Gus Faucher Stuart Hoffman William Adams Kurt Rankin Mekael Teshome Chief Economist Senior Economic Advisor Senior Economist Economist Economist

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1 21, 2017 Gus Faucher Stuart Hoffman William Adams Kurt Rankin Mekael Teshome Chief Economist Senior Economic Advisor Senior Economist Economist Economist Housing starts rose 8.3 percent in to million at a seasonally-adjusted annualized rate. Singlefamily starts rose 6.3 percent to 849,000, while multifamily (apartment and condominium) starts rose 13.3 percent to 366,000. May starts were revised higher, to million from million. Housing permits also rose in, up 7.4 percent to million at a seasonally-adjusted annualized rate. Single-family permits rose 4.1 percent to 811,000, while multifamily permits rose 13.9 percent to 443,000. May permits were unrevised at million. After a few soft months, housing starts and permits both bounced back in. Housing starts rose to their highest level since February, and permits to their highest level since March. The first quarter was strong for homebuilding because of unseasonably warm weather that allowed projects to get started earlier than usual, but that weighed on construction in the spring. Now it appears that homebuilding is responding to stronger demand, in particular for single-family homes. Homebuilding will likely be a drag on GDP growth in the second quarter, because of a drop in starts in April and May, but should add to growth in the second half of the year. The fundamentals for residential construction are good: households are more interested in homeownership eight years into the economic expansion, affordability is high, mortgage rates are low, the job market is solid, consumer credit is in excellent shape, and lenders are more willing to offer mortgages. Building would be even stronger were it not for shortages of skilled construction workers and a lack of developable land in some parts of the country. PNC is forecasting total housing starts of million this year, up 3.7 percent from Starts are expected to rise an additional 5.9 percent next year, to million, given continued economic expansion and solid fundamentals for the housing market. The Index of Leading Indicators rose by a solid 0.6 percent in, its biggest rise since January, and is up 3.3 percent from a year ago. This fairly reliable indicator is flashing green for continued moderate economic growth for at least the next year. Warnings that the U.S. economy is close to recession by perennially bearish stopped clocks economic and market forecasters should be ignored once again by longer term investors. Fed Funds Rate Target Range Mid-Point (after the FOMC meeting on 7/26/17) Range: 1.00 to 1.25 percent Median: percent 0.88% FOMC likely to give a clear signal next Wednesday that they will agree to start to normalize ( shrink ) the balance sheet at their September meeting. No rate hike until their December meeting, assuming inflation awakens from its spring slumber in the summer and autumn months, as we expect.

2 21, 2017 Existing Home Sales (7/24, Monday) Range: to million Median: million Consumer Confidence (7/25, Tuesday) Range: to Median: New Home Sales (7/26, Wednesday) Range: to million Median: million Durable Goods Orders (7/27, Thursday) Range: -0.2 to 7.5 percent Median: 2.8 percent Advance Trade in Goods (7/27,Thursday) Range: -$67.4 to -$58.0 billion Median: -$65.0 billion Q2 GDP Advance Report (7/28, Friday) Range: 2.3 to 3.0 percent Median: 2.5 percent Q2 Chain Price Index Advance Report (7/28, Friday) Range: 0.8 to 1.9 percent Median: 1.4 percent Q2 Employment Cost Index (7/28,Friday) Range: 0.4 to 0.7 percent Median: 0.6 percent 5.620M M -0.8% -$66.3B 1.4% 1.9% 0.8% Up to 5.65 million. Held down by limited supply of homes for sale. Existing home median price up close to 6 percent from a year ago. Down to but still at a high level consistent with solid consumer spending this summer. Unchanged at 610K. Up 1.5 percent on strength in civilian aircraft orders. Shipments up 0.2 percent. Extransportation orders and shipments both up 0.3 percent. A slight narrowing to -$65.7 billion on lower imported oil costs. Up 2.7 percent with real consumer spending also up 2.7 percent. Up 0.8 percent. Up 0.6 percent and up 2.5 percent from a year ago. This is in line with the 2.5 percent rise in average hourly wages in the second quarter from a year ago. U. Mich. Consumer Sentiment (final) (7/28, Friday) Range: 92.6 to 93.7 Median: A slight uptick to Personal Income (8/1, Tuesday) Range: 0.2 to 0.4 percent Median: 0.3 percent 0.4% Up 0.2 percent.

3 21, 2017 Personal Consumption Expend. (8/1, Tuesday) Range: 0.1 to 0.2 percent Median: 0.2 percent ISM (Manufacturing) (8/1, Tuesday) Range: 55.5 to 57.7 percent Median: 56.5 percent Construction Spending (8/1, Tuesday) Range: 0.2 to 0.5 percent Median: 0.4 percent ADP Employment Survey (8/2, Wednesday) Range: 145,000 to 200,000 Median: 180,000 Factory Orders (8/3, Thursday) Range: 0.7 to 4.0 percent Median: 1.0 percent ISM-NMI (8/3, Thursday) Range: 56.0 to 57.7 percent Median: 56.9 percent Nonfarm Payrolls Range: 175,000 to 218,000 Median: 190,000 Private Nonfarm Payrolls Range: 172,000 to 210,000 Median: 184,000 Manufacturing Payrolls Range: -3,000 to 10,000 Median: 4,000 Unemployment Rate Range: 4.3 to 4.4 percent Median: 4.3 percent 0.1% 57.8% 0.0% 158K -0.8% 57.4% 222K 187K 1K 4.4% Up 0.1 percent. The total and core PCE price index is unchanged and up 0.1 percent, respectively. Down to a still strong 56. Up 0.5 percent including a solid gain in state and local government spending on highway, street and bridge construction. Orange barrels everywhere! Up 185,000. Up 1.0 percent. Shipments up 0.3 percent. Down to a still strong Up 180,000. Up 175,000. Down 3,000. Production and job cutbacks in the auto industry this month to reduce excessive inventories, especially of cars. Down to 4.3 percent. The household measure of jobs up 160,000 and labor force up 100,000.

4 21, 2017 Hours Worked Range: 34.4 to 34.5 hours Median: 34.5 hours Average Hourly Earnings Range: 0.2 to 0.4 percent Median: 0.3 percent Trade Balance Range: to billion Median: billion 34.5 hrs 0.2% -$46.5B Unchanged at Up 0.4 percent. AHE tend to jump in. The rise from a year ago would stay at 2.5 percent. A slight narrowing to -$46.0 billion. Visit to view the full listing of economic reports published by PNC s economists. Disclaimer: The material presented is of a general nature and does not constitute the provision of investment or economic advice to any person, or a recommendation to buy or sell any security or adopt any investment strategy. Opinions and forecasts expressed herein are subject to change without notice. Relevant information was obtained from sources deemed reliable. Such information is not guaranteed as to its accuracy. You should seek the advice of an investment professional to tailor a financial plan to your particular needs The PNC Financial Services Group, Inc. All rights reserved.

5 0Ok,1 Gus Faucher Stuart Hoffman William Adams Kurt Rankin Mekael Teshome Chief Economist Senior Economic Advisor Senior Economist Economist Economist /Aug 2017 MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY Import Prices EXISTING HOME SALES(000) Apr 5,560 May 5, CASE-SHILLER HPI 20-City Composite(SA) M/M Y/Y Mar 0.5% 5.9% Apr May CB CONSUMER CONFIDENCE Total Current Expect May HOUSING(000) Starts Permits Apr 1,154 1,228 May 1,122 1,168 1,215 1, NEW HOME SALES(000) Apr 593 May 610 LEADING INDICATORS Apr 0.2% May Philly Fed Survey () ADV DURABLE GOODS GROSS DOMESTIC PRODUCT Total Ex-Transp 2nd Qtr (1st estimate) Apr -0.9% -0.5% Real GDP Price Index May Q % 2.3% 3Q Q Q Q 17(1 st ) Employment Cost Index Total W&S Fringes 2Q Q Q Q Q FOMC Statement 2pm U of M Consumer Sentiment (Final) 31 Aug 1 PERSONAL Income Spending Apr May MANUFACTURERS Ship Inv Orders Apr 0.0% 0.0% -0.3% May EMPLOYMENT REPORT U.Rate Jobs(000) May Chicago PMI () ISM MFG INDEX May 54.9% 57.8 CONSTRUCTION SPENDING Apr -0.7% May 0.0 Autos Light Dom For Truck Total May ADP Employment ISM NON-MFG INDEX May UNEMPLOYMENT CLAIMS(000) May Aug TRADE BALANCE ($B) Apr -$47.6 May CONSUMER CREDIT($B) Apr May Nonfarm Business (Q2 1st Estimate) Productivity & Costs Productivity Unit Labor Costs 2Q Q Q Q Q PRODUCER PRICE INDEX Total Core May 0.0% -0.1% CONSUMER PRICE INDEX Total Core May -0.1% 0.1% Federal Budget ().