The State of Our EconomyAn Economic Outlook

Edison Byzyka, CFAChief Investment OfficerHefty Wealth Partners

Quick Background

B.S. Finance & Economics – Indiana/Purdue Fort Wayne

CFA Charterholder, CFA Institute

Navistar Research Analyst – Trend Modeling for global network

Tower Financial Corporation – Portfolio Manager

Hefty Wealth Partners – SEC registered investment advisor

CrescendoMAX – integrated consulting platform for advisory firms

Disclosure

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

Agenda

National Economy

Overview of growth, key sector performance, and potential path

State Economy

Relative analysis to national economy as a means of potential growth prospects

Regional Data

Discuss how national and state trends may effect regional economy

U.S. Economy

GDP

Labor Market

Housing Market

Industrial Production

Personal Income

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016

Quarterly Annualized Growth

Source: Hefty Wealth Partners. Bloomberg.

U.S. Gross Domestic Product

U.S. Labor Market – through August 2016

Initial jobless claims continued their four decade low streak

Net new private payrolls hovered around an average of 205,000 over the past 12 months

Unemployment rate closed August at 4.87%

190,000

195,000

200,000

205,000

210,000

215,000

220,000

225,000

60 monthaverage

48 monthaverage

36 monthaverage

24 monthaverage

12 monthaverage

Rolling monthly net new payrolls

0

100

200

300

400

500

600

700

800

1967 1972 1977 1982 1987 1992 1997 2002 2007 2012

Weekly Jobless Claims

Source: Hefty Wealth Partners. Bloomberg.

Labor force participation rate is indicating risks to the headline employment data

U.S. Labor Force Participation Rate

57.00%

59.00%

61.00%

63.00%

65.00%

67.00%

69.00%

19

48

19

50

19

52

19

54

19

56

19

58

19

60

19

62

19

64

19

66

19

68

19

70

19

72

19

74

19

76

19

78

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

20

16

Source: Hefty Wealth Partners. Bloomberg.

R&D and Labor Force Participation

60%

61%

62%

63%

64%

65%

66%

67%

68%0

5

10

15

20

25

30

35

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Figure 1: S&P 500 Research & Development Expenditures & Labor Force Participation

S&P 500 Research & Development Expenses

(IN BILLIONS)

Labor Force Participation (INVERSE)

Source: Hefty Wealth Partners. Bloomberg.

More R&D does not mean more profit

-20

-15

-10

-5

0

5

10

15

20

S&P 500 --- % CHANGE IN R&D AND PROFIT MARGINS SINCE 1Q 2014

R & D Expenditures Profit Margin

Source: Hefty Wealth Partners. Bloomberg.

250

350

450

550

650

750

850

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

New Home Sales

U.S. Housing Market

3

3.5

4

4.5

5

5.5

6

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Existing Home Sales

Source: Hefty Wealth Partners. Bloomberg.

Industrial Production / Manufacturing

-5.00%

-4.00%

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Month-over-Month Industrial Production Growth

30

35

40

45

50

55

60

65

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Month-over-Month Manufacturing Growth

Source: Hefty Wealth Partners. Bloomberg.

20162016

Source: Hefty Wealth Partners. Bloomberg.

Year-over-Year growth of Hourly Earnings

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

U.S. Economy

GDP

Labor Market

Housing Market

Industrial Production

Personal Income

Risks

Corporate Margins

Deflation

Productivity

Credit Tightening

Investment

Productivity

-0.50%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

0

0.2

0.4

0.6

0.8

1

1.2

1986 1993 2000 2007 2014

Annual Change Productivity Gauge

2016

projection

Source: Hefty Wealth Partners. Bloomberg. Organization for Economic Co-operation and Development

All Loan & Lease DelinquenciesFederal Reserve – through June 2016

5000

15000

25000

35000

45000

55000

1987 1994 2001 2008 2015

IN M

ILLI

ON

S

Source: Hefty Wealth Partners. Bloomberg. Organization for Economic Co-operation and Development

Investments in Equipment & StructuresCHANGE FROM 5 YEAR AVERAGE

-30.00%

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Aggregate of Structures & Equipment Structures Equipment

Source: Hefty Wealth Partners. Bloomberg.

Heavy Industrial and Manufacturing PresenceBureau of Labor Statistics – as of May 2015

Industrial Production – Location Quotient Concentration of Industrial Engineers

Source: Bureau of Labor Statistics

Indiana – Relative Comparison

0

2

4

6

8

10

12

1996 1999 2002 2005 2008 2011 2014

%

Indiana Unemployment Rate U.S. Unemployment Rate

U.S. Labor Force Relative to Total Population

~60%

Indiana Labor Force Relative to Total Population

~51%

Source: Hefty Wealth Partners. Bloomberg. As of June 2016

Indiana – Aggregate Economic Health

-8

-6

-4

-2

0

2

4

6

8

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Federal Reserve Bank of Philadelphia – State Leading Index – Indiana

Precipitous decline --- bottom on March 2000

Precipitous decline on March 2008

Source: Hefty Wealth Partners. Bloomberg. Federal Reserve Bank of Philadelphia

2016

Occupation Mix SummaryAggregate Index for DeKalb, Lagrange, Noble, and Steuben counties

Source: Hoosiers by the numbers – Indiana Department of Workforce Development. As of January 2016.

18,0677,351

5,667

5,348

4,773

3,444

2,737

1,923

1,878

1,571

Production

Office and Admin support

Transport and Material Moving

Sales and Related

Food Prep and Serving Related

Education Training and Library

Installation maintenance and repair

Healthcare Practitioners and Technical

Management

Construction and Extraction

Top 10 occupation types by Employment

0%

10%

20%

30%

40%

50%

60%

$25,000 and

Under

$25,000 -

$50,000

$50,000 -

$75,000

$75,000 -

$100,000

Over $100,000

Four County Region Indiana

Share of Employment by Median Wage

-1000

0

1000

2000

3000

4000

5000

6000

7000

5 YEAR ABSOLUTE CHANGE - # OF JOBS ADDED FROM 2009-2014

Net New Jobs by IndustryAggregate Index for DeKalb, Lagrange, Noble, and Steuben counties

Source: Hoosiers by the numbers – Indiana Department of Workforce Development

2604

486

289

103

123

-109

4

14

-1

17

1-9 employees

10-19 employees

20-49 employees

50-99 employees

100 plus employees

Absolute change from 2009-2014 Current Establishments

Attribution of Net New Jobs (2009-2014)Aggregate Index for DeKalb, Lagrange, Noble, and Steuben counties

Source: Hoosiers by the numbers – Indiana Department of Workforce Development

Investments in Equipment & StructuresCHANGE FROM 5 YEAR AVERAGE

-30.00%

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Aggregate of Structures & Equipment Structures Equipment

Source: Hefty Wealth Partners. Bloomberg.

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Total Labor Force Employed

Labor Force (2004 – 2014)Aggregate Index for DeKalb, Lagrange, Noble, and Steuben counties

Source: Hoosiers by the numbers – Indiana Department of Workforce Development

Population Trend (1990 – 2015)Aggregate Index for DeKalb, Lagrange, Noble, and Steuben counties

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

20.00%

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

1990 2000 2005 2010 2015

Total Population Population Change

Source: Hoosiers by the numbers – Indiana Department of Workforce Development

Population Projections (2015 – 2030)Aggregate Index for DeKalb, Lagrange, Noble, and Steuben counties

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%

2.00%

156,000

158,000

160,000

162,000

164,000

166,000

168,000

170,000

172,000

2010 2015 2020 2025 2030

Total Population Population Change

Source: Hoosiers by the numbers – Indiana Department of Workforce Development

U.S. Labor Force Participation Rate

57.00%

59.00%

61.00%

63.00%

65.00%

67.00%

69.00%

1948 1958 1968 1978 1988 1998 2008

CBO Estimate by 2026

Source: Hefty Wealth Partners. Bloomberg. Congressional Budget Office.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which

investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are

unmanaged and cannot be invested into directly.

Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

Securities offered through LPL Financial, Member FINRA/SIPC.

Investment advice offered through Hefty Wealth Partners and CrescendoMAX, A Registered Investment Advisor and separate entity from LPL Financial.