Release Date: June 9, 2009

JUNE 2009

Modest Growth, Higher Unemployment Predicted for Second Half of 2009

The 32 participants in the June Livingston Survey have lowered their estimates of output growth through 2009. The
forecasters, who are surveyed by the Federal Reserve Bank of Philadelphia twice a year, project that the economy’s output
(real GDP) will fall at an annual rate of 3.9 percent in the first half of 2009 and then rise by 1.1 percent in the second half.
Both of these estimates are lower than those of the previous survey. Growth for the first half of 2010 is predicted to
improve to 2.6 percent.

Projections for the unemployment rate have been revised upward throughout 2009 and are expected to remain high into
the middle of 2010. The forecasters predict that the unemployment rate will be 9.3 percent in June 2009 and will rise to
9.9 percent in December 2009. The unemployment rate in the middle of 2010 is expected to be 9.8 percent. On an annual
average basis, the unemployment rate is expected to be 9.1 percent in 2009 and 9.7 percent in 2010.

Growth Rate of
Real GDP (%) Unemployment Rate (%)
Previous New Previous New
Half-year data:
2008 Q4 to 2009 Q2 -0.9 -3.9 June 2009 7.6 9.3
2009 Q2 to 2009 Q4 1.8 1.1 December 2009 7.8 9.9
2009 Q4 to 2010 Q2 N.A. 2.6 June 2010 N.A. 9.8

Inflation Predictions Revised Downward

The forecasters have lowered their predictions for consumer price (CPI) inflation over the next six months to 1.4 percent,
compared to 2.1 percent from the survey of six months ago. On an annual average basis, CPI inflation is expected to be -
0.7 percent in 2009 and 1.7 percent in 2010, both lower than the previous estimates of 0.5 percent and 2.1 percent,
respectively. Producer price (PPI) inflation is expected to be -3.6 percent in 2009 and then rise to 1.3 percent in 2010,
compared to the previous estimates of -0.8 percent and 1.1 percent, respectively.

CPI Inflation (%) PPI Inflation (%)

Previous New Previous New
Annual average data:
2008 to 2009 0.5 -0.7 -0.8 -3.6
2009 to 2010 2.1 1.7 1.1 1.3
Projections for Interest Rates Revised Downward
The forecasts for interest rates on three-month Treasury bills and 10-year Treasury notes have fallen from those made six
months ago. The interest rate on three-month Treasury bills is expected to be 0.20 percent at the end of June, down from
the previous estimate of 0.50 percent. It is then expected to rise to 0.30 percent by the end of 2009. The interest rate for
10-year Treasury notes is expected to be 3.35 percent at the end of June, down from the previous estimate of 3.50 percent.
It is then expected to rise to 3.75 percent by the end of 2009, lower than the previous estimate of 4.00 percent.

3-Month Treasury Bill 10-Year Treasury Bond

Interest Rate Interest Rate
Previous New Previous New

June 30, 2009 0.50 0.20 3.50 3.35

Dec. 31, 2009 1.00 0.30 4.00 3.75
June 30, 2010 N.A. 0.54 N.A. 4.00
Dec. 31, 2010 2.45 1.19 4.70 4.28

2009 Livingston Survey Participants

S. Anderson Wells Fargo and Company D. Maki Barclays Capital

E. Beeson Zentner Bank of Tokyo-Mitsubishi, Ltd. E. McKelvey Goldman Sachs
R. Berner Morgan Stanley & Co. M. Moran Daiwa Securities America
J. Butkiewicz University of Delaware J. Mueller LBMC, LLC
J. Carson Alliance Capital Management F. Nothaft Federal Home Loan Mortgage Corp.
R. Chase Chase Economics M. Regalia U.S. Chamber of Commerce
R. Dhawan Georgia State University D. Seiders National Association of Home Builders
M. Englund Action Economics, LLC J. Silvia Wachovia Corporation
S. Gallagher Societe Generale A. Sinai Decision Economics, Inc.
K. Goldstein The Conference Board J. Smith Parsec Financial Management, Inc.
J. Gonzalez Tennessee Valley Authority S. Snaith University of Central Florida
B. Horrigan Loomis Sayles & Co. S. Stanley RBS Greenwich Capital
P. Hooper Deutsche Bank D. Torgerson USDA
D. Knop Williams Gas Pipeline Corp. B. Wesbury First Trust Advisors, L.P.
T. Lam United Overseas Bank, Ltd. R. Yamarone Argus Research Group
E. Leamer University of California, Los Angeles L. Yun National Association of Realtors
J. Lonski Moody's Investors Service, Inc.

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Slight Change in the Long-Term Outlook
The forecasters’ predictions of long-term output growth are slightly higher, while their predictions for long-term inflation
continue to hold steady. The panelists think that real GDP will grow 2.7 percent annually over the next 10 years, up from
2.6 percent in the previous survey. Inflation (measured by the consumer price index) is expected to average 2.5 percent
over the next 10 years, unchanged from the last 15 surveys dating back to December 2001.

Stock-Price Projections Revised Downward

The projected value for the S&P 500 index is 935.8 for the end of June and is expected to rise to 1000.0 by the end of
2009, below the previous estimates of 950.0 and 1052.5, respectively. The index is expected to finish 2010 at 1115.0, also
short of the previous estimate of 1165.0.

Stock Prices (end of year)

S&P 500 Index
Previous New

June 30, 2009 950.0 935.8

Dec. 31, 2009 1052.5 1000.0
June 30, 2010 N.A. 1049.4
Dec. 31, 2010 1165.0 1115.0

Technical Notes
This news release reports the median value across the 32 forecasters on the survey’s panel.

The Philadelphia Fed’s Livingston Survey is the oldest continuous survey of economists’ expectations. The survey
was started in 1946 by the late columnist Joseph A. Livingston. It summarizes the forecasts of economists from
industry, government, banking, and academia. It is published twice a year, in June and December.

To subscribe to the survey, go to: http://www.philadelphiafed.org/philscriber/user/dsp_content.cfm. This four-page

write-up contains partial results of the survey; more detailed tables are available. These tables can be accessed on the
Internet at: http://www.philadelphiafed.org/research-and-data/real-time-center/livingston-survey/.

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 LIVINGSTON SURVEY
MAJOR MACROECONOMIC INDICATORS, 2009-2010

Q4 2008 Q2 2009 Q4 2009 2008 2009

QUARTERLY INDICATORS TO TO TO TO TO
(percentage changes at annual rates) Q2 2009 Q4 2009 Q2 2010 2009 2010

Real Gross Domestic Product -3.9 1.1 2.6 -2.8 1.9

Nominal Gross Domestic Product -2.2 2.7 4.1 -1.2 3.6

Nonresidential Fixed Investment -27.7 -8.4 1.6 -19.5 -1.9

Corporate Profits After Taxes -3.8 5.7 9.7 -11.6 7.5

DEC 2008 JUN 2009 DEC 2009 2008 2009

MONTHLY INDICATORS TO TO TO TO TO
(percentage changes at annual rates) JUN 2009 DEC 2009 JUN 2010 2009 2010

Industrial Production -11.4 0.0 2.8 -10.9 1.0

Producer Prices - Finished Goods 1.1 1.6 2.1 -3.6 1.3

Consumer Price Index (CPI-U) 1.6 1.4 2.1 -0.7 1.7

Average Weekly Earnings in Mfg. -6.7 0.5 1.9 -2.2 1.0

Retail Trade 1.4 3.1 6.0 -7.0 3.9

(levels of variables) JUN 2009 DEC 2009 JUN 2010 2009 2010

Total Private Housing Starts 0.494 0.574 0.704 0.522 0.753

(annual rate, millions)

Unemployment Rate 9.3 9.9 9.8 9.1 9.7

(percent)

Automobile Sales (incl. foreign) 4.9 5.4 5.9 5.0 6.1

(annual rate, millions)

FINANCIAL INDICATORS
(levels of variables at end of month) JUN 2009 DEC 2009 JUN 2010 DEC 2010

Prime Interest Rate 3.25 3.25 3.42 4.13

10-Year Treasury Note Yield 3.35 3.75 4.00 4.28

3-Month Treasury Bill Rate 0.20 0.30 0.54 1.19

Stock Prices (S&P500) 935.8 1000.0 1049.4 1115.0

LONG-TERM OUTLOOK
Average Annual Growth Rate for the Next Ten Years

Real GDP 2.7

Consumer Price Index 2.5

Source: Research Department, Federal Reserve Bank of Philadelphia, Livingston Survey, June 2009

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 LIVINGSTON SURVEY

June 2009

Tables

Note: Data in these tables listed as “actual” are the data that were available to the forecasters when they were sent the survey
questionnaire on May 20; the tables do not reflect subsequent revisions to the data. All forecasts were received on or before
June 3.
 TABLE ONE
MAJOR MACROECONOMIC INDICATORS, 2009-2010
MEDIANS OF FORECASTER PREDICTIONS

NUMBER
OF FORE- ACTUAL FORECASTS ACTUAL FORECASTS
QUARTERLY INDICATORS CASTERS 2008 Q4 2009 Q2 2009 Q4 2010 Q2 2008 2009 2010

1. Real Gross Domestic Product 32 11522.1 11294.3 11357.0 11503.3 11652.0 11330.0 11545.6
(billions, chain weighted)

2. Nominal Gross Domestic Product 32 14200.3 14041.4 14227.8 14518.7 14264.6 14094.2 14598.0
($ billions)

3. Nonresidential Fixed Investment 30 1341.1 1140.3 1091.2 1099.7 1405.4 1131.9 1110.1
(billions, chain weighted)

4. Corporate Profits After Taxes 22 1001.2 982.2 1009.7 1057.7 1109.9 981.2 1054.9
($ billions)

ACTUAL FORECASTS ACTUAL FORECASTS

MONTHLY INDICATORS DEC 2008 JUN 2009 DEC 2009 JUN 2010 2008 2009 2010

5. Industrial Production 28 102.4 96.4 96.3 97.7 108.8 97.0 97.9

(2002=100)

6. Total Private Housing Starts 28 0.556 0.494 0.574 0.704 0.900 0.522 0.753
(annual rate, millions)

7. Producer Prices - Finished Goods 26 169.7 170.6 172.0 173.8 177.3 171.0 173.1
(index level)

8. Consumer Price Index (CPI-U) 29 211.6 213.3 214.8 217.0 215.2 213.6 217.2
(index level)

9. Unemployment Rate 29 7.2 9.3 9.9 9.8 5.8 9.1 9.7

(percent)

10. Average Weekly Earnings in Mfg. 11 727.8 703.0 704.6 711.3 724.3 708.2 715.0
($)

11. Retail Trade 18 336.4 338.8 344.0 354.1 367.0 341.3 354.7
($ billions)

12. Automobile Sales (incl. foreign) 20 5.2 4.9 5.4 5.9 6.7 5.0 6.1
(annual rate, millions)
 TABLE ONE (CONTINUED)

ACTUAL FORECASTS
INTEREST RATES & STOCK PRICES DEC 2008 JUN 2009 DEC 2009 JUN 2010 DEC 2010
(end of period)

13. Prime Interest Rate 28 3.25 3.25 3.25 3.42 4.13

(percent)

14. 10-Year Treasury Note Yield 29 2.25 3.35 3.75 4.00 4.28
(percent)

15. 3-Month Treasury Bill Rate 29 0.11 0.20 0.30 0.54 1.19
(percent)

16. Stock Prices (S&P500) 18 903.3 935.8 1000.0 1049.4 1115.0

(index level)

Source: Research Department, Federal Reserve Bank of Philadelphia, Livingston Survey, June 2009
 TABLE TWO
MAJOR MACROECONOMIC INDICATORS, 2009-2010
PERCENTAGE CHANGES AT ANNUAL RATES

NUMBER Q4 2008 Q2 2009 Q4 2009 2008 2009

OF FORE- TO TO TO TO TO
QUARTERLY INDICATORS CASTERS Q2 2009 Q4 2009 Q2 2010 2009 2010

1. Real Gross Domestic Product 32 -3.9 1.1 2.6 -2.8 1.9

2. Nominal Gross Domestic Product 32 -2.2 2.7 4.1 -1.2 3.6

3. Nonresidential Fixed Investment 30 -27.7 -8.4 1.6 -19.5 -1.9

4. Corporate Profits After Taxes 22 -3.8 5.7 9.7 -11.6 7.5

DEC 2008 JUN 2009 DEC 2009 2008 2009

TO TO TO TO TO
MONTHLY INDICATORS JUN 2009 DEC 2009 JUN 2010 2009 2010

5. Industrial Production 28 -11.4 0.0 2.8 -10.9 1.0

6. Total Private Housing Starts 28 -0.062 0.080 0.130 -0.378 0.231

7. Producer Prices - Finished Goods 26 1.1 1.6 2.1 -3.6 1.3

8. Consumer Price Index (CPI-U) 29 1.6 1.4 2.1 -0.7 1.7

9. Unemployment Rate 29 2.1 0.6 -0.1 3.3 0.6

10. Average Weekly Earnings in Mfg. 11 -6.7 0.5 1.9 -2.2 1.0

11. Retail Trade 18 1.4 3.1 6.0 -7.0 3.9

12. Automobile Sales (incl. foreign) 20 -0.3 0.5 0.5 -1.7 1.0
 DEC 2008 JUN 2009 DEC 2009 JUN 2010
TO TO TO TO
INTEREST RATES & STOCK PRICES JUN 2009 DEC 2009 JUN 2010 DEC 2010

13. Prime Interest Rate 28 0.00 0.00 0.17 0.70

14. 10-Year Treasury Note Yield 29 1.10 0.40 0.25 0.28

15. 3-Month Treasury Bill Rate 29 0.09 0.10 0.24 0.65

16. Stock Prices (S&P500) 18 7.3 14.2 10.1 12.9

Note: Figures for housing starts, unemployment rate, auto sales, prime interest rate, 30-year Treasury bond,
and 90-day Treasury bill are changes in levels. All others are percentage changes at annual rates.

Source: Research Department, Federal Reserve Bank of Philadelphia, Livingston Survey, June 2009
 TABLE THREE
LONG-TERM (10 YEAR) FORECASTS

__________________________________

SERIES: CPI Inflation Rate

__________________________________

STATISTIC
Minimum 1.00
Lower Quartile 1.99
Median 2.45
Upper Quartile 2.80
Maximum 3.50

Mean 2.36
Std. Deviation 0.60

N 31
Missing 1

__________________________________

__________________________________

SERIES: Real GDP

__________________________________

STATISTIC
Minimum 2.00
Lower Quartile 2.40
Median 2.68
Upper Quartile 2.95
Maximum 3.50

Mean 2.68
Std. Deviation 0.38

N 31
Missing 1

__________________________________

Source: Research Department, Federal Reserve Bank of Philadelphia, Livingston Survey, June 2009