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APPENDIX National Economic Outlook Note to readers: Much of this report's narrative was consumer spending. Higher gasoline and food written in the late summer time fume. Obviously the prices create additional inflationary pressures calamities that have since hit financial markets both here and increasin l abroad make the economic and negatively impact consumer spending. g y Nevertheless ex ectations for ositive rowth backdrop to our forecast somewhat impertinent. It ls, ~ p p g nevertheless, fairly consistent with the outlook from the continue throughout the forecast period as most recent State Economic Forecast. export growth picks up some of the slack. The national economic outlook is more Currently, national gasoline prices appear to subdued than the prior forecast from the end be peaking. As shown in Figure 14, the of 2007. Figure 13 displays recent trends in baseline outlook suggests that prices will real GDP, along with the base case forecast slowly recede out through 2015 to levels only over the 2008-2015 time frame. In 2007, the marginally lower than at present (light blue economy grew approximately 2.2 percent. line in the chart). Based on recent experience, Growth for 2008 appears to be even slower, this indicated stability disregards the volatility averaging about 1.2 percent. Slow growth inherent in the global marketplace for oil. under 2.0 percent is expected for 2009 as Thus, actual experience is likely to stray from well. However, real GDP growth will likely the projected path shown. Nevertheless, it is pick up a bit in 2010 and will range between worth noting that, when adjusted for inflation, 2.4 and 3.3 percent over the remaining years real gas prices decline in the forecast period of the forecast period. to levels comparable to those seen in 2005. Figure 13: Real GDP and Real GDP Figure 14: Gasoline Prices (Regular Growth Unleaded) 5% 220 - 4% $16,000 200 - 0 3% ~ ~ $14,000 ~ n 180 - 2% ~ 3 m ~ > 160 - a $12,000 1 % ~ ~ ~ 140 - ~ $10,000 0% m ~ a! ~ 120 - -1 % ~ $8,000 ~ - 100 - m U ~L $6,000 a 80 - 1990 1995 2000 2005 2010 2015 0 U.S. Real GDP Percentage Change 60 - 1990 1995 2000 2005 2010 2015 2000 =base year Several factors contribute to the current Price Index for Gasoline -Constant Dollar Price Index for Gasoline economic slowdown. The housing market downturn is the primary impediment to the . . econom at this time. Increasin inventories As consumers get squeezed between declining y g home rices mort a e loan resets and risin of homes for sale, falling housing prices, and p g g g ti htenin credit standards all tend to dam en prices for energy and food, falling demand for g g p 24