Current U.S. Economic Outlook and Trends

U.S. economy is leading advanced economies with a strong growth forecast for 2024. Despite easing inflation, progress has slowed. Geopolitical tensions pose risks, but unemployment is normalizing, and population growth may be higher than estimated. Job growth remains robust.

• U.S. economy
• Economic outlook
• Growth trends
• Inflation
• Geopolitical risks

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1. TD ECONOMICS TD ECONOMICS Landing The Plane James Marple, Associate Vice President, Senior Economist Economic Outlook Beata Caranci, Chief Economist Presentation to New England States Government Finance Officers August 2023 April 17, 2024

2. America Exceptionalism: U.S. Growth Leads Advanced Economies Real GDP, % Change (Annualized) 2024 Annual Average Percent Change 5.0 U.S. Canada U.K. Eurozone 4.0 2.3% 1.2% 0.2% 0.3% 3.0 2.0 1.0 0.0 -1.0 -2.0 H1 2023 H2 2023 H1 2024 H2 2024 Forecast as of March 2024. Source: The Bureau of Economic Analysis, Statistics Canada, Eurostat, Office for National Statistics, TD Economics. 2

3. U.S. Inflation Has Eased Alongside Others Core Inflation, Three-Month Moving Average % Change (Annualized) 10 Current Peak 8 6 4 2 0 U.S. Canada Euro Area U.K. Japan Core Ex. Food and Energy: Canada, U.S., Japan. Core Ex. Food, Energy, Alcohol and Tobacco: U.K., Euro Area. Source: National Statistics Agencies, Haver Analytics, TD Economics. 3

4. But Progress Has Slowed Core PCE Inflation, Annualized % Change 7 3-month 6 6-month 5 12-month 4 3 2 1 0 -1 -2 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Source: Bureau of Economic Analysis, TD Economics 4

5. Geopolitical Flashpoints Present Upside Risk to Inflation $ Per 40 Foot Container, Thousands 25 China to Europe Freightos Global Index China to U.S. West Coast 20 15 10 5 0 2020 2021 2022 2023 2024 Source: Freightos, Bloomberg, TD Economics. Last Observation: April 7, 2024. 5

6. Unemployment Rate Has Normalized Unemployment rate; % 16 14 United States 12 10 New England 8 6 4 2 0 2019 2020 2021 2022 2023 2024 Sources: Bureau of Labor Statistics, TD Economics 6

7. U.S. Population Growth Likely Higher Than Officially Estimated U.S. Net Immigration, Millions Forecast 3.5 3.0 CBO Census 2.5 2.0 1.5 1.0 0.5 0.0 2010 2012 2014 2016 2018 2020 2022 2024 2026 Source: CBO, Census Bureau, TD Economics. 7

8. Job Growth Running Above Trend Three-Month Moving Average Trend Growth in Labor Force Labor Force Growth With Revised Immigration Figures U.S. Non-Farm Payrolls, Thousands 350 300 250 200 150 100 50 0 Dec 22 Feb 23 Apr 23 Jun 23 Aug 23 Oct 23 Dec 23 Feb 24 Source: Bureau of Labor Statistics, TD Economics. 8

9. More Jobs Available Than People to Fill them Ratio of Job Openings to Unemployed 4.0 2019 3.5 Max Current 3.0 2.5 2.0 1.5 1.0 0.5 0.0 VT NH MA ME RI CT U.S. Source: Bureau of Labor Statistics, TD Economics 9

10. Resilient Economic Growth Despite High Policy Rates Policy Rate % 8 7 Effective Funds Rate Proxy Funds Rate 6 5 4 Neutral Rate 3 2 1 0 -1 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Source: Federal Reserve Board, TD Economics. 10

11. Strong Labor Productivity Growth Helps Output Per Working Hour, Annual % Change 2.0 2019Q4 - 2023Q4 2009 - 2019 Average 1.5 1.0 0.5 0.0 -0.5 -1.0 -1.5 UK* EA20 Germany France Canada U.S. *To 2023Q3 (Latest Available Data). Source: National Statistical Agencies, TD Economics. 11

12. Where to From Here? Tech Boom 90s or Post-GFC Slump U.S. Real Output Per Hour, Year/Year % Change U.S. Real Output Per Hour, Year/Year % Change 6 7 6 5 5 4 4 3 3 2 2 1 1 0 0 -1 -1 -2 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: Bureau of Labor Statistics, TD Economics. Source: Bureau of Labor Statistics, TD Economics. 12

13. Higher Interest Rates Are Weighing On Consumers Share of Car Loans with Payments more than $1000, % Delinquency Rate, % 20 6.0 Auto Loans Credit Cards Consumer Finance Loans New Used 18 5.5 16 5.0 14 4.5 12 4.0 10 3.5 8 3.0 6 2.5 4 2.0 2 0 1.5 2019 2020 2021 2022 2023 2015 2016 2017 2018 2019 2020 2022 2023 Source: Edmunds, TD Economics. Source: Equifax, TD Economics. 13

14. Excess Deposits Largely Drawn Down Total Deposits Held by U.S. Households, Trillion $ 16 Total Deposits Held by Households 14 2010-2019 Trend 12 10 8 6 4 2 0 2017 2018 2019 2020 2021 2022 2023 Note: Data to Q4 2023. Source: Federal Reserve Board, TD Economics. 14

15. Limited Supply Keeping Upward Pressure on Home Prices Single-Family Homes (Thousands) Median Single-Family Home Price*, $Thousands** 8 480 410 Existing Home Sales New 460 7 390 Existing Inventory 440 Existing 6 370 420 350 5 400 380 330 4 360 310 3 340 290 2 320 270 1 300 280 250 0 2019 2020 2021 2022 2023 2024 1999 2001 2004 2007 2009 2012 2015 2017 2020 2023 *3-Month moving average. **Seasonally adjusted. Source: National Association of Realtors, Census Bureau, TD Economics. Source: National Association of Realtors, Census Bureau, TD Economics. 15

16. Home Price Growth Has Exceeded the Nation in New England Core Logic Home Price Index; Annual % Change 14 2019-2023 12 Latest* 10 8 6 4 2 0 United States Massachusetts Connecticut New Hampshire Rhode Island Vermont Maine *Year-over-year to February 2024. Source: CoreLogic, TD Economics 16

17. Commercial Real Estate Faces Structural Challenges Vacancy Rate, % Industrial Retail 13.5 Multi-Family Office 11.5 9.5 7.5 5.5 3.5 2000 2003 2006 2009 2012 2015 2018 2021 Source: CoStar, TD Economics. 17

18. Investors Reconsidering Interest Rate Trajectory Federal Funds Rate Futures, Yields (%) 5.5 5.0 4.5 4.0 3.5 3.0 Market View (April 11th) 2.5 Market View (Post December FOMC) 2.0 Apr 24 Jun 24 Aug 24 Oct 24 Dec 24 Feb 25 Apr 25 Jun 25 Aug 25 Oct 25 Dec 25 Source: Bloomberg, TD Economics. 18

19. Tax Battle Looms: +$6 Trillion At Stake U.S. Federal Budget Deficit, % of GDP Biden 8 Permanent Extension of TCJA + 15% Corporate Tax Rate Maintain tax cuts for households earning <$400k; allow tax breaks for higher income earners to expire Increase corporate tax rate from 21% to 28% (estimated to educe deficit by ~$3T over next decade). De-risk but not decouple U.S. trade linkages with China Trump Make permanent 2017 tax breaks for households and businesses, requiring ~$3.5T of revenue offsets Potentially lower corporate tax rate to 15% Automatic 10% tariff on all imports Permanent Extension of TCJA 7 CBO Baseline Projection 6 5 4 3 2 2010/19 Avg. 2023 2024 2025 2026 2027 2028 2029 2030 Source: CBO, TD Economics. 19

20. New England's Labor Force Is Smaller than It was Pre-Covid Labor Force Indexed* (January 2020=100) 103 102 United States New England 101 100 99 98 97 96 2020 2021 2022 2023 2024 *Three month moving average. Sources: Bureau of Labor Statistics, Moody's Analytics 20

21. Age Matters Share of Total Population (2022); Percent 8 United States 7 New England 6 5 4 3 2 1 0 0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85+ Source: U.S. Census Bureau 21

22. Website: economics.td.com This reportis provided by TD Economicsfor customers of TD Bank Group. It is for information purposes only and may not be appropriate for other purposes. The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable but is not guaranteed to be accurate or complete. The report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain assumptions and other factors and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that comprise TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered. 22