U.S. Macroeconomic scorecard:

1. U.S. Macroeconomic scorecard: What Retail-relevant indicators tell us Frank Badillo Chief Economist August 2013

2. Current Retail Conditions Modestly positive conditions driving mixed retail sales • Gains muted in consumable, non-discretionary categories • Gains skewed online and toward discretionary categories (i.e., apparel, homegoods) • Reflects mixture of caution vs. improved ability to spend driven by job and housing markets • Caution fanned by fears about government cuts, pullback in monetary stimulus Retail-Relevant Macro Indicators Through August 2013# Mixed Worsening Improving #The latest weekly scorecard is available in a news brief posted on the Macroeconomic Insights webpage at: http://www.kantarretailiq.com/Topic/NewsList.aspx?Topic=368280 Source: U.S. Department of Commerce, U.S. Department of Labor, Conference Board, Federal Reserve Board, and Kantar Retail

3. Topline Indicators: Slightly Positive • Online sales remain strongest growth trend • Same-store sales trend is weak coming out of first quarter Retail-Relevant Macro Indicators Through August 2013# • Modest growth in GDP, other spending metrics Mixed Worsening Improving #The latest weekly scorecard is available in a news brief posted on the Macroeconomic Insights webpage at: http://www.kantarretailiq.com/Topic/NewsList.aspx?Topic=368280 Source: U.S. Department of Commerce, U.S. Department of Labor, Conference Board, Federal Reserve Board, and Kantar Retail

4. Market Disruptions: Biggest Drag on Growth • Growth slowed by fears of sequester impact, new threats • European woes hurting exports, business confidence Retail-Relevant Macro Indicators Through August 2013# • Global demand also hurt by slow-downs in China, emerging markets Mixed Worsening Improving #The latest weekly scorecard is available in a news brief posted on the Macroeconomic Insights webpage at: http://www.kantarretailiq.com/Topic/NewsList.aspx?Topic=368280 Source: U.S. Department of Commerce, U.S. Department of Labor, Conference Board, Federal Reserve Board, and Kantar Retail

5. Confidence/Spending Intentions: Mixed Signals • Good news is that sentiment is improved from a year ago • July letup is troublesome, especially for spending intentions Retail-Relevant Macro Indicators Through August 2013# • Present situation vs. expectations is good sign for “Have Nots” and bad sign for “Haves” Mixed Worsening Improving #The latest weekly scorecard is available in a news brief posted on the Macroeconomic Insights webpage at: http://www.kantarretailiq.com/Topic/NewsList.aspx?Topic=368280 Source: U.S. Department of Commerce, U.S. Department of Labor, Conference Board, Federal Reserve Board, and Kantar Retail

6. Jobs/Income: Trends Suggest Persisting Growth • Subsiding unemployment claims are best leading indicator • Steady, modest job growth is spreading recovery regionally Retail-Relevant Macro Indicators Through August 2013# • Income gains hurt by end of Social Security payroll tax holiday Mixed Worsening Improving #The latest weekly scorecard is available in a news brief posted on the Macroeconomic Insights webpage at: http://www.kantarretailiq.com/Topic/NewsList.aspx?Topic=368280 Source: U.S. Department of Commerce, U.S. Department of Labor, Conference Board, Federal Reserve Board, and Kantar Retail

7. Investment/Housing Market: Positive Signs • Persisting business investment will drive future job growth • Key driver of jobs/spending is recovery in home buying, prices Retail-Relevant Macro Indicators Through August 2013# • Uptick in mortgage rates will slow, not stop home buying, refinancing Mixed Worsening Improving #The latest weekly scorecard is available in a news brief posted on the Macroeconomic Insights webpage at: http://www.kantarretailiq.com/Topic/NewsList.aspx?Topic=368280 Source: U.S. Department of Commerce, U.S. Department of Labor, Conference Board, Federal Reserve Board, and Kantar Retail

8. Price Inflation: Pressures Muted for Now • July fuel uptick appears to be letting up in August weekly metrics • Otherwise, consumer and commodity inflation is relatively weak Retail-Relevant Macro Indicators Through August 2013# • Inflation threats will re-emerge as demand recovers in China/ emerging markets and Europe Mixed Worsening Improving #The latest weekly scorecard is available in a news brief posted on the Macroeconomic Insights webpage at: http://www.kantarretailiq.com/Topic/NewsList.aspx?Topic=368280 Source: U.S. Department of Commerce, U.S. Department of Labor, Conference Board, Federal Reserve Board, and Kantar Retail

9. Government Policy: Net Stimulative • Fed policy still providing boost, despite concern about “tapering” • Fiscal drags likely will flare up again in September/October Retail-Relevant Macro Indicators Through August 2013# • Stronger dollar in short term amid global weakness helping keep import prices down Mixed Worsening Improving #The latest weekly scorecard is available in a news brief posted on the Macroeconomic Insights webpage at: http://www.kantarretailiq.com/Topic/NewsList.aspx?Topic=368280 Source: U.S. Department of Commerce, U.S. Department of Labor, Conference Board, Federal Reserve Board, and Kantar Retail

10. T: +614.355.4019 Frank Badillo Chief Economist Frank.Badillo@KantarRetail.com T: +614.355.4044 Doug Hermanson Senior Economist Doug.Hermanson@KantarRetail.com F: +614.355.4059 F: +614.355.4059 www.KantarRetailiq.com KRIQ website: Macroeconomics InsightsTopics & Trends > Macroeconomics