Exhibit 25: Conference Board Consumer Confidence Index
The labor market recovery has led to a steady increase in consumer confidence.
Index Points 160
140
20 113.7
91.5
Conference Board Consumer Confidence G4 —« Historical Average Post-Global Financial Crisis Average
0 = 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014
Data through December 2016. Note: Series starts in January 1978. Post-GFC average begins in July 2009. Source: Investment Strategy Group, Datastream.
Exhibit 26: Gallup Poll on Satisfaction With the Direction of the US
Dissatisfaction remains at a very high level, similar to that at the beginning of the global financial crisis.
% of Respondents 100
90 80 70 60
50 Beginning of Global
Financial Crisis
40
30
20 War in Iraq
September 11th
iti War in Afghanistan
0 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015
Data through December 2016.
Note: The poll asks, “In general, are you satisfied or dissatisfied with the way things are going in the United States at this time?”
Source: Investment Strategy Group, Gallup.
Other high-profile cyberattacks included
¢ The announced theft of the account information of 1 billion Yahoo users in 2013 and 500 million Yahoo users in 2014°*’
¢ The theft of information from as many as 700,000 accounts at the Internal Revenue Service®®
¢ A suspected Chinese military hack into the Federal Deposit Insurance Corporation”
¢ The theft of 117 million LinkedIn passwords (stolen in 2012 but announced in 2016)”
The risks of cyberattacks continue to increase.
Outlook | Investment Strategy Group 31
The risks of cyberattacks continue to increase.
To date, the attacks have had limited detrimental impact on the broad US economy, but the impact could be far-reaching if foreign governments such as Russia or China, criminal entities, or lone actors attack critical infrastructure in the US or any other major country.
China Submerges Under Its Debt Burden and Capital Outflows At $11.4 trillion, China is the second-largest economy in the world, with a 13.8% share of global exports and a 9.7% share of global imports. It accounts for nearly half of global demand for zinc, tin, steel, copper and nickel, and more than half for thermal coal, aluminum and iron ore. Any major slowdown or volatility across bond, currency and equity markets in China, including Hong Kong, would have major ramifications for the rest of the world. While the US has limited direct economic exposure to China—only 0.6% of exports as a share of GDP, 0.6% of bank assets and 0.7% of corporate profits—any shocks in China will reverberate through US financial markets. As shown earlier in Exhibit 18 on page 19, US financial conditions tightened by 118 basis points in the summer of 2015
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