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U.S. Bank Releases 2006 Economic Forecast; Tucker Hart Adams, Ph.D., Projects Slower Growth for Colorado in 2006; State Economy to Reflect National Trends During Economic ''Fork in the Road'' Period

DENVER--(BUSINESS WIRE)--Sept. 13, 2005--Colorado's economy will grow at a slower pace in 2006, while impacts for Colorado consumers from rising interest rates will mirror the national economy, according to the U.S. Bank (NYSE:USB) 2006 Economic Forecast, prepared by Tucker Hart Adams, Ph.D., U.S. Bank's Rocky Mountain Region chief economist.

"The outlook for the Colorado economy is closely tied to our outlook for the U.S. economy," Adams said in the annual forecast released by U.S. Bank. "As 2005 draws to an end, the economy pauses at a fork in the road that will determine the economic outlook for a number of years. Although continued economic expansion is still the most likely scenario, a compelling case exists for a year that ends in recession for the nation and most of the industrialized world. Higher interest rates will have the same impact on Colorado consumers and Colorado housing prices as they do nationally."

Nationally, the U.S. economy can expect a downturn in output growth to 3.0 percent, from 3.5 percent in 2005 and 4.2 percent in 2004, according to Adams' forecast. Consumer price inflation will average 3.0 percent, compared to 3.1 percent in 2005 and 2.7 percent in 2004.

The national unemployment rate should remain virtually unchanged at 5.0 percent, due to the newly employed being replaced by discouraged job seekers that have ceased looking for jobs and are thus unaccounted for in unemployment statistics. Housing permits will decline by four percent, as 30-year mortgage rates will climb to 6.5 percent with an increase in loan defaults and foreclosures and fewer lenders willing to offer unconventional mortgage products, Adams' forecast states.

The global economy grew by 5.1 percent in 2004, the fastest growth rate recorded in nearly 30 years, but Adams warns that growth slowed in each consecutive quarter and world growth is expected to slow by a full percentage point this year with more slowing to come in 2006. Adams attributes this global slowdown to the effect of higher oil prices and anemic economies in Europe and Asia on the more robust U.S. and Chinese economies.

In Colorado, Adams states that after a decade of averaging 2.3 to 2.4 percent population growth, this critical economic indicator fell below 2.0 percent in 2002 and has remained at that level. In 2006, the state's population will grow by 1.5 percent, with Adams noting that "population growth is a critical component of a robust local economy, and job growth is not yet high enough to attract large numbers of people to the state." State employment growth is forecasted to slow to 2.1 percent in 2006, down from 2.3 percent in 2005.

Adams' forecast calls for an increase in personal income of 5.9 percent in Colorado in 2006, increasing per capita personal income to $38,817, while Metro Denver inflation will average 2.0 percent. According to Adams, this 2.3 percent increase in inflation-adjusted per capita income provides an indicator for the level of improved average standard of living that Colorado residents can expect in 2006.

Retail sales growth will slow to 5.9 percent in 2006 in Colorado, down from more than 8.0 percent in 2004 and 2005, due to "local residents and tourists moderating their spending and attempting to reduce their debt burden," according to Adams. While Adams does not predict housing prices, the forecast notes that a private mortgage insurer ranks Denver as the 12th most likely U.S. city to experience a downturn in housing prices in 2005 and 2006.

U.S. Bancorp (NYSE:USB), with $204 billion in assets, is the 6th largest financial holding company in the United States. The company operates 2,383 banking offices and 4,877 ATMs in 24 states, and provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses and institutions. U.S. Bancorp is home of the Five Star Service Guarantee in which the company pays customers if certain key banking benefits and services are not met. U.S. Bancorp is the parent company of U.S. Bank. Visit U.S. Bancorp on the web at usbank.com.

Interviews are available with Tucker Hart Adams beginning at 9:30 a.m. MT today.

The economic forecast will be published on www.ColoradoEconomy.com at 7:30 a.m. MT Tuesday, Sept. 13.

CONTACT: U.S. Bank
Tucker Hart Adams, Ph.D., 303-329-9218
or
Adrina Angel, 303-585-6936

SOURCE: U.S. Bank

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding U.S. Bancorp's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.



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