>Tatum/Roulston Report

January 27, 2010

>Whenever in past recessions we have seen the downward correction, inevitably the markets and pundits start to estimate timing and velocity of recovery. Knowing the market is both a leading indicator and a measure of confidence; its direction historically is influenced not only by economic activity but visibility and predictability of the future.

This month’s Tatum Survey showed a measurable change in company executives’ outlook and their experience in the last 30 days. As quantifiable as the Fall of 2008 downturn the January survey reflected that in December that measurements of backlogs, capital expenditures, and employment all saw current trends changing and 60 day outlooks improving. That type of brad based turnaround has not been seen in two years. The only trend not showing improvement was capital availability but here also the outlook improved. It is hard to believe that if business conditions improve the banks won’t get involved to a greater degree. The survey seems to indicate they are more receptive.

This is one month not a trend. But at this point it seems clear that stabilization albeit at a level back near two years ago(or more in certain industries) has temporarily been reached. Over 90% of respondents say business conditions are unchanged or improving. We will look very closely at this number moving forward. The ratio of improved to worsened has improved steadily in 2009, we believe the markets are telling us that we are at an inflection point. Over 95% of businesses think the 60 day outlook is positive. In large part this is driven by their outlook for backlog growth resulting in some plans for increased spending and employment growth. This is a good sign yet only one month. Our belief is this survey although sometimes volatile continues to reflect change on the ground much more timely.

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