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CACHANDLIM <br />ASR1 <br />ECONOMIC ROUNDUPANAG <br />THIRD QUARTER ADVANCE GDP <br />The Fourth quarter preliminary estimate for Gross Domestic <br />Product (GDP) reported an annualized growth rate of <br />1.6%, down from the third quarter reading of 4.1 %. This <br />was the slowest rate of GDP growth in the last twelve <br />quarters. The slowdown now reflects the impact of the <br />Gulf Coast hurricanes which hit last summer. Contributing <br />further to slow down were reductions in personal <br />consumption, business investments, residential <br />investments as well as decline in government spending. <br />OIL PRICES <br />Oil prices for West Texas Intermediate decreased over $6 <br />per barrel this month. The price per barrel closed the <br />month at $61.41 down from $67.92 per barrel. Price levels <br />eased on improved inventory data and less news <br />concerning the Iranian nuclear research story. <br />CREDIT SPREADS MIXED <br />3 -month top-rated commercial paper 0.04 <br />CONSUMER AND PRODUCER PRICES <br />During the month of January, the economy's headline inflation <br />readings moved higher. Energy prices also rose sharply during <br />the first part of the year. As a result, the year -over -year <br />Consumer Price Index increased to 4.0% from 3.4%. <br />Nevertheless, the favorable trend in core inflation continued as <br />the year -over -year Core CPI was down 0.1 % to 2.1 %. Core CPI <br />has continued to depict a very positive inflationary <br />environment for the economy. (Core CPI is measured less food <br />and energy) <br />LABOR MARKETS <br />The February non-farm payroll employment report showed a <br />strong increase of 243,000 jobs. Currently, the three-month <br />average for non-farm payroll employment is 186,000 jobs. This <br />month's report suggests that the growth trend in jobs is solid as <br />we move further into 2006. <br />w Credit spreads firmed <br />a during the month <br />across maturities and <br />0.08 (0.04) sectors, <br />2 -year AA corporate note <br />0.33 0.39 (0.06) <br />5 -year AA corporate note <br />0.46 0.48 (0.02) <br />5 -year Agency note <br />0.36 0.40 (0.03) <br />Source: Bloomberg <br />As of 2/28106 <br />SUSTAINABLE EcoNomic GROWTH <br />Trade Balance <br />(65.7) $Bin DEC 05 <br />(64.7) $Bin NOV 05 <br />(54.7) Bin DEC 04 <br />GDP <br />1.6% DEC 05 <br />4.1 % SEP 05 <br />3.3% DEC 04 <br />Unemployment Rate <br />4.8% FEB 06 <br />4.7% JAN 06 <br />5.4% FEB 05 <br />Prime Rate <br />7.50% FEB 06 <br />7.50% JAN 06 <br />5.50% FEB 05 <br />CRB Index <br />324.36 FEB 06 <br />348.66 JAN 06 <br />305.00 FEB 05 <br />Oil (West Texas Int.) <br />$61.41 FEB 06 <br />$67.92 JAN 06 <br />$51.75 FEB 05 <br />Consumer Price Index (y/o/y) <br />4.0% JAN 06 <br />3.4% DEC 05 <br />3.0% JAN 05 <br />Producer Price Index (y/o/y) <br />5.70% JAN 06 <br />5.40% DEC 05 <br />4.10% JAN 05 <br />Dollar / EURO <br />1.19 FEB 06 <br />1.22 JAN 06 <br />1.32 FEB 05 <br />As of 2128106 <br />Source: Bloomberg <br />® 2006 Chandler Asset Management Inc, An Independent Registered Investment Adviser. <br />The information contained herein was obtained from sources we believe to be reliable, but we do not guarantee its accuracy. Opinions and forecasts regarding industries, <br />companies, andlor the economy are all subject to change at any time, based on market and other conditions, and should not be construed as a recommendation. Page 3 <br />CHANDLER ASSET MANAGEMENT 0 9255 Towne Centre Drive, Ste 350 8 San Diego, CA 92121 0 800 317 4747 10 chandlerasset.com <br />