1	"Outlook for the Global," Outlook for the Global, U.S. and California Economies Presented to the 21^st Annual Agribusiness Management Conference Fresno, California October 31, 2002 Steven A. Wood Chief Economist FinancialOxygen, Inc.
2	Outlook Overview Global Economic Overview Global Commodity Prices U.S. Economic Outlook Inflation Outlook Financial Markets Outlook California Economic Outlook Regional Outlook
3	Global Economic Overview Who’s Hot, Who’s Not? Who’s Hot (or at least Lukewarm)? Australia/New Zealand U.K. Canada Mexico China Parts of Southeast and East Asia
4	Global Economic Overview Who’s Hot, Who’s Not? Who’s Not? Argentina Brazil Venezuela Japan Germany, France and Italy
5	Global Commodity Prices What’s Hot, What’s Not? What’s Hot? Oil Foodstuffs What’s Not? Natural gas Livestock & products Industrial raw materials Metals
6	U.S. Economic Outlook The Recession is Over Economic Fundamentals are Positive So Moderate Growth will Continue with Low Inflation and Improving Equity Markets But the Economy is Still Vulnerable
7	The Recession is Over
8	Economic Fundamentals Are Positive So Expansion is Still the Best Bet Policy is very accommodative Consumer spending is still strong Housing remains robust Capital spending has stopped falling Inventories are poised for restocking Exports are set to rebound But Growth will be Modest
9	Inflation Outlook Producer Prices are Falling Consumer Inflation is Modest Goods prices are falling Weak Economy Slows Wage Growth Productivity Gains Are Very Solid Inflation Will Stay Subdued
10	Outlook For Financial Markets Equity Markets Stay Volatile but Move Higher Interest Rates are Very Low but Will Eventually Rise while the Yield Curve Flattens The Federal Reserve will Not Raise Interest Rates Until Next Summer At the earliest
11	U.S. Economy: Summary & Conclusions Economy will expand moderately Growth will be unexciting, about 3% Unemployment will stay high, just under 6% Inflation will continue to whither Core CPI inflation slowly recedes, to about 2% Slack economy, solid productivity, and intense competitive pressures squeeze pricing power Equity markets stay volatile, move higher Profit growth will resume but uncertainty will persist Interest rates steady-to-higher Fed unlikely to change policy anytime soon Yield curve should flatten over the next year
12	Economy Remains Vulnerable The Economy is Still at Risk Equity Markets Remain Weak War with Iraq threatens Oil prices, and Consumer and business confidence Deflation: Possible but Not Probable
13	Economy Remains Vulnerable
14	Economy Remains Vulnerable Falling Stocks Threaten Economy Consumer Spending The Wealth Effect Capital Spending The Cost of Capital Government Spending The Revenue Effect
15	Economy Remains Vulnerable
16	"California and Regional Outlook" California and Regional Outlook
17	California Outlook State economy lags national economy High-tech industries will lag Export activities will struggle Government budget shortfalls persist Equity-related tax revenues slow to recover Major risks Housing “bubble” bursts Additional high-tech restructuring
18	California Regional Outlook Southern California will perform “best” More diversified economy Beneficiary of increased defense spending Northern California will “lag” Recovery dependent on high-tech rebound Significant longer-term growth potential Central Valley Agriculture continues to struggle Benefits from distribution center relocations
19	"Outlook for the Global," Outlook for the Global, U.S. and California Economies Presented to the 21^st Annual Agribusiness Management Conference Fresno, California October 31, 2002