Exhibit 31: US Cyclical Spending Exhibit 32: US Inflation There is scope for business and consumer spending to Normalizing energy prices account for much of the inflation increase in the US economy. increase we expect. % of Potential GDP ——-——— US Cyclical Spending - — — — - Average Recession % YoY 32 45 Mm Energy Contribution to Headline Inflation forecast rare = = = = = Headline Inflation 30 3 ' Core Inflation* t lt : 28 \¢ " | ~ 24 2 OFS $>. pe | Zz SN oe \¢ op~Vi ply Wge___\ ff VPA i A 1 | 1 ra - 24 ‘ ‘ 23.6 \ 0 | oe —— -° dnt. ” | pu 20 1 18 2 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2011 2012 2013 2014 2015 2016 2017 Data through 03 2016. Data as of 03 2016. Note: 4-quarter average. Cyclical spending is business fixed investment plus consumer Note: ISG forecasts from 04 2016. For informational purposes only. There can be no assurance durables spending. the forecasts will be achieved. Source: Investment Strategy Group, Datastream. Source: Investment Strategy Group, Datastream. * Core inflation excludes food and energy. three culprits: economic imbalances, excessive Federal Reserve tightening and/or exogenous Exhibit 33: US Unemployment Indicators shocks (most commonly in the form of spiraling There are still signs of slack in the labor market. oil prices). % % As we survey these risks today, none are 14 — Overall Employment Population Ratio (Right, Inverted) 55 . F C - — —-—- Unemployment Rate particularly alarming. The depth of the financial » NITRA) ite UnaIaaGA crisis and the lackluster pace of the recovery have po allowed the US to avoid the imbalances that would — 0 se typically be evident this far into an expansion (see ; " = x 4 “ Section I of this year’s Outlook). If anything, there ng a. ‘, Hs is scope for spending in cyclical parts of the US 6 of — Nee od ‘, , ale e r] < economy relative to overall GDP to move toward ‘ “ren *% 63 . ot 3 4 acy) its long-term average (see Exhibit 31). There is also less risk of disruptive Federal 2 8 Reser