The U.S. Economic Outlook

1
The U.S. Economic Outlook

• March 2003
• Jay H. Bryson, Global Economist
• Wachovia Bank, N.A.

2
U.S. GDP Growth(quarter-on-quarter, annualized
rates)
3
Final Domestic Demand Components(year-on-year
growth)
4
Consumer Durable Goods
5
Residential Construction
6
Business Fixed Investment
7
Services Non-Durable Goods
8
U.S. Outlook
9
Household Assets
10
Household Debt(as percent of disposable income)
11
Household Liabilities(as percent of financial
assets)
12
Monthly Debt Service Payments(as percent of
disposable income)
13
Real Spending Indicators(year-on-year growth,
3-month moving average)
14
Non-farm Productivity Growth
15
Real GDP Components
Forecast
16
Real Capital Spending(quarterly change,
annualized rate)
17
Information Processing Equipment
18
Corporate Bond Yields
19
Net Interest Expense(non-financial corporations,
as of EBIDT)
20
Debt/Net Worth(non-financial corporations)
21
Foreign GDP Growth(year-on-year rates)
Forecast
22
Summary

• We project that the recovery will continue,
  albeit at a very modest rate.
• We do not believe that the Fed will need to ease
  again. However, it would do so if growth remains
  very sluggish.
• Growth presently is very dependent on consumer
  spending. Therefore, it is vulnerable to
  exogenous shocks that could cause consumer
  spending to weaken.

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U.S. Current Account Balance
24
U.S. Private Capital Inflows
25
Exchange Rate Forecast
26
Notable Risks

• Upside
• Willingness of U.S. consumers to take on even
  more debt to sustain consumption.
• Synchronous global upturn in capex.
• More fiscal stimulus.

• Downside
• More attacks.
• Messy conflict with Iraq.
• More corporate governance scandals.