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#MIGlobal Unemployment approaching Fed-set NAIRU Civilian unemployment rate, NAIRU=Non-Accelerating Inflation Rate of Unemployment 0 2 4 6 8 10 12 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Percent Sources: Bureau of Labor Statistics, IHS Global Insight.

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Page 1: Unemployment approaching Fed-set NAIRU - Milken Instituteassets1c.milkeninstitute.org/assets/Events/... · Unemployment approaching Fed-set NAIRU Civilian unemployment rate, NAIRU=Non-Accelerating

#MIGlobal

Unemployment approaching Fed-set NAIRUCivilian unemployment rate, NAIRU=Non-Accelerating Inflation Rate of Unemployment

0

2

4

6

8

10

12

1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Percent

Sources: Bureau of Labor Statistics, IHS Global Insight.

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#MIGlobal

Labor market gaining momentumNonfarm employment, United States

-6

-5

-4

-3

-2

-1

0

1

2

3

-1000

-800

-600

-400

-200

0

200

400

600

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Percent change, year agoDifference from previous month, thousands

Absolute change (left)

Percent change (right)

Sources: Bureau of Labor Statistics, IHS Global Insight.

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#MIGlobal

Manufacturing jobs starting to grow again, but slowlyManufacturing employment, United States

5

10

15

20

25

30

10

11

12

13

14

15

16

17

18

19

20

1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015

Manufacturing share of total nonfarm (right)

Manufacturing employees (left)

Manufacturing employees, millions Percent

Sources: Bureau of Labor Statistics, IHS Global Insight.

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#MIGlobal

Unit labor costs rising as productivity growth slowsUnited States

-6

-4

-2

0

2

4

6

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Percent change, year ago

Sources: Bureau of Labor Statistics, IHS Global Insight.

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#MIGlobal

Productivity growth slowsOutput per hour among nonfarm businesses, United States

-1

0

1

2

3

4

5

6

7

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Percent change, year ago

Sources: Bureau of Labor Statistics, IHS Global Insight.

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#MIGlobal

Weak U.S. jobs recovery compared with previous recoveriesChange in total nonfarm employment from the start of recession

-10

-5

0

5

10

15

20

0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69 72 75 78 81 84 87

Percent change, monthly

2001

1990-91

1981-82

Source: Bureau of Labor Statistics.

1973-75

2007-09

Number of months since peak of recession

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#MIGlobal

Youth labor force participation still at historic lows16-24 year olds

53

55

57

59

61

63

65

67

69

71

1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015

Percent

Sources: Bureau of Labor Statistics, IHS Global Insight.

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#MIGlobal

Labor force participation rate lowest since 1979United States

58

59

60

61

62

63

64

65

66

67

68

1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015

Percent

Source: Bureau of Labor Statistics.

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#MIGlobal

Private employment grows but government employment stagnantU.S. employment

-6

-5

-4

-3

-2

-1

0

1

2

3

4

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Private

Government

Percent change, year ago

Source: Bureau of Labor Statistics, IHS Global Insight.

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#MIGlobal

Purchasing managers index indicates continued growthU.S. ISM diffusion indices

30

35

40

45

50

55

60

65

2006 2007 2008 2009 2010 2011 2012 2013 2014

Index

Non-manufacturing

Manufacturing

Sources: Institute for Supply Management, Moody’s Analytics.

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#MIGlobal

U.S. small business mood improvesSmall business optimism Index

80

85

90

95

100

105

110

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Index

Sources: National Federation of Independent Business, IHS Global Insight.

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#MIGlobal

U.S. small businesses find less difficulty in accessing credit

-30

-25

-20

-15

-10

-5

0

5

10

15

20

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Net percent

Firms reporting credit is harder to get

Firms planning to add inventory

Sources: National Federation of Independent Business, IHS Global Insight.

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#MIGlobal

Domestic banks tighten standards, commercial and industrialNet percent of bank respondents, annual change in C&I

-30-20-10

0102030405060708090

1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Percent

Small firms

Large and medium-sized firms

Sources: Federal Reserve, IHS Global Insight.

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#MIGlobal

U.S. commercial and industrial lending

-150

-100

-50

0

50

100

150

2007 2008 2009 2010 2011 2012 2013 2014

Quarterly change, US$ billions

Sources: FDIC, IHS Global Insight.

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#MIGlobal

Consumer spending fluctuating around 4% growthPersonal consumption expenditures

-4

-2

0

2

4

6

8

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Percent change, year ago

Sources: Bureau of Economic Analysis, IHS Global Insight.

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#MIGlobal

Declining gasoline prices and severe winter curtail retail salesTotal retail sales, excluding motor vehicle and parts dealers

-15

-10

-5

0

5

10

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Percent change, year ago

Sources: Census Bureau, IHS Global Insight.

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#MIGlobal

U.S. corporate profits

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2000 2002 2004 2006 2008 2010 2012 2014

US$ trillions

Source: BEA, Bloomberg.

Note: U.S. corporate profits without IVA and CCA profits before tax, seasonally.

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#MIGlobal

Headline CPI inflation a non-issue, for nowOverall vs. core Consumer Price Index

-3

-2

-1

0

1

2

3

4

5

6

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Percent change, year ago

Overall

Less food and energy

Source: FRED.

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#MIGlobal

Oil prices plummet to recession lowsWest Texas intermediate crude

0

20

40

60

80

100

120

140

160

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

US$ per barrel

Source: Federal Reserve Bank of St. Louis.

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#MIGlobal

Extraction of natural gas and crude oil from shale drives growth in

productionUnited States, annual

1.5

2.0

2.5

3.0

3.5

15

17

19

21

23

25

27

29

31

33

1980 1984 1988 1992 1996 2000 2004 2008 2012

Trillions of cubic feet Trillions of barrels

Natural gas production (left axis)

Oil production (right axis)

Source: Energy Information Administration.

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#MIGlobal

Oil rig count falls but U.S. production increases

0

200

400

600

800

1000

1200

1400

1600

1800

0

1

2

3

4

5

6

7

8

9

10

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Oil field production (left axis)

Rotary oil rig count (right axis)

CountMillions of barrels a day

Sources: Thomson Datastream, Energy Information Administration.

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#MIGlobal

Value of the U.S. dollarTrade-weighted value of U.S. dollar against major currencies

40

50

60

70

80

90

100

110

120

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Index 1973 M3=100

Source: Thomson Datastream.

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#MIGlobal

Vacancy rates still low for apartments in U.S.

0

2

4

6

8

10

12

14

16

18

20

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Vacancy rates (percent)

Office buildings

Apartments

Retail shopping center

Sources: Thompson Datastream, REIS.

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#MIGlobal

Office construction increasingConstruction completions

0

5,000

10,000

15,000

20,000

25,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Square feet

Office building

Retail shopping center

Retail community shopping centers

Source: REIS.

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#MIGlobal

Auto sales are bright spotLight-vehicle sales, United States

8

10

12

14

16

18

20

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Millions, SAAR

Sources: Bureau of Economic Analysis, IHS Global Insight.

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#MIGlobal

Some strength in nondefense capital goods, but will it last?Value of U.S. manufacturing new orders (excluding aircraft)

-40

-30

-20

-10

0

10

20

30

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Percent change, year ago

Source: Federal Reserve Bank of St. Louis.

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#MIGlobal

Imports outpacing exports as dollar appreciates U.S. international goods and services trade

-40

-30

-20

-10

0

10

20

30

40

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Percent change year-over-year

Imports

Exports

Sources: Bureau of Economic Analysis, IHS Global Insight.

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#MIGlobal

Housing values appreciate at slower rateMedian price of existing home sales, single family

-20

-15

-10

-5

0

5

10

15

20

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Percent change, year ago

Sources: National Association of Realtors, IHS Global Insight.

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#MIGlobal

U.S. home sales show modest gainsSingle-family home sales

-60

-50

-40

-30

-20

-10

0

10

20

30

40

50

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Percent change, year ago

Sources: National Association of Realtors, IHS Global Insight.

New homes

Existing homes

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#MIGlobal

Housing starts continue to disappointUnited States

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Thousand of units

Source: Federal Reserve Bank of St. Louis.

Multi-family units

Single-family units

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#MIGlobal

Case-Shiller home price index stabilizesSeasonally adjusted

0

20

40

60

80

100

120

140

160

180

200

1987 1990 1993 1996 1999 2002 2005 2008 2011 2014

Thousands, US$

Sources: Standard and Poor’s, IHS Global Insight.

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#MIGlobal

Foreclosures decline from peak in 2009Number of new home foreclosures

0

100

200

300

400

500

600

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Thousands

Sources: Federal Reserve Bank of New York, IHS Global Insight.

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#MIGlobal

Total U.S. credit market debt

0

10

20

30

40

50

60

70

'45 '49 '53 '57 '61 '65 '69 '73 '77 '81 '85 '89 '93 '97 '01 '05 '09 '13

US$ billions

Total credit market debt owed

GDP

Debt to GDP ratio(1950-1980): 1.5

Debt to GDP ratio(2013): 3.5+

Sources: Federal Reserve, Bureau of Economic Analysis.

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#MIGlobal

U.S. households reduce financial obligationsDebt service ratio as a percent of disposable income of disposable income

4

5

6

7

8

2000 2002 2004 2006 2008 2010 2012 2014

Percent

Mortgage debt

Consumer debt

Sources: Federal Reserve, IHS Global Insight.

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#MIGlobal

Household debt fallsPercent of disposable personal income

9

10

11

12

13

14

1997 1999 2001 2003 2005 2007 2009 2011 2013

Percent

Sources: Federal Reserve, IHS Global Insight.

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#MIGlobal

U.S. consumer outstanding creditExtended to household and personal expenditures, annual change

-6

-4

-2

0

2

4

6

8

10

12

14

2000 2002 2004 2006 2008 2010 2012 2014

Percent, annual change

Sources: Federal Reserve, IHS Global Insight.

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#MIGlobal

Composition of the U.S. household debt balance

0

2

4

6

8

10

12

14

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Mortgage Auto loan HE revolving Credit card Student loan Other

US$ trillions

Source: IHS Global Insight.

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#MIGlobal

Historical trend of U.S. household financial obligation ratioU.S. household financial obligation ratio

14

15

16

17

18

19

1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013

Percent of disposable income

Source: IHS Global Insight.

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#MIGlobal

U.S. economy is still below its potential output trendReal GDP in chained 2009 U.S. dollars

10

11

12

13

14

15

16

17

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

US$ trillions

Source: Federal Reserve Bank of St. Louis.

Potential real GDP

Real GDP

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#MIGlobal

Repeated QE has led to unprecedented amount of Fed assetsTotal assets of Federal Reserve banks

0

1

2

3

4

5

2007 2009 2011 2013 2015

US$ trillions

Nov. 2008:QE1 announced

Mar. 2009:QE1 expanded

Nov. 2010:QE2 announced

Sep. 2011:“Operation Twist”

Sep. 2012QE3 announced

Dec. 2013“Tapering” begins

Source: Thompson Reuters Eikon.

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#MIGlobal

U.S. 10-year Treasury yields have dropped

-1

0

1

2

3

1M 3M 6M 1Y 2Y 3Y 5Y 7Y 10Y 30Y

Percent

1/1/15

3/20/15

Source: Bloomberg.

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#MIGlobal

Industrial production has recoveredIndustrial production Index

70

75

80

85

90

95

100

105

110

2008 2009 2010 2011 2012 2013 2014 2015

Index, 2007=100

Sources: Federal Reserve Bank, IHS Global Insight.

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#MIGlobal

High-yield corporate spreads near lowsCorporate bond spreads over U.S. Treasuries

0

100

200

300

400

500

600

700

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Basis points

A rated

Source: Bloomberg.

BBB rated

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#MIGlobal

Long-term joblessness still a challengePercent unemployed for 27 weeks or more

0

5

10

15

20

25

30

35

40

45

50

2000 2002 2004 2006 2008 2010 2012 2014

Percent

Sources: Bureau of Labor Statistics, Moody’s Analytics.

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#MIGlobal

Unemployment gap by educationJobless rates for adults 25 and older

0

2

4

6

8

10

12

14

16

18

2001 2003 2005 2007 2009 2011 2013 2015

Percent

Sources: Bureau of Labor Statistics, Moody’s Analytics.

High schooldiploma

Less than a high school diploma

Some college orassociate’s degree

Bachelor’s degree and higher

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#MIGlobal

Lower R&D expenditures inhibit U.S. competitivenessSelected countries, most recent year

0

1

2

3

4

5

Israel S. Korea Japan Finland Germany UnitedStates*

France China(People'sRepublic)

UnitedKingdom

R&D expenditures as percent of GDP

*Note: U.S. R&D expenditures are from 2012

Sources: Organisation for Economic Co-operation and Development, The World Bank.

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#MIGlobal

Durable goods lift U.S. manufacturingIndustrial production and capacity utilization, seasonally adjusted

75

80

85

90

95

100

105

110

115

2007 2008 2009 2010 2011 2012 2013 2014 2015

Index, 2007=100

Nondurable goods

Durable goods

Manufacturing

Source: Federal Reserve.

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#MIGlobal

U.S. manufacturing output above pre-recession peakProduction in manufacturing since 2007

65

70

75

80

85

90

95

100

105

110

115

2007 2008 2009 2010 2011 2012 2013 2014

Index, 12/2007=100

Source: Federal Reserve of St. Louis.

Japan

United Kingdom

United States

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#MIGlobal

Cumulative Snowfall IndexPopulation under 6” of snow

0

10

20

30

40

50

60

70

80

90

100

October November December January February March

Index (peak 2013/2014 = 100)

Average 1998-2013

2013/2014

2014/2015

Source: National Climatic Data Center.

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#MIGlobal

March high for those unable to work due to weatherDifference from historical average

-50

-40

-30

-20

-10

0

10

20

30

40

50

2010 2011 2012 2013 2014 2015

Workers, thousands

Source: Bloomberg.

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#MIGlobal

Fed Funds futures don’t see rate hike until DecemberImplied probability of target rate greater than 0.25, by 2015 meeting date

4%8%

25%

31%

50%

0

10

20

30

40

50

60

June July September October December

Percent chance

Sources: Bloomberg, Milken Institute.

As of 4/24/2015.

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#MIGlobal

Disclaimer

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MasterCard SpendingPulse™ and MasterCard Sector Insights™ reports

and content, including estimated forecasts of spending trends, (i) do not

in any way contain, reflect or relate to actual MasterCard operational or

financial performance, or specific payment-card-issuer data; and (ii) are

solely for informational purposes and shall not be relied upon by any

person for the purpose of investment or other financial decisions.

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US Gasoline Prices

Gasoline prices are now down 33.5% year over year,

granting the consumer additional spending power

Source: SpendingPulse™

-40%

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

$-

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

2015-042015-032015-022015-012014-122014-112014-10

US Average Regular Gasoline Price/Gal Y/Y Change in Gasoline Average Price/Gal

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US Y/Y Total Retail Sales Growth (ex. Auto)

Total Retail sales grew by 1.2% year-over-year in March.

Excluding gasoline, retail sales grew by 4.8% showing the gasoline

savings are now being spent by the consumer

Source: SpendingPulse™

0%

1%

1%

2%

2%

3%

3%

4%

4%

5%

5%

Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15

US Y/Y Total Retail Sales Growth x-Auto

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US Y/Y Total Retail Sales Growth (ex. Auto+ex.Gas)

0%

1%

2%

3%

4%

5%

6%

7%

US Y/Y Total Retail Sales Growth x-Auto x-Gas

Total Retail xGas sales grew by 4.8% year-over-year in March.

Including gasoline, retail sales grew by 1.2%

Source: SpendingPulse™

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0%

1%

2%

3%

4%

5%

6%

7%

US Y/Y Total Retail Sales Growth x-Auto US Y/Y Total Retail Sales Growth x-Auto + x-Gas

US Y/Y Total Retail Sales Growth

Total Retail sales grew by 1.2% year-over-year in March.

Excluding gasoline, retail sales grew by 4.8%

Source: SpendingPulse™

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US Y/Y Small Business Sales Growth

Small Business Retail xGas sales grew by 7.5% year-over-year

in March. Including gasoline, retail sales grew by 6.5%

Source: SpendingPulse™

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

US Y/Y Small Business Total Retail Sales Growth x-Auto xAuto - xGas

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Regional US Y/Y YTD Total Retail Sales Growth(ex. Auto)

The Southeast

continues to be a

leading sales region,

while the Northeast

continues to lag.

Source: SpendingPulse™

-10% +10%-5% 0% +5%

Northeast

Mid-Atlantic

Southeast

Pacific

Mountain

South Central

Great Plains North CentralGreat Plains North Central

5.7%

7.2%

14.9%

6.9%

4.1%

0.0%

Region Yr/Yr Sales

Growth

Share of

Total Sales

March 2015

Northeast

Mid-Atlantic

Southeast

North Centra l

South Centra l

Great Pla ins

Mountain

Paci fic

-3.7%

-1.3%

6.4%

-2.3%

3.3%

13.0%

12.6%

14.8%

12.9%

18.7%

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Leading

Hardware +8.3%

Grocery +8.0%

Restaurant +7.4%

Lagging

Department Stores +1.0%

Luxury excl. Jewelry (3.0%)

Automotive (3.9%)

SectorsYear-over-Year

March 2015

US Sector Performance

Hardware, Grocery, and

Restaurant were the

leading sectors for the

month of March 2015,

with luxury continuing to

underperform

Source: SpendingPulse™

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US Automotive Repairs and Tires Y/Y Sales Growth

6 months of negative Auto repairs and tires shows the

increasing new auto purchases

Source: SpendingPulse™

-8%

-6%

-4%

-2%

0%

2%

4%

6%

Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

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US Auto Sales

The number of cars sold increased over 40% from early 2010.

Source:Various publicly available sources

0

2

4

6

8

10

12

14

16

US Auto Sales Annualized SA

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U.S. Housing Turnover

The recent improvement in housing statistics is a positive

for future spend on home related sectors.

Source: Various publicly available sources

-10%

-5%

0%

5%

10%

15%

20%

25%

Housing Turnover Y/Y Growth

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Hardware sales grew by 8.3% year-over-year in March

Source: SpendingPulse™

US Hardware Y/Y Sales Growth

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

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US Appliance Y/Y Sales Growth

Appliance sales have been volatile and largely

declining year over year.

Source: SpendingPulse™

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

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US Furniture and Furnishings Y/Y Sales Growth

Furniture & Furnishings combined sales grew by

8.4% year-over-year in March, showing that consumers are

making more larger ticket purchases

Source: SpendingPulse™

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

Furniture Y/Y Sales Growth Furnishings Y/Y Sales Growth

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US Consumer Airlines Y/Y Sales Growth

The consumer continues to travel

demonstrating experiential spending

Source: SpendingPulse™

0.0%

-5%

-4%-3%

-2%

-1%

0%1%

2%3%

4%5%

6%

Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

Airlines Y/Y Sales Growth Airlines Y/Y Price Index Growth

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US Consumer Lodging Y/Y Sales Growth

The strength in lodging outpaces airlines sales,

reflecting both driving and flying vacations by the consumer

Source: SpendingPulse™

0%

2%

4%

6%

8%

10%

12%

Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

Lodging Y/Y Sales Growth Lodging Y/Y Price Index Growth

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US Restaurant Y/Y Sales Growth

The strength in restaurant sales continues to improve each month,

reflecting the traveling consumer and the experiential spender

Source: SpendingPulse™

0%

1%

2%

3%

4%

5%

6%

7%

8%

Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

Restaurant Y/Y Sales Growth

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Grocery sales grew by 8.0% year-over-year in March

Source: SpendingPulse™

US Grocery Y/Y Sales Growth

-2%

0%

2%

4%

6%

8%

10%

Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

Grocery Store Y/Y Sales Growth

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US Fine Dining Restaurants Sales

Restaurant segment year-over-year growth rates in March:

Overall: +7.4% Fine Dining: +3.7%

Fine Dining continues to lag in growth versus other categories

Source: SpendingPulse™

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

Overall Restaurants Fine Dining

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0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

Casual Dining Y/Y Sales Growth Fast Casual Y/Y Sales Growth Quick Service Y/Y Sales Growth

US Fast Casual, Casual Dining and Quick Service Restaurants Sales

Restaurant segment year-over-year growth rates in March:Casual Dining: +6.0% | Fast Casual: +14.1% | Quick Service: +7.9%

Source: SpendingPulse™

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US Total Apparel Y/Y Sales Growth

Specialty Apparel sales grew by 6.1% year-over-year in

March, demonstrating sustained growth over a number of months

Source: SpendingPulse™

72

-4%

-2%

0%

2%

4%

6%

8%

Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

Apparel Y/Y Sales Growth Apparel Y/Y Price Index Growth

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US Footwear Y/Y Sales Growth

Footwear sales grew by 4.9% year-over-year in March,

demonstrating the unique nature of accessories

Source: SpendingPulse™

-4%

-2%

0%

2%

4%

6%

8%

Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

Footwear Y/Y Sales Growth Apparel Y/Y Sales Growth

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US Jewelry Y/Y Sales Growth

Jewelry sales grew by 1.0% year-over-year in March,

making it the 25th consecutive month of year over year growth

Source: SpendingPulse™

0%

1%

2%

3%

4%

5%

6%

Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

Jewelry Y/Y Sales Growth

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Jewelry segment year-over-year growth rates in March:

Overall: +1.0%Independent: +0.1%

Source: SpendingPulse™

US Independent Jeweler Y/Y Sales Growth

0%

1%

2%

3%

4%

5%

6%

Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

Overall Jewelry Independent Jewelers

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US High-Tier Jewelry Y/Y Sales Growth

Jewelry segment year-over-year growth rates in March:

Overall: +1.0% High-Tier: +0.5% - This is one of the few months

that high-tier jewelry has lagged in its growth rate

Source: SpendingPulse™

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

Overall Jewelry High-Tier Jewelry

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US Luxury excl. Jewelry Y/Y Sales Growth

Luxury sales declined by 3.0% year-over-year in

March, again showing that the affluent consumer is

not traditionally spending

Source: SpendingPulse™

-4%

-2%

0%

2%

4%

6%

8%

10%

Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

Luxury excl. Jewelry Y/Y Sales Growth

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-4%

-2%

0%

2%

4%

6%

8%

10%

12%

Monthly Sales Index Year-over-Year Change

Sales Index 3 Month Moving Average (Sales Index)

US Luxury Goods & Accessories Total Sales

The recent recovery in luxury spending

had been focused on only a few select brands

Source: SpendingPulse™

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-20%

-10%

0%

10%

20%

30% Monthly Sales Index Year-over-Year Change

Sales Index 3 Month Moving Average (Sales Index)

US Luxury Retail eCommerce

Using a more concentrated view we see,

the concentration of the consumer on fewer brands

Source: SpendingPulse™

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US Department Store Y/Y Sales Growth

Department Store sales finally reversed their negative

trend benefiting from the early Easter, however they are not

the preferred channel for purchases

Source: SpendingPulse™

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

Department Store Y/Y Sales Growth

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US eCommerce Y/Y Sales Growth

eCommerce sales share of total retail sales is 6.7% YTD

in retail 2015, with the growth rates again in single digits

Source: SpendingPulse™

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2015 YTD20142013201220112010

US eCommerce Share of Total Retail Sales US eCommerce YY Growth

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eCommerce sales grew by 8.9% year-over-year in March,

the fifth month of single digit growth

Source: SpendingPulse™

0%

2%

4%

6%

8%

10%

12%

14%

16%

Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

eCommerce Y/Y Sales Growth

US eCommerce Y/Y Sales Growth

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More generic

sectors, such as

electronics and

children’s apparel

are the clear

leaders in

eCommerce

growth

Total eCommerce +8.9%

Leading

Women's Apparel +23.1%

Children's Apparel +21.0%

Electronics +12.0%

Lagging

Jewelry +1.5%

Footwear Apparel +1.2%

Family Apparel +0.5%

SectorsYear-over-Year

March 2015

US eCommerce Sector Performance

Source: SpendingPulse™

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US eCommerce Y/Y Sales Growth

eCommerce Shares are growing but at a slower pace

Source: SpendingPulse™

84

In Store

eCommerce

Channel Share

by Sector for

Mar. 2015

Total U.S. Retail Sales x Auto

6.5%

93.5%

Jewelry

17.5%

82.5%

Electronics & Appliances

48.3%

51.7%

Department Store

16.8%

83.2%

In Store

Children's Apparel

Family Apparel

Women's Apparel

Footwear

All Other

Apparel

74.4%

25.6%

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US Dept. Stores eCommerce vs Bricks & Mortar

Department Store sales finally reversed their negative trend

benefiting from the early Easter, however they are not the

preferred channel for purchases

Source: SpendingPulse™

85

-10%

-5%

0%

5%

10%

15%

20%

25%

Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

US Dept Store eCommerce YY Sales GrowthUS Dept Store Brick & Mortar Y/Y Sales Growth

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UK Y/Y Total Retail Sales Growth (ex. Auto)

The UK Consumer continued to reflect the rebound in the economy

taking advantage of both an early Easter and Mothers Day

Source: SpendingPulse™

86

0%

1%

2%

3%

4%

5%

6%

7%

UK Y/Y Total Retail Sales Growth - Nominal, Not Adjusted

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-1%

0%

1%

2%

3%

4%

5%

6%

Canada Y/Y Total Retail Sales Growth x-Auto

Canada Y/Y Total Retail Sales Growth(ex. Auto)

Total Retail sales grew by 1.6% year-over-year in March,

but was positive mostly due to the early Easter shift

Source: SpendingPulse™

87

1.6%

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-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

Brazil Y/Y Total Retail Sales Growth (Volume of Sales)

Brazil Y/Y Total Retail Sales Growth

Brazilian total retail sales rose 4.1% in March 2015,

reflecting 2 additional sales days in March due to an earlier Carnival

Source: SpendingPulse™

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Hong Kong Y/Y Total Retail Sales Growth (Nominal Not Adjusted)

Hong Kong Y/Y Total Retail Sales Growth

Total Retail sales grew by 5.8% year-over-year in February, reflecting

the shift in the Lunar New Year to February from January

Source: SpendingPulse™

89

5.8%

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Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15

Hong Kong Jewellery Y/Y Sales Growth (Not Adjusted)

Hong Kong Jewelry Y/Y Sales Growth

Jewellery sales declined by 9.4% year-over-year in February,

showing renewed concern by the tourist consumer

Source: SpendingPulse™

-9.4%

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Learn more at:

Sarah Quinlan

[email protected]

(914) 249 – 2069

www.mastercardadvisors.com