2019 Economic Outlook Scott Anderson, Ph.D., EVP & Chief Economist, Bank of the West The Sacramento Sierra Chapter of the Appraisal Institute Presents 2019 Economic Forecast Crowne Plaza Sacramento, CA January 25, 2019
Let The Trade War Begin!!!!! 2
Global Economy Losing Momentum 3
Forecasting Deceleration in 2019 4
Positive U.S. Economic Surprises Fading 5
U.S. Labor Market Tight – How Much Tighter Can It Get? 6
20 Million Net New Jobs Created And Still Counting 7
Job Growth Will Slow in 2019 8
Unemployment Rate Starts to Rise By Q4 2019 9
Consumers Keep Spending 10
Real Earnings Growth Not Keeping Pace 11
Slowdown in Consumer Spending Forecast 12
No Investment Spending Boom Visible in the Data 13
Housing Cycle Has Peaked in the U.S. and California 14
Home Price Growth Moderates 15
Treasury Yield Curve Flattest Since 2007 16
Q2 Bounce Expected to be Peak U.S. Growth 17
What’s In Store for Interest Rates? Jerome Powell Takes the Reigns 18
Will Fed Rate Hikes Continue? 19
Is the Next Move a Rate Hike or a Rate Cut? 20
Prices for Most Commodities are Already Plunging 21
Bond Market Inflation Expectations Have Moved Lower 22
Interest Rate Outlook – Only Modest Increase From Here 23
Can We Win a Trade War With China? 24
The Economic Cost Of Trade War Escalation 25
U.S. Equities Prices – Could They Fall Further? 26
Corporate Credit Spreads Start to Rise from Historically Low Levels 27
Is Sacramento Outperforming? 28
Sacramento Job Growth Lagging Behind 29
Bay Area and Stockton Lead the Way 30
Sacramento Had a Good Month in December 31
Government and Health Care Driving Job Creation in Sacramento 32
Leaders And Laggards 33
Sacramento Already Above Full-Employment 34
Homebuilding Has Seen an Anemic Recovery This Cycle 35
Sacramento Home Prices Steady 36
Solid Housing Activity Could Continue For Awhile 37
Disclosures: The preceding presentation is for educational purposes only. The discussions and information contained within the presentation should not be construed or used as a specific recommendation for the investment of assets of any customer of Bank of the West or its affiliates and is not intended as an offer, or a solicitation of an offer, to purchase or sell any security or financial instrument, nor does the information constitute advice or an expression of the Bank’s view as to whether a particular security or financi al instrument is appropriate for you and meets your financial objectives. Economic and market forecasts reflect subjective judgments and assumptions, and unexpected events may occur. Therefore, there can be no assurance that developments will transpire as forecasted. Please consult with your financial advisor prior to making investment decisions. All investing involves risk, including loss of principal. Bank of the West Wealth Management Group offers products and services through Bank of the West and its various affiliates and subsidiaries. Bank of the West is a wholly owned subsidiary of BNP Paribas.
THANK YOU Scott Anderson - Bank of the West Executive Vice President Chief Economist San Francisco, CA Scott.Anderson@bankofthewest.com bankofthewest.com
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