Arbor Realty's U.S. Economic Overview for 2018 q4 with insights on U.S. employment growth, the consumer price index, average earnings and the homeownership rate.

1. U.S. Economic Overview
Q4 2018

2. 1
U.S. Multifamily Data Book Q3 2018
U.S. Recession
-900.0
-600.0
-300.0
0.0
300.0
600.0
Dec-03 Jun-05 Dec-06 Jun-08 Dec-09 Jun-11 Dec-12 Jun-14 Dec-15 Jun-17 Dec-18
Monthly Change 12-Month Moving Average
Source: U.S. Bureau of Labor Statistics; National Bureau of Economic Research
Employment Growth
United States, All Employees, Total Nonfarm, Seasonally Adjusted
According to the U.S. Bureau of Labor Statistics, total nonfarm payroll employment rose 1.8% during 2018, higher than the 1.5% increase
during 2017. Additionally, December marked the 99th consecutive month of positive job growth. The largest year-over-year percentage
gains in employment occurred in the mining and logging (8.7%) and construction (5.1%) sectors, with no major sectors posting a loss.

3. 2
U.S. Multifamily Data Book Q3 2018
Mining and
Logging
0.5%
Construction
4.8%
Manufacturing
8.6%
Trade,
Transportation,
and Utilities
18.7%
Information
1.9%
Financial
Activities
5.8%
Professional
and Business
Services
14.1%
Education and
Health Services
16.0%
Leisure and
Hospitality
10.7%
Other Services
3.9%
Government
15.1%
Source: U.S. Bureau of Labor Statistics
Employment By Industry
United States, Thousands, December 2018
Employment Growth By Industry
United States, 12-Month Percent Change, December 2018
Mining and Logging
Construction
Manufacturing
Trade, Transportation, and
Utilities
Information
Financial Activities
Professional and Business Services
Education and Health Services
Leisure and Hospitality
Other Services
Government
Total Nonfarm
0.0% 2.5% 5.0% 7.5% 10.0%

4. 3
U.S. Multifamily Data Book Q3 2018
Employment Growth by Metropolitan Area
Total Nonfarm, Not Seasonally Adjusted, 12-Month % Change, December 2017 to December 2018
Source: U.S. Bureau of Labor Statistics
In December, 61 metropolitan areas had
year-over-year increases in nonfarm payroll
employment and 327 were essentially
unchanged.
The largest over-the-year employment
increases occurred in Dallas-Fort Worth-
Arlington, TX (+116,400), New York-
Newark-Jersey City, NY-NJ-PA (+115,500),
and Houston-The Woodlands-Sugar Land,
TX (+108,300).
The largest over-the-year percentage gains
in employment occurred in Midland, TX
(+6.7%), Colorado Springs, CO (+5.5%), and
Reno, NV (+5.3%).

5. 4
U.S. Multifamily Data Book Q3 2018
U.S. Recession
-3.0%
-1.0%
1.0%
3.0%
5.0%
7.0%
Dec-03 Jun-05 Dec-06 Jun-08 Dec-09 Jun-11 Dec-12 Jun-14 Dec-15 Jun-17 Dec-18
Consumer Price Index (%) Federal Funds Inflation Target (%)
Source: U.S. Bureau of Labor Statistics; National Bureau of Economic Research
Consumer Price Index
United States, All Items, Seasonally Adjusted, 12-Month % Change, 1982-84=100
The Consumer Price Index (CPI) increased 1.9% for the 12 months ending in December. This was the first time it held under 2.0% since
August 2017. The index for all items less food and energy rose 2.2% over the last 12 months, the same increase as for the 12 months
ending in November.

6. 5
U.S. Multifamily Data Book Q3 2018
U.S. Recession
-3.0%
-1.0%
1.0%
3.0%
5.0%
7.0%
Dec-03 Jun-05 Dec-06 Jun-08 Dec-09 Jun-11 Dec-12 Jun-14 Dec-15 Jun-17 Dec-18
CPI All Items Owners' Equivalent Rent of Residences Rent of Primary Residence
Consumer Price Index: Rent and Rent Equivalence
United States, All Items, Seasonally Adjusted, 12-Month % Change, 1982-84=100
The Consumer Price Index (CPI) increased 1.9% for the 12 months ending in December. This was the first time it held under 2.0% since
August 2017. Key indicators of affordability worsened during the year, as the CPI rent index increased 3.5%, significantly higher than
inflation, while average hourly earnings rose at a slower rate of 3.3%.
Source: U.S. Bureau of Labor Statistics; National Bureau of Economic Research

7. 6
U.S. Multifamily Data Book Q3 2018
U.S. Recession
-3.0%
-1.0%
1.0%
3.0%
5.0%
7.0%
Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18
Average Hourly Earnings (%) Consumer Price Index (%)
Average Hourly Earnings
United States, All Employees, Total Private, Seasonally Adjusted, 12-Month % Change
Real average hourly earnings increased 3.3%, seasonally adjusted, from December 2017 to December 2018. The change in real average
hourly earnings, combined with no change in the average workweek, resulted in a 1.2% increase in real average weekly earnings over
this period.
Source: U.S. Bureau of Labor Statistics; National Bureau of Economic Research

8. 7
U.S. Multifamily Data Book Q3 2018
Economic Projections of the Federal Reserve Board
Median Projection
Source: Board of Governors of the Federal Reserve System
2018 2019 2020 2021 Longer run
Change in Real GDP 3.0% 2.3% 2.0% 1.8% 1.9%
September Projection 3.1% 2.5% 2.0% 1.8% 1.8%
Unemployment Rate 3.7% 3.5% 3.6% 3.8% 4.4%
September Projection 3.7% 3.5% 3.5% 3.7% 4.5%
PCE Inflation 1.9% 1.9% 2.1% 2.1% 2.0%
September Projection 2.1% 2.0% 2.1% 2.1% 2.0%
Core PCE Inflation 1.9% 2.0% 2.0% 2.0%
September Projection 2.0% 2.1% 2.1% 2.1%
Federal Funds Rate 2.4% 2.9% 3.1% 3.1% 2.8%
September Projection 2.4% 3.1% 3.4% 3.4% 3.0%
“In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal
funds rate to 2-1/4 to 2-1/2 percent. In determining the timing and size of future adjustments to the target range for the federal funds rate,
the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric
two percent inflation objective.”
- Board of Governors of the Federal Reserve System’s Monetary Policy Release, December 19, 2018

9. 8
U.S. Multifamily Data Book Q3 2018
U.S. Recession
-10.0%
-6.0%
-2.0%
2.0%
6.0%
10.0%
4Q03 4Q04 4Q05 4Q06 4Q07 4Q08 4Q09 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
Gross Domestic Product (%) 15-Year Average
Source: U.S. Bureau of Economic Analysis; National Bureau of Economic Research; Retrieved from FRED, Federal Reserve Bank of St. Louis
Gross Domestic Product
United States, Quarterly Change from Preceding Period, Seasonally Adjusted at Annual Rates, Based on Chained 2009 Dollars
Real gross domestic product (GDP) increased 2.6% in the fourth quarter of 2018, according to the “initial” estimate released by the Bureau
of Economic Analysis. In the third quarter, real GDP increased 3.4%.

10. 9
U.S. Multifamily Data Book Q3 2018
U.S. Recession
0.0
200.0
400.0
600.0
800.0
1,000.0
3Q54
3Q56
3Q58
3Q60
3Q62
3Q64
3Q66
3Q68
3Q70
3Q72
3Q74
3Q76
3Q78
3Q80
3Q82
3Q84
3Q86
3Q88
3Q90
3Q92
3Q94
3Q96
3Q98
3Q00
3Q02
3Q04
3Q06
3Q08
3Q10
3Q12
3Q14
3Q16
3Q18
Corporate Profits Compensation of Employees
Source: U.S. Bureau of Economic Analysis; National Bureau of Economic Research; Retrieved from FRED, Federal Reserve Bank of St. Louis
Corporate Profits and Compensation of Employees
Includes Gross Domestic Product: Implicit Price Deflator; Index 1954=100; Seasonally Adjusted Annual Rate; Quarterly
“The trends of the two series tend to track each other over several decades, reflecting the general growth of the economy. The past
decade and a half seems to be different, though. Never have corporate profits outgrown employee compensation so clearly and for so
long.” - Federal Reserve Bank of St. Louis; August 9, 2018

11. 10
U.S. Multifamily Data Book Q3 2018
0
25
50
75
100
125
150
Apr-33to
Apr-37
Jul-38to
Jan-45
Nov-45to
Oct-48
Nov-49to
Jun-53
Jun-54to
Jul-57
May-58to
Mar-60
Mar-61to
Nov-69
Dec-70to
Oct-73
Apr-75to
Dec-79
Aug-80to
Jun-81
Dec-82to
Jun-90
Apr-91to
Feb-01
Dec-01to
Nov-07
Jul-09to
Current
Time Between Recessions (Months) Average
Source: National Bureau of Economic Research
Time Between Recessions (1933 to Current)
NBER Based Recession Indicators for the United States From the Peak Through the Trough
Longest Time Between Recessions (Apr-91 to Feb-01): 119 mo.
Average Time Between Recessions: 62 mo.
Time Since Previous Recession: 114 mo.

12. 11
U.S. Multifamily Data Book Q3 2018
U.S. Recession
0.0%
1.5%
3.0%
4.5%
6.0%
Dec-03 Jun-05 Dec-06 Jun-08 Dec-09 Jun-11 Dec-12 Jun-14 Dec-15 Jun-17 Dec-18
3-Month Treasury 2-Year Treasury 10-Year Treasury
Source: Board of Governors of the Federal Reserve System; National Bureau of Economic Research; Retrieved from FRED, Federal Reserve Bank of St. Louis
Treasury Yield Curve as a Predictor of U.S. Recessions
Monthly, End of Period, Not Seasonally Adjusted
“Research beginning in the late 1980s documents the empirical regularity that the slope of the yield curve is a reliable predictor of future
real economic activity.” - Federal Reserve Bank of New York

13. 12
U.S. Multifamily Data Book Q3 2018
U.S. Recession
60.0%
62.0%
64.0%
66.0%
68.0%
70.0%
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
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
2016
2017
2018
Homeownership Rate (%)
Source: U.S. Bureau of the Census; National Bureau of Economic Research; Retrieved from FRED, Federal Reserve Bank of St. Louis
Homeownership Rate
United States, Not Seasonally Adjusted, Annual, End of Period
The U.S. Census Bureau reported that the homeownership rate reached 64.6% at the end of 2018, the highest since the third quarter of
2014. Increasing millennial demand was one of the biggest trends influencing the housing market, as the 61.1% homeownership rate for
those between 35 and 44 years old was the highest in more than five years.

14. 13
U.S. Multifamily Data Book Q3 2018
13
Homeownership and Household Formation
United States, Not Seasonally Adjusted, Annual, End of Period
Source: U.S. Census Bureau; Retrieved from FRED, Federal Reserve Bank of St. Louis
60.0%
62.5%
65.0%
67.5%
70.0%
-1.0
0.0
1.0
2.0
3.0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Thousands
Owner Occupied Housing Units (Millions) Renter Occupied Housing Units (Millions) Homeownership Rate (%)

15. 14
U.S. Multifamily Data Book Q3 2018
U.S. Recession
30.0%
42.0%
54.0%
66.0%
78.0%
90.0%
4Q94 4Q96 4Q98 4Q00 4Q02 4Q04 4Q06 4Q08 4Q10 4Q12 4Q14 4Q16 4Q18
All Ages Under 35 years 35 to 44 years
45 to 54 years 55 to 64 years 65 years and over
Source: U.S. Bureau of the Census; National Bureau of Economic Research
Homeownership Rate by Age
United States, Not Seasonally Adjusted, Annual, End of Period

16. 15
U.S. Multifamily Data Book Q3 2018
U.S. Recession
$0.0
$0.3
$0.6
$1.0
$1.3
$1.6
4Q06 4Q07 4Q08 4Q09 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
Thousands
Student Loans Outstanding (Trillions)
Source: Board of Governors of the Federal Reserve System; National Bureau of Economic Research; Retrieved from FRED, Federal Reserve Bank of St. Louis
Student Loans Outstanding
United States, Owned and Securitized, Not Seasonally Adjusted, Quarterly, End of Period
“Homeownership rates for those with a bachelor’s degree are nearly 8% higher than those with a high school degree. This difference
becomes more exaggerated when comparing those with a college degree to those who do not complete high school, nearly a 25%
difference in homeownership rates.” - Odeta Kushi, First American

17. 16
U.S. Multifamily Data Book Q3 2018
100.0
125.0
150.0
175.0
200.0
225.0
Dec-03 Jun-05 Dec-06 Jun-08 Dec-09 Jun-11 Dec-12 Jun-14 Dec-15 Jun-17 Dec-18
U.S. Recession S&P/Case-Shiller U.S. National Home Price Index
Source: S&P Dow Jones Indices; National Bureau of Economic Research; Retrieved from FRED, Federal Reserve Bank of St. Louis
S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index
United States, Monthly, Seasonally Adjusted, January 2000 = 100
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 4.7% annual gain in
December, down from 5.1% in the previous month. Las Vegas, Phoenix and Atlanta reported the highest year-over-year gains among the
20 cities.

18. 17
U.S. Multifamily Data Book Q3 2018
U.S. Recession
2.0%
3.2%
4.4%
5.6%
6.8%
8.0%
100.0
130.0
160.0
190.0
220.0
250.0
Dec-03 Jun-05 Dec-06 Jun-08 Dec-09 Jun-11 Dec-12 Jun-14 Dec-15 Jun-17 Dec-18
Housing Affordability Index 30-Year Fixed Rate Mortgage Average (%)
17
Housing Affordability Index
United States, Not Seasonally Adjusted, Monthly
Source: National Association of Realtors; Freddie Mac; National Bureau of Economic Research; Retrieved from FRED, Federal Reserve Bank of St. Louis
Value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home.
An index above 100 signifies that family earning the median income has more than enough income to qualify for a mortgage loan on a
median-priced home, assuming a 20% down payment.

19. 18
U.S. Multifamily Data Book Q3 2018
U.S. Recession
0.0%
2.0%
4.0%
6.0%
8.0%
$0.0
$250.0
$500.0
$750.0
$1,000.0
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
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
2016
2017
2018
Residential Structures % of Total GDP
Private Residential Fixed Investment
United States, Annual, End of Period, Billions of Dollars, Seasonally Adjusted Annual Rate
“Of the components of GDP, residential investment offers the best early warning sign of an oncoming recession. Since World War II, we
have had eight recessions preceded by substantial problems in housing and consumer durables.” - National Bureau of Economic Research
Source: U.S. Bureau of Economic Analysis; National Bureau of Economic Research; Retrieved from FRED, Federal Reserve Bank of St. Louis

20. 19
U.S. Multifamily Data Book Q3 2018
U.S. Recession
0.0%
0.3%
0.6%
0.9%
1.2%
1.5%
$0.0
$15.0
$30.0
$45.0
$60.0
$75.0
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Multifamily ($ Billions) % of Total GDP
Private Residential Fixed Investment: Multifamily Structures
United States, Annual, End of Period, Billions of Dollars, Seasonally Adjusted Annual Rate
Source: U.S. Bureau of Economic Analysis; National Bureau of Economic Research; Retrieved from FRED, Federal Reserve Bank of St. Louis

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Headquartered in Uniondale, New York, Arbor manages a multibillion-dollar servicing portfolio, specializing in Fannie
Mae, Freddie Mac and other government-sponsored enterprises, as well as CMBS, bridge, mezzanine and preferred
equity lending. Rated by Standard and Poor’s and Fitch Ratings, Arbor is committed to building on its reputation for
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