%

12%

18%

24%

88 90 92 94 96 98 00 02 04 06 08 10 12 14

CoreLogic National Home Price Index vs. Homeownership Rate

Home Price Index Yr/Yr: Q2 @ 5.9% (Left Axis)

Homeownership Rate: Q2 @ 63.4% (Right Axis)

-1,500

-1,000

-500

0

500

1,000

1,500

2,000

2,500

-1,500

-1,000

-500

0

500

1,000

1,500

2,000

2,500

66 70 74 78 82 86 90 94 98 02 06 10 14

U.S. Homeowners vs. RentersAnnual Change in Occupied Units, In Thousands

Renters: 2014 @ 1026.3 ThousandHomeowners: 2014 @ -234.5 Thousand

Series Break 1981


A Shifting Demographic Profile

Higher student debt burdens are hindering young adults’ ability to form new households

Source: Federal Reserve Board, U.S. Department of Commerce and Wells Fargo Securities, LLC

Household FormationStudent Loans

$0

$5

$10

$15

$20

$25

$30

15%

20%

25%

30%

35%

40%

45%

1989 1992 1995 1998 2001 2004 2007 2010 2013

Student Loan DebtHouseholds With Head Under 35, Ths. of 2013 Dollars

Median Value: 2013 @ $17.2K (Right Axis)

Percent with Student Debt: 2013 @ 41.7% (Left Axis)

6%

8%

10%

12%

14%

16%

6%

8%

10%

12%

14%

16%

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

Young Adults Living in Parent's Household Percent of Total Population Aged 25 to 34 Years

25 to 34 Year Olds: 2014 @ 14.4%

1995 to 2007 Average


Food Away from Home

Food at Home

Transportation

Healthcare

Apparel and Services

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

-5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%

Year-

over-

Year

Perc

ent

Change

Percent Change from Three Years Ago

Consumer Expenditure GrowthYear-over-Year Percent Change & Change from 2011 to 2014

Share of Average Total Expenditures<5.5%5.5% - 8.0%>8.0%

Recovering Expanding

Contracting Decelerating

Entertainment Housing - Rented

Housing - Owned

The Consumer

Food away from home, entertainment, and apparel

spending have improved over the past year as the economy has picked up

Source: U.S. Department of Labor and Wells Fargo Securities, LLC


-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

2000 2002 2004 2006 2008 2010 2012 2014 2016

Real Personal Consumption ExpendituresBars = CAGR Line = Yr/Yr Percent Change

PCE - CAGR: Q2 @ 3.6%PCE - Yr/Yr Percent Change: Q2 @ 3.3%

Forecast

The Consumer

Consumer spending growth will continue to average

around 2.5 percent



0%

4%

8%

12%

16%

20%

24%

0%

4%

8%

12%

16%

20%

24%

94 96 98 00 02 04 06 08 10 12 14

Underuse of LaborU-6 Unemployment Rate Components, Seasonally Adjusted

Part-Time for Economic Reasons: Sep @ 3.8%

Discouraged and Marginally Attached: Sep @ 1.1%

Unemployed: Sep @ 5.1%

U-6 Unemployment Rate: Sep @ 10%

Unemployment Rates

Alternative measures of unemployment show an historically high level of

underemployment



Employment Rate

The employment rate is picking up, but structural

issues remain


57

58

59

60

61

62

63

64

65

57

58

59

60

61

62

63

64

65

86 88 90 92 94 96 98 00 02 04 06 08 10 12 14

Employment-Population Ratio16 Years and Over, Seasonally Adjusted

Employment-Population Ratio: Sep @ 59.2


0

10

20

30

40

50

60

70

80

0

10

20

30

40

50

60

70

80

No High SchoolDiploma

High SchoolDiploma

Some College College Degree

Employment-Population Ratio by EducationSeptember 2015

The Employment Situation

The employment picture is mixed across different

levels of education



108

111

114

117

120

123

126

129

128

131

134

137

140

143

146

149

07 08 09 10 11 12 13 14 15

Thousa

nds

Thousa

nds

Full Time vs. Part Time EmploymentMillions, Seasonally Adjusted

Total Employment: Sep @ 146.5M (Left Axis)Full-Time: Sep @ 120.9M (Right Axis)

Total: 2.1M Above Prerecession Peak

Full-Time: 0.1M Above Prerecession Peak

Employment: Structural

A large proportion of the jobs created over the past four years have been part-

time, which has weighed on wage & salary growth



-5%

0%

5%

10%

15%

20%

25%

-5%

0%

5%

10%

15%

20%

25%

LowestQuintile

SecondQuintile

MiddleQuintile

FourthQuintile

HighestQuintile

Income Growth During Economic RecoveriesPercent Change 5 Years After Recession End, Before-Tax Income

Avg of Prior 2 Recoveries2009-2014

Personal Income

Income growth has finally begun to turn around but still lags prior recoveries



Inflation

Inflation remains in check


-2%

-1%

0%

1%

2%

3%

4%

5%

-2%

-1%

0%

1%

2%

3%

4%

5%

00 02 04 06 08 10 12 14

PCE Deflator vs. "Core" PCE DeflatorYear-over-Year Percent Change

PCE Deflator: Aug @ 0.3%

"Core" PCE Deflator: Aug @ 1.3%


Yield Curve: Rates Rise Without Fed

The yield curve is expected to flatten further as the Fed begins to raise short-term interest rates in December

of this year

Source: Bloomberg LP and Wells Fargo Securities, LLC

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

Yield CurveU.S. Treasuries, Active Issues

October 1, 2015

September 3, 2015

October 2, 2014


Key Issues

Fiscal Policy Outlook

What to watch for in the 114th Congress

Oct. 29th - Funding for Highway Trust Fund expires How will the gap be filled?

November 5th - Re-establishment of debt ceiling How will Congress increase the borrowing limit?

December 11th - FY 2016 budget debate Current funding runs out

Corporate tax reform Both sides agree action is needed, but what will be

done?

International trade agreements (TPP, TTIP) Don’t expect immediate action, but progress is being

made


-15%

-10%

-5%

0%

5%

10%

15%

-15%

-10%

-5%

0%

5%

10%

15%

92 94 96 98 00 02 04 06 08 10 12 14

Global Economic IndicatorsYear-over-Year Percent Change

Global Industrial Production: Q2 @ 2.0%U.S. GDP: Q2 @ 2.7%

Global Industrial Production

It would take a sharp downturn in the rest of the world to have a meaningful

effect on U.S. economic growth

Source: IHS Global Insight and Wells Fargo Securities, LLC

The Idaho Economy


-4%

-3%

-2%

-1%

0%

1%

2%

3%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

90 92 94 96 98 00 02 04 06 08 10 12 14

Idaho Coincident Index3-Month Percent Change

Coincident Index: Aug @ 0.5%

Idaho – Current Economic Conditions

Economic activity in Idaho is downshifting

Source: Federal Reserve Bank of Philadelphia and Wells Fargo Securities, LLC


Idaho– Employment Growth & Unemployment Rate

Employment is growing modestly, while the unemployment rate is below the national rate

August 2015

-10% -5% 0% 5% 10% 15%

Information

Other Services

Construction

Financial Activities

Manufacturing

Leisure and Hospitality

Prof. & Bus. Svcs.

Educ. & Health Services

Government

Trade, Trans. & Utilities

Total Nonfarm

Idaho Employment Growth By IndustryYear-over-Year Percent Change, 3-MMA

Number of Employees

Less

More


Unemployment RateEmployment

0%

2%

4%

6%

8%

10%

0%

2%

4%

6%

8%

10%

90 92 94 96 98 00 02 04 06 08 10 12 14

Idaho Unemployment RateSeasonally Adjusted

Unemployment Rate: Aug @ 4.2%

12-Month Moving Average: Aug @ 4.2%


-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

90 92 94 96 98 00 02 04 06 08 10 12 14

Idaho Nonfarm Employment3-Month Moving Averages

3-Month Annual Rate: Aug @ -0.9%Nonfarm: Yr/Yr Pct. Change: Aug @ 3.1%Household: Yr/Yr Pct. Change: Aug @ 3.3%

Idaho: Employment

Overall employment growth has been strong over the

past year



-12%

-8%

-4%

0%

4%

8%

12%

16%

20%

24%

-12%

-8%

-4%

0%

4%

8%

12%

16%

20%

24%

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Idaho Personal IncomeBars = Compound Annual Rate Line = Yr/Yr % Change

Idaho Personal Income: Q2 @ 4.5%

Idaho Personal Income: Q2 @ 3.1%

Idaho: Personal Income

Personal income growth has steadily rebounded since

the recession ended



Idaho– Home Prices and Construction

Home prices are growing modestly in the state as building activity has begun to pick up

-24%

-18%

-12%

-6%

0%

6%

12%

18%

24%

30%

-24%

-18%

-12%

-6%

0%

6%

12%

18%

24%

30%

90 92 94 96 98 00 02 04 06 08 10 12 14

Core Logic HPI : ID vs. U.S.Year-over-Year Percent Change

United States: J ul @ 6.9%

Idaho: J ul @ 4.8%

Source: CoreLogic, Inc., U.S. Department of Commerce and Wells Fargo Securities, LLC

Housing PermitsHome Prices

0

5

10

15

20

25

0

5

10

15

20

25

90 92 94 96 98 00 02 04 06 08 10 12 14

Thou

sand

s

Thou

sand

s

Idaho Housing PermitsThousands of Permits, Seasonally Adjusted Annual Rate

Single-Family: Aug @ 9,276Single-Family, 12-MMA: Aug @ 7,073Multifamily, 12-MMA: Aug @ 2,344

Single-Family Average (1998-2003): 10,107


Idaho – Economic Outlook

The leading index signals somewhat stronger economic growth ahead

-6.0%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

-6.0%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14

Idaho Leading IndexThree Month Percent Change

Idaho: Aug @ 1.4%

Source: Federal Reserve Bank of Philadelphia and Wells Fargo Securities, LLC

Outlook

Economic growth will likely remain modest given the state’s exposure to commodities and manufacturing.

The state’s manufacturing sector may face some challenges associated with slower global growth and reduced business investment.

Idaho’s unemployment rate remains well below the national average. Manufacturing employment growth in the

state will be challenging over the next several years due to changing tastes and preferences.

Job growth will be driven by the service sector.

Leading Index


Headwinds to Economic Growth

Potential Headwinds to

Economic Growth

Effects of Monetary Policy Changes?

Slower Pace of Business Investment

Slower GlobalGrowth Environment

Fiscal Policy Uncertainty

Modest Income Growth


Outlook Summary

Source: IHS Global Insight and Wells Fargo Securities, LLC

Wells Fargo U.S. Economic Forecastq 3 2 01 5

2015

2013 2014 2015 2016 2017

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

Real Gross Domestic Product 1 0.6 3.9 1.9 2.7 2.6 2.8 2.8 2.6 2.2 2.3 2.2 2.2 1.5 2.4 2.5 2.7 2.4

Personal Consumption 1.8 3.6 2.9 3.0 2.5 2.6 2.5 2.3 2.1 2.1 2.0 2.0 1.7 2.7 3.1 2.7 2.2

Business Fixed Investment 1.6 4.1 4.9 5.5 5.2 5.3 5.6 5.5 5.2 5.1 5.0 4.9 3.0 6.2 3.6 5.2 5.3

Equipment 2.3 0.3 3.1 4.7 4.1 4.8 5.5 5.6 5.3 5.2 4.8 4.7 3.2 5.8 2.7 4.2 5.2

Intellectual Property Products 7.4 8.3 6.8 6.9 6.7 6.0 5.8 5.3 4.9 4.7 4.8 4.7 3.8 5.2 7.1 6.5 5.1

Structures - 7.4 6.2 6.1 5.3 5.4 5.4 5.5 5.5 5.6 5.6 5.7 5.8 1.6 8.1 0.8 5.5 5.6

Residential Construction 10.1 9.4 10.0 9.5 12.0 14.0 14.0 12.5 9.0 9.0 8.0 8.0 9.5 1.8 9.1 11.8 10.3

Government Purchases - 0.1 2.6 1.8 1.7 1.7 2.1 1.8 1.7 1.5 1.6 1.5 1.4 - 2.9 - 0.6 0.8 1.9 1.6

Net Exports 2 - 1.9 0.2 0.3 - 0.5 - 0.6 - 0.6 - 0.6 - 0.5 - 0.4 - 0.4 - 0.3 - 0.3 0.2 - 0.2 - 0.6 - 0.4 - 0.4

Inventories 2 0.9 0.0 - 1.3 - 0.1 0.1 0.1 0.1 0.0 - 0.1 - 0.1 - 0.1 - 0.1 0.0 0.0 0.1 - 0.1 - 0.1

Nonfarm Payroll Change 3 195 231 167 210 200 197 195 190 185 180 180 175 199 260 201 195 180

Unemployment Rate 5.6 5.4 5.2 5.0 4.9 4.8 4.7 4.6 4.5 4.5 4.4 4.4 7.4 6.2 5.3 4.8 4.5

PCE Deflator 4 0.2 0.3 0.4 0.9 1.8 1.7 1.9 1.9 2.0 2.0 1.9 1.9 1.4 1.4 0.4 1.8 2.0

Quarter- End Interest Rates 5

Federal Funds Target Rate 0.25 0.25 0.25 0.50 0.75 1.00 1.25 1.50 1.75 2.00 2.25 2.50 0.25 0.25 0.31 1.13 2.13

Conventional Mortgage Rate 3.77 3.98 3.91 4.15 4.23 4.28 4.37 4.63 4.75 4.76 4.84 4.93 3.98 4.17 3.95 4.38 4.82

3 Month Bill 0.03 0.01 0.00 0.13 0.56 0.84 1.17 1.34 1.63 1.81 2.12 2.38 0.06 0.03 0.04 0.98 1.99

6 Month Bill 0.14 0.11 0.08 0.30 0.61 0.89 1.23 1.43 1.66 1.94 2.19 2.41 0.09 0.06 0.16 1.04 2.05

1 Year Bill 0.26 0.28 0.33 0.68 0.96 1.23 1.59 1.80 2.09 2.29 2.38 2.57 0.13 0.12 0.39 1.40 2.33

2 Year Note 0.56 0.64 0.64 0.85 1.07 1.26 1.71 1.92 2.27 2.39 2.50 2.62 0.31 0.46 0.67 1.49 2.44

5 Year Note 1.37 1.63 1.37 1.73 1.87 1.99 2.20 2.34 2.52 2.60 2.69 2.78 1.17 1.64 1.53 2.10 2.65

10 Year Note 1.94 2.35 2.06 2.40 2.49 2.53 2.63 2.77 2.83 2.88 2.95 3.03 2.35 2.54 2.19 2.61 2.92

30 Year Bond 2.54 3.11 2.87 3.16 3.23 3.26 3.33 3.58 3.66 3.73 3.81 3.89 3.45 3.34 2.92 3.35 3.77

Forecast as of: September 25, 20151 Compound Annual Growth Rate Quarter-over-Quarter 2 Percentage Point Contribution to GDP 3 Average Monthly Change4 Year-over-Year Percentage Change 5 Annual Numbers Represent Averages

Forecast

2015 2016

Actual

2017

ForecastActual

Appendix


Recent Special Commentary

Wells Fargo Economics Group Publications

To view any of our past research please visit:

http://www.wellsfargo.com/economics

To join any of our research distribution lists please

visit:https://

wellsfargo.mworld.com/econ/alerts.asp

Date Title Authors

U.S. Macro

September- 23 Capitol Hill Update: Down- to- the- Wire Votes Expected Silvia & BrownSeptember- 23 J ob Openings vs. Turnover: Mixed Messages from J OLTS House & MoehringSeptember- 23 U.S. Manufacturing & USD: Setting the Record Straight Quinlan, House & NelsonSeptember- 14 Equipment Spending: It's Not About Rates Anyway Quinlan, House & NelsonSeptember- 10 Will Higher Rates Impact Consumption? Alemán & Brown

U.S. RegionalSeptember- 17 California Employment Conditions: August 2015 Vitner & BatchellerSeptember- 18 Lower Oil Prices Are Clearly Weighing On Texas J ob Growth Vitner & BatchellerSeptember- 18 Florida’s Economy Continues to See Solid J ob Gains Vitner & BatchellerSeptember- 17 New J ersey Adds 13,600 J obs in August Vitner & BatchellerSeptember- 17 Minnesota Added 7,300 J obs in August Vitner & Batcheller

Global EconomySeptember- 21 Argentine Government Spending Boosts Growth in Q2 2015 AlemánSeptember- 10 Global Chartbook: September 2015 Bryson, House & NelsonSeptember- 10 Turkish GDP Growth Surprises to the Upside in Q2 2015 BrysonSeptember- 03 Weaker GDP in Australia and the Ties that Bind QuinlanSeptember- 02 U.K. Economy: A Mid- Year Review Bryson & Nelson

Interest Rates/Credit MarketSeptember- 21 FOMC Decides: Markets Assess What's Next Silvia, Vitner & BrownSeptember- 16 Household Credit Healthy for Now Silvia, Vitner & BrownSeptember- 09 We Do Not Expect a Repeat of the Taper Tantrum Silvia, Vitner & BrownSeptember- 02 Financing Growth as Inflation and Interest Rates Align Silvia, Vitner & Brown

August- 26 Interest Rates and Rising U.S. Federal Debt Silvia, Vitner & Brown

Real EstateSeptember- 30 Nonresidential Construction Recap: September Khan

September- 01 Housing Data Wrap- Up: August 2015 Vitner & Khan

August- 31 Nonresidential Construction Recap: August Khan

August- 07 Commerial Real Estate Chartbook: Q2 Khan

J uly- 31 Housing Chartbook: J uly 2015 Vitner, Khan & Batcheller

A Sampling of Our Recent Special, Regional & Industry Commentary

Wells Fargo Economics

Wells Fargo Securities, LLC Economics Group

33

John E. Silvia … ...................... . … [email protected]

Global Head of Research and Economics

Diane Schumaker-Krieg ………………… ………[email protected] Head of Research & Economics

Chief Economist

Mark Vitner, Senior Economist……………....………. . [email protected]

Jay H. Bryson, Global Economist …………………....…… ….

[email protected]

Sam Bullard, Senior Economist [email protected]

Nick Bennenbroek, Currency Strategist ……[email protected]

Eugenio J. Alemán, Senior Economist… …………[email protected]

Anika R. Khan, Senior Economist … . [email protected]

Senior Economists

Erik Nelson, Economic Analyst [email protected]

Alex Moehring, Economic Analyst [email protected]

Misa Batcheller, Economic Analyst [email protected]

Michael Pugliese, Economic Analyst [email protected]

Economists

Azhar Iqbal, Econometrician………………… ……………[email protected]

Tim Quinlan, Economist …………………… ……………. [email protected]

Eric J. Viloria, Currency Strategist [email protected]

Sarah House, Economist …………… ………… [email protected]

Michael A. Brown, Economist ……………… … [email protected]

Economic Analysts

Administrative Assistants

Wells Fargo Securities Economics Group publications are produced by Wells Fargo Securities, LLC, a U.S broker-dealer registered with the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority, and the Securities Investor Protection Corp. Wells Fargo Securities, LLC, distributes these publications directly and through subsidiaries including, but not limited to, Wells Fargo & Company, Wells Fargo Bank N.A., Wells Fargo Advisors, LLC, Wells Fargo Securities International Limited, Wells Fargo Securities Asia Limited and Wells Fargo Securities (Japan) Co. Limited. Wells Fargo Securities, LLC. ("WFS") is registered with the Commodities Futures Trading Commission as a futures commission merchant and is a member in good standing of the National Futures Association. Wells Fargo Bank, N.A. ("WFBNA") is registered with the Commodities Futures Trading Commission as a swap dealer and is a member in good standing of the National Futures Association. WFS and WFBNA are generally engaged in the trading of futures and derivative products, any of which may be discussed within this publication. Wells Fargo Securities, LLC does not compensate its research analysts based on specific investment banking transactions. Wells Fargo Securities, LLC’s research analysts receive compensation that is based upon and impacted by the overall profitability and revenue of the firm which includes, but is not limited to investment banking revenue. The information and opinions herein are for general information use only. Wells Fargo Securities, LLC does not guarantee their accuracy or completeness, nor does Wells Fargo Securities, LLC assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sales of any security or as personalized investment advice. Wells Fargo Securities, LLC is a separate legal entity and distinct from affiliated banks and is a wholly owned subsidiary of Wells Fargo & Company © 2015 Wells Fargo Securities, LLC.

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For recipients in the EEA, this report is distributed by Wells Fargo Securities International Limited ("WFSIL"). WFSIL is a U.K. incorporated investment firm authorized and regulated by the Financial Conduct Authority. The content of this report has been approved by WFSIL a regulated person under the Act. For purposes of the U.K. Financial Conduct Authority’s rules, this report constitutes impartial investment research. WFSIL does not deal with retail clients as defined in the Markets in Financial Instruments Directive 2007. The FCA rules made under the Financial Services and Markets Act 2000 for the protection of retail clients will therefore not apply, nor will the Financial Services Compensation Scheme be available. This report is not intended for, and should not be relied upon by, retail clients. This document and any other materials accompanying this document (collectively, the "Materials") are provided for general informational purposes only.

Donna LaFleur, Executive Assistant.

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Cyndi Burris, Senior Administrative Assistant [email protected]

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Documents

Michael A. Brown, Economist October 6, 2015 Economic Outlook for 2016 and Beyond