DuPont Product/Presentation Title

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Economic Outlook ROBERT FRY DuPONT ECONOMISTS OFFICE Flexographic Prepress Platemakers Association Sanibel Island, Florida February 22, 2010 2 This presentation contains forward-looking statements based on expectations, estimates and projections that are not guarantees of future performance and involve a number of uncertainties and assumptions. The content is provided AS IS, AS AVAILABLE. DuPont does not warrant the accuracy or completeness of the information, text, graphics, links, or other items contained in this communication, and DuPont expressly disclaims liability for errors or omissions in these materials. We reserve the right to make changes and corrections at any time, without notice. DuPont expressly disclaims all liability for the use or interpretation by others of information contained in this DuPont communication. Decisions based on information contained in this DuPont communication are the sole responsibility of the reader, and in exchange for using this DuPont communication the reader agrees to hold DuPont harmless against any claims for damages arising from any decisions that the reader makes based on such information. Nothing contained in this DuPont communication constitutes investment advice. 02/03/20 DUPONT ECONOMISTS OFFICE 3 Excuse me. Can you tell me where I am? Youre in a balloon.

02/03/20 DUPONT ECONOMISTS OFFICE 4 You must be a economist. Your answer is perfectly correct and totally useless. You must be a manager. You have a great view, but dont know where you are. 02/03/20 DUPONT ECONOMISTS OFFICE 5 Recovery Chronology Recovery is first apparent to economists when seasonally adjusted monthly data turn up. Recovery becomes apparent to businesses when year-over-year growth turns positive, usually 5-6 months after the sequential upturn. Skepticism about recovery persists among public and politicians until unemployment falls and economic activity returns to prerecession levels. This can take years, depending on the speed of the rebound. Markets (industries/geographies) are in various stages of recovery. 02/03/20 DUPONT ECONOMISTS OFFICE 6 Industrial Production - World 115 Index 2005=100 Gray Bars = Recession Periods

110 Peak 115 110 105 105 100 100 Trough (Turning Point) 95 90 85 80 95 90 85 IP331R 99 00 01 02 03 04 05 06 07 08 09 10 11 02/03/20 DUPONT ECONOMISTS OFFICE 80 7

Industrial Production, Mfg - World 10 Rate of Change Yr/Yr 10 Trend Rate 5 5 0 0 Actual -5 -5 Y/Y % Chg 2008 0.1% 2009 -9.1% 2010 5.6% -10 -15 IP33R 99 00 01 02 03 04 05 06 07 08 09 10 11 02/03/20 DUPONT ECONOMISTS OFFICE

-10 -15 8 Industrial Production: Asia 500 450 400 350 300 250 200 1997 = 100, Seasonally Adjusted Total industrial production in China, manufacturing elsewhere. *Data seasonally adjusted by this office. 500 450 400 350 300 250 200 150 150 100 100 Japan China* 50

asiaqjm4 Taiwan* India* Korea 98 99 00 01 02 03 04 05 06 07 08 09 10 02/03/20 DUPONT ECONOMISTS OFFICE 50 9 Industrial Production, Asia 40 Percent Change from Year Ago, 3-Month Moving Averages 40 20 20 0 0 Japan China Korea Taiwan -20 -40

-20 asiagary4 01 02 02/03/20 DUPONT ECONOMISTS OFFICE 03 04 05 06 07 08 09 10 -40 10 Industrial Production, Latin America 140 1997 = 100, 3-Month Moving Averages 130

140 130 Mexico 120 120 110 110 100 100 Brazil 90 80 Argentina lataqjtt 97 98 99 00 01 02 03 04 05 06 07 08 09 10 02/03/20 DUPONT ECONOMISTS OFFICE 90 80 11 Industrial Production: Central Europe & Russia 140 2005 = 100, 3-Month Moving Average

140 Poland Hungary Czech Republic Russia 130 120 130 120 110 110 100 100 90 ee3sa 04 02/03/20 DUPONT ECONOMISTS OFFICE 05 06 07 08

09 10 90 12 Industrial Production: European Union 115 110 2005 = 100 Industrial Production, Manufacturing OECD Leading Indicator 115 110 105 105 100 100 95 95 90 90 85

me25qjmfa 99 00 01 02 03 04 05 06 07 08 09 10 02/03/20 DUPONT ECONOMISTS OFFICE 85 13 Industrial Production and Expectations: EU Balance of Opinion Percent Change from Year Ago 20 10 15 5 10 5 0 0 -5 -5 -10 -10 -15 -15 Production Expectations, Mfg (Left) -20 Industrial Production, Mfg (Right) -25 -20 -30 -25

eu1 -35 99 00 01 02 03 04 05 06 07 08 09 10 02/03/20 DUPONT ECONOMISTS OFFICE 14 US Industrial Production 125 Cycle Trough = 100 125 June 2009 Trough May 1975 Trough December 1982 Trough 120 120 115 115 110 110 105 105 100 100

07 02/03/20 DUPONT ECONOMISTS OFFICE 08 09 10 11 15 Global economy recovering from worst recession since WW2 Most of world is growing again. Recovery started in developing countries of Asia and South America. Production turned up in Japan in March 2009, in Western Europe in April 2009. North America turned up in July 2009. Central & Eastern Europe recovering slowly. Question now turns to shape of recovery. A V-shaped bottom is the historical norm, but few expected one. Slow recovery (Nike swoosh) has been most common base case. So far, recovery in industrial production is closer to a V, but going forward, V is likely to become more asymmetrical (lop-sided) than in past as growth slows. W and are risks. Speed of recovery will vary across industries and geographies. Recovery means different things to different people. 02/03/20 DUPONT ECONOMISTS OFFICE 16 Real GDP (Annual % Change)

2008 2009 2010 2011 World 1.8 -2.1 3.2 3.3 N. America 0.5 -2.7 3.5 3.1 W. Europe 0.5 -4.0 1.0 1.6

C. & E. Europe 4.0 -5.6 2.3 3.6 Asia 3.1 0.9 5.3 4.6 Japan -1.2 -5.1 1.8 1.1 China 9.6 8.7 10.1

8.5 S. America 4.8 -0.8 3.3 4.5 M. East & Africa 5.1 0.8 4.0 5.1 02/03/20 DUPONT ECONOMISTS OFFICE 17 Short-Term Interest Rates 7 Percent 7 6 6 UK

5 5 4 4 3 3 2 2 Euro-Zone 1 0 US 1 Japan rates3 99 00 01 02/03/20 DUPONT ECONOMISTS OFFICE

02 03 04 05 06 07 08 09 10 0 18 US Monetary Aggregates 300 260 220 January 2005 = 100 300 260 Monetary base* M1** M2*** 220

180 180 140 140 100 100 * Currency + bank reserves ** Currency + checkable deposits *** M1 + time & savings deposits + money market mutual funds 60 2005 02/03/20 DUPONT ECONOMISTS OFFICE 2006 2007 2008 2009 2010 60 19 TED Spread & Dow-Jones Industrial Average 3-Month LIBOR minus 3-Month T-bills, Percent

5 DJIA (Right) TED Spread (Left) 4 3 Index 15000 14000 13000 12000 11000 10000 9000 2 8000 1 7000 teddow 0 J 6000 A SON D J FM AM J J A S OND J FM AM J J A S OND J F 2007 2008 2009 2010 02/03/20 DUPONT ECONOMISTS OFFICE 20 Heads, we save Bear Stearns. Tails, we save Lehman. Hank Paulson, March 2008 02/03/20 DUPONT ECONOMISTS OFFICE

21 I think weve averted the risk of a new American depression. Ben Bernanke, March 12, 2009 02/03/20 DUPONT ECONOMISTS OFFICE 22 US Mortgage Applications and Home Sales Index, 4-Week Moving Average Thousands 600 8000 500 7000 400 6000 300 5000 200 100 0 mbavprch Mortgage Applications for Purchases (Left) New + Existing Home Sales (Right)

94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 02/03/20 DUPONT ECONOMISTS OFFICE 4000 3000 23 US Housing Starts 2.4 Millions, Seasonally Adjusted Annual Rate 2.4 2.0 2.0 1.6 1.6 1.2 Blue Chip Forecasts 2010 2011 Top 10 0.82 1.20 Consensus 0.71 0.96 Bottom 10 0.63 0.73 0.8 0.4 75 80

02/03/20 DUPONT ECONOMISTS OFFICE 85 90 95 00 05 X X X X X X X X 10 1.2 0.8 0.4 24 Gee, thanks for the housing bubble, Alan. Im sure you can handle it, Ben. (Looks like Andrea and I sure picked the right time to sell our condo in DC.) 02/03/20 DUPONT ECONOMISTS OFFICE 25 Median Sales Price of Existing Single-Family Homes

420 Percent of Median Family Income 420 380 380 1981-2000 Average 340 340 300 300 260 260 220 Source: National Association of Realtors puvholdmedyfam 70 02/03/20 DUPONT ECONOMISTS OFFICE 75 80

85 90 95 00 05 10 220 26 Anything that cant go on forever will stop. Herbert Stein, 1916-1999 02/03/20 DUPONT ECONOMISTS OFFICE 27 US Motor Vehicle Sales & Production 20 18 Millions 20 Sales 1986-2007 Trend (1.0%) Production 18 16

16 X X 14 X X X X X X 12 14 12 10 10 8 8 6 6 87 89 91 93 95 97 99 01 03 05 07 09 11 02/03/20 DUPONT ECONOMISTS OFFICE 28 US Consumer Spending and Disposable Income 5

Percent Change from Year Ago, Constant Dollars 5 2008 Fiscal Stimulus 4 3 4 3 2 2 1 1 0 0 -1 -1 -2 Disposable Income Consumption Expenditures -3J

-2 mceydpyp96 FMAM J J ASOND J FMAM J J ASOND J FMAM J J ASOND 2007 2008 2009 02/03/20 DUPONT ECONOMISTS OFFICE -3 29 US Retail Sales ex Automotive 3 Percent Change 9 2 6 1 3 0 0 -1 -3 From Year Ago (Right) From Month Ago (Left)

-2 -3 -6 -9 sretafsxmvpnom -4 J F MA M J J A S OND J F MA M J J A S OND J FMA M J J A S O ND J F -12 2007 02/03/20 DUPONT ECONOMISTS OFFICE 2008 2009 2010 30 US Real Gross Domestic Product 8 Annualized Growth Rates Shaded areas denote recessions 6 8 6 4 4

2 2 0 0 -2 -4 -6 -8 Quarter-to-quarter Year-over-year Year-over-year forecast -2 -4 -6 Annual Growth Rates (%) 3.7 4.5 4.4 4.8 4.1 1.1 1.8 2.5 3.6 3.1 2.7 2.1 0.4 -2.5 3.6 3.0 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 02/03/20 DUPONT ECONOMISTS OFFICE -8 32 US Manufacturing Production & Stock Prices 60 Percent Change from Year Ago, Smoothed 40

Correlation = .50 15 Long-term average of both series 10 20 5 0 0 -5 -20 -10 -40 -60 Manufacturing Production ex high tech (Right) Wilshire 5000, 7 months prior (Left) jipsp 75 80 02/03/20 DUPONT ECONOMISTS OFFICE 85

90 95 00 05 10 33 US Manufacturing Production & Orders 40 Percent/Percentage Point Change from Year Ago, Smoothed 30 20 10 0 -10 -20 Long-term average of both series Correlation = .61 20 15 10 5 0 -5 Manufacturing Production ex high tech (Right) -10

ISM New Orders Index, 7 months prior (Left) jiporn -30 -15 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 02/03/20 DUPONT ECONOMISTS OFFICE 34 Worst US recession since WW2 has ended US recession was been longest and deepest since Great Depression. Real GDP declined 3.9% over four quarters. 8.4 million jobs lost. Recession lasted at least 18 months. Recession probably ended in June 2009. Unprecedented action by Fed steadied financial markets. Stock prices bottomed in March 2009. Unemployment claims have fallen sharply since early April 2009. Home sales & housing starts have risen from troughs. Vehicle sales surged in July/August 2009 and continue to trend up. Leading indicators are up strongly. 02/03/20 DUPONT ECONOMISTS OFFICE 35 US Manufacturing Production ex High-Tech Sectors 115 110 2002 = 100 115 Actual 95-07 Trend (0.8%) 110

105 105 100 X X X XX X 100 X 95 90 85 X Annual Growth Rates (%) 1.4 0.8 -8.5 0.0 0.0 2.2 3.3 1.2 0.7 -3.7 -11.0 5.9 3.6 99 00 01 02 03 04 05 06 07 08 09 10 11 02/03/20 DUPONT ECONOMISTS OFFICE 95 90 85

36 Industrial Production, Containers 110 2002 = 100 110 105 105 100 100 95 95 90 90 85 85 80 jipcont 89 91 02/03/20 DUPONT ECONOMISTS OFFICE

93 95 97 99 01 03 05 07 09 80 37 US Industrial Production, Printing & Related Activities 2002 = 100 Actual 90-00 Trend (1.3%) 100 100 90 90 80

70 X 0.8 jip27 X X X XX XX Annual Growth Rates (%) 0.6 -6.1 -5.9 -3.8 0.8 2.4 0.6 0.9 -6.6 -14.5 -1.0 2.6 99 00 01 02 03 04 05 06 07 08 09 10 11 02/03/20 DUPONT ECONOMISTS OFFICE 80 70 38 US Industrial Production, Food 120 2002 = 100 Actual 89-2000 Trend (1.6%)

115 120 XX X XXX XX 115 110 110 105 105 100 100 95 95 90 90 jip20 85 Annual Growth Rates (%) 1.0 1.7 0.0 2.4 1.0 0.1 3.1 1.1 3.9 1.5 -0.5 4.3 1.1

99 00 01 02 03 04 05 06 07 08 09 10 11 02/03/20 DUPONT ECONOMISTS OFFICE 85 39 US Merchandise Trade Balance 0 Billion $, Annual Rate, 3-Month Moving Average Total (Left) Chemicals ex Pharma (Right) -200 40 30 -400 20 -600 10 -800 0 -1000 exchem 97 98 99 00 01 02 03 04 05 06 07 08 09 10

02/03/20 DUPONT ECONOMISTS OFFICE -10 40 US Merchandise Trade Balance 0 Billion $, Seasonally Adjusted Annual Rate 0 -100 -100 -200 -200 -300 -300 -400 -400 -500 -600 exdcchinxoil with China Rest of World ex Oil Oil

97 98 99 00 01 02 03 04 05 06 07 08 09 10 02/03/20 DUPONT ECONOMISTS OFFICE -500 -600 41 Value of US Dollar vs Major Currencies 105 100 95 90 85 80 75 70 2002 Peak = 100 65 65 Euro British Pound Japanese Yen Chinese Yuan 60 55 50 105 100 95

90 85 80 75 70 60 55 dollar4 02 03 02/03/20 DUPONT ECONOMISTS OFFICE 04 05 06 07 08 09 10 50 42 Forecasting exchange rates has a success rate no better than that of forecasting the outcome of a coin toss.

-- Alan Greenspan November 19, 2004 02/03/20 DUPONT ECONOMISTS OFFICE 43 US Crude Oil and Natural Gas Futures Prices $/mmbtu 24 NYMEX Crude Oil (Right) 22 Natural Gas (Left) 20 18 16 14 12 10 8 6 4 2 oilgasl 0 99 00 01 02 03 04 05 06 02/03/20 DUPONT ECONOMISTS OFFICE 07 08 09 10 $/bbl 144 132 120 108

96 84 72 60 48 36 24 12 0 44 Industrial Chemical Prices vs. Oil Prices $/BBL 1982 = 100 150 350 140 PPI, Industrial Chemicals (Right) 325 130 WTI Crude Oil (Left) 300 120 110 275 100 250 90 80 225 70 200 60 175 50 40

150 30 125 20 ppichemoil 10 100 97 98 99 00 01 02 03 04 05 06 07 08 09 10 02/03/20 DUPONT ECONOMISTS OFFICE 45 US Consumer Price Index 6 Percent Change from Year Ago 6 4 4 X X X 2 X XXXX 0 -2 2 0

Annual Inflation Rates (%) 2.8 2.9 2.3 1.6 2.2 3.4 2.8 1.6 2.3 2.7 3.4 3.2 2.9 3.8 -0.4 2.5 2.5 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 02/03/20 DUPONT ECONOMISTS OFFICE -2 46 PCE* Price Index, ex Food & Energy Percentage of Companies Reporting Slower Deliveries 80 "Core" Inflation (Right) ISM Supplier Delivery Index (Left) 70 Percent 10 60 8 6 50 4 40 2 30 20 jpcxfae

*Personal Consumption Expenditures 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 02/03/20 DUPONT ECONOMISTS OFFICE 0 47 US Interest Rates 10 Percent 10 8 8 6 6 XXXX 4 X X X X X 4

X X 2 0 X 10-Year Bond Yield Target Federal Funds Rate X X ratesq 89 XX 91 93 02/03/20 DUPONT ECONOMISTS OFFICE 95 97 99 01 2 03

05 07 09 11 0 48 Global Industrial Production 10 Percent Change from Year Ago, 3-Month Moving Average 10 5 5 0 0 -5 1994-2008 Correlation = .89 -5 -10 ipworlei 91 -10

Industrial Production (Right) OECD+6 Leading Index, 4 months prior (Left) 93 02/03/20 DUPONT ECONOMISTS OFFICE 95 97 99 01 03 05 07 09 -15 49 Global Industrial Production 120 2005 = 100 120 Industrial Production OECD Broad Leading Index 110

110 100 100 90 90 80 80 70 70 60 60 50 ipworleil 91 93 02/03/20 DUPONT ECONOMISTS OFFICE 95 97 99

01 03 05 07 09 50 50 Conclusions Leading indicators point to continued near-term growth. No evidence of double-dip, but growth likely to slow in second half of 2010. Rising commodity prices & surprising bottlenecks have halted decline in inflation despite slack in economy. 2010 Central Bank challenge: Withdrawing stimulus at correct pace. Many arguments for slow recovery are really explanations for why the recession was so severe or arguments for slow long-term growth. 02/03/20 DUPONT ECONOMISTS OFFICE 51 US Federal Budget Surplus/Deficit* 0 Rolling 12-month total, Billion $ *On- and off-budget 0

-200 -200 -400 -400 -600 -600 -800 -800 -1000 -1000 Budget deficit BEFORE stimulus plan and Obama budget proposal -1200 -1400 -1600 2005 02/03/20 DUPONT ECONOMISTS OFFICE 2006 2007 2008 -1200

-1400 2009 2010 -1600 52 You know a recession is over when Congress finally passes a stimulus bill. -- Anonymous 02/03/20 DUPONT ECONOMISTS OFFICE 53 Every election is a sort of advance auction sale of stolen goods. --H. L. Mencken, 1880-1956 02/03/20 DUPONT ECONOMISTS OFFICE 54 The accuracy of an economic vision is not always commensurate with the analytical ability of those who hold it. Pessimistic visions about almost anything always strike the public as more erudite than optimistic ones. --Joseph Schumpeter, 1883-1950 02/03/20 DUPONT ECONOMISTS OFFICE 55 The error of optimism dies in the crisis, but in dying it gives birth to an error of pessimism. This new error is born not an infant, but a giant. 02/03/20 DUPONT ECONOMISTS OFFICE

--A. C. Pigou, 1877-1959

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