DRI/WEFA Audio Conference - October 9, 2001

On Tuesday, October 9, 2001, DRI/WEFA presented an audio conference regarding the outlook for the general US and World economies, presentations for which are attached.

In summary, DRI/WEFA believes that the economy will experience a deeper downturn than previously forecast, reaching a low during the second quarter of 2002. Following this bottom, they expect the economy to experience a sharp "V" recovery in 2003, reaching levels that are comparable to the second half of 2000, driven by fiscal stimuli from US government and monetary stimuli from the Federal Reserve. They expect the world economy to follow the US pattern of growth, although some countries may experience slower growth rates .

DRI/WEFA has made the following baseline assumptions (probability 50-60%):
There will be no more terrorist attacks in the near future;
US counter-attacks will have no permanent negative impact on confidence or oil prices;
Consumer and business confidence will recover after three to four months;
Oil prices will remain weak; and
More fiscal and monetary stimuli are in the pipeline.

Downside scenarios include (probability 25-30%):
Further terrorist attacks and/or an unsuccessful US retaliation;
Oil prices spike again; and
Consumer and business confidence falls further and doesn't recover as quickly as anticipated.

The upside scenario includes the following (probability 15-20%):
US retaliation is considered to be successful;
Consumer and business confidence rebounds quickly; and
The recession in the US and the rest of the world is mild.

These conclusions are not much different from those presented by Goldman-Sachs several weeks ago, but may still be somewhat optimistic. Yana Kristal is revising her economic forecast for presentation in the near future.

Please let Yana or me know if you have any questions.

Peggy