Economic Forecast May 13, 2014 Outline for Today Myths and - - PowerPoint PPT Presentation

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Economic Forecast May 13, 2014 Outline for Today Myths and - - PowerPoint PPT Presentation

Mar 07, 2023 152 likes •737 views

Babson Capital/UNC Charlotte Economic Forecast May 13, 2014 Outline for Today Myths and Realities of this Recovery Positive Economic Signs Negative Economic Signs Outlook for 2014 The Employment Picture Housing Trends

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SLIDE 1

Babson Capital/UNC Charlotte Economic Forecast

May 13, 2014

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SLIDE 2

Outline for Today

  • Myths and Realities of this Recovery
  • Positive Economic Signs
  • Negative Economic Signs
  • Outlook for 2014
  • The Employment Picture
  • Housing Trends
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SLIDE 3

Headlines for 1914

  • Ford Raises Daily Wage from $2.40 to $5.00
  • Panama Canal Opens
  • Austria Declares War
  • Burnett-anti-immigration Law Passes
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SLIDE 4

The Economy in1914

  • U.S. GDP
  • Real Per Capita GDP
  • Federal Spending
  • CPI
  • Unemployment Rate
  • $36.5 billion
  • $4,799 (Honduras)
  • $730 million ($17 bil.)
  • 10
  • 7.9%
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SLIDE 5

Myths and Realities of this Recovery

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SLIDE 6

Current Expansion

  • Began July 2009
  • 58 months
  • 7th longest of 33 total expansions since

December 1854

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SLIDE 7
  • 4
  • 3
  • 2
  • 1

1 2 3 4

2006 2007 2008 2009 2010 2011 2012 2013 2.7 1.8

  • 0.3
  • 2.8

2.5 1.8 2.8 1.9

2006 - 2013 U.S. GDP

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SLIDE 8
  • 7
  • 5
  • 3
  • 1

1 3 5

2009 I II III IV 2010 I II III IV 2011 I II III IV 2012 I II III IV 2013 I II III IV 2014 I

  • 5.4
  • 0.4

1.3 3.9 1.6 3.9 2.8 2.8

  • 1.3

3.2 1.4 4.9 3.7 1.2 2.8 0.1 1.1 2.5 4.1 2.6 0.1

2009 - 2014 U.S. Quarterly GDP

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SLIDE 9
  • Employment Decline:
  • 8,710,000
  • Employment Gain:

8,044,000

  • Percent Recovered: 92.4%

2007-2013 United States Payroll Employment

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SLIDE 10

What’s the Target?

3,000,000 Jobs per Year 250,000 Jobs per Month

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SLIDE 11

US Job Growth 2012

2,193,000 jobs 182,750 per month

(Second Largest Job Growth Since 1999)

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SLIDE 12

US Job Growth 2013

2,186,000 jobs 182,150 per month

(Third Largest Job Growth Since 1999)

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SLIDE 13
  • 6,000
  • 5,000
  • 4,000
  • 3,000
  • 2,000
  • 1,000

1,000 2,000 3,000 4,000 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

  • 848

1,168 2,810 3,844 2,157 2,810 3,391 3,0143,170 1,944

  • 1,757
  • 532

62 2,019 2,484 2,071 1,115

  • 3,617
  • 5,052

1,022 2,103 2,193 2,186

U.S. Job Growth 1990 - 2013

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SLIDE 14

2007 – 2013 Labor Force Participation Rates

60 62 64 66 68 70 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13

U.S.

August US LFPR 63.2%

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SLIDE 15

1947 – 2013 Labor Force Participation Rates

50 52 54 56 58 60 62 64 66 68 70 1948 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

2013 US LFPR 63.7% 1998-2000 US LFPR 67.1%

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SLIDE 16

Labor Force Participation Rate

# of People Employed + # of People Unemployed Noninstitutional Population 16 +

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SLIDE 17

Age Group Count

Under 5 years 20,201,362 5 to 9 years 20,348,657 10 to 14 years 20,677,194 15 to 19 years 22,040,343 20 to 24 years 21,585,999 25 to 29 years 21,101,849 30 to 34 years 19,962,099 35 to 39 years 20,179,642 40 to 44 years 20,890,964 45 to 49 years 22,708,591 50 to 54 years 22,298,125 55 to 59 years 19,664,805 60 to 64 years 16,817,924 65 to 69 years 12,435,263 70 to 74 years 9,278,166 75 to 79 years 7,317,795 80 to 84 years 5,743,327 85 years and over 5,493,433

2010 Population By Age Group

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SLIDE 18

1 2 3 4 5

2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013

January 2010 3.97 Persons per Job Opening November 2013 1.57 Persons per Job Opening

NC Number of Unemployed per Job Opening

(Not Seasonally Adjusted)

January 2008 1.21 Persons per Job Opening

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SLIDE 19

1 2 3 4 5

2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013

December 2009 3.09 Persons per Job Opening November 2013 1.28 Persons per Job Opening

MSA Number of Unemployed per Job Opening

(Not Seasonally Adjusted)

January 2008 0.84 Persons per Job Opening

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SLIDE 20

1 2 3 4 5

2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013

November 2009 4.46 Persons per Job Opening November 2013 1.34 Persons per Job Opening

SC Number of Unemployed per Job Opening

(Not Seasonally Adjusted)

January 2008 1.46 Persons per Job Opening

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SLIDE 21
  • Housing Stock/Prices
  • Interest Rates
  • Inflation
  • Consumer Credit
  • Consumer Confidence
  • Dollar
  • Gas Prices
  • Budget Deficit

Positive Indicators

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SLIDE 22

2 4 6 8 10 12 14 16

Jan-05 Apr Jul Oct Jan-06 Apr Jul Oct Jan-07 Apr Jul Oct Jan-08 Apr Jul Oct Jan-09 Apr Jul Oct Jan-10 Apr Jul Oct Jan-11 Apr Jul Oct Jan-12 Apr Jul Oct Jan-13 Apr Jul Oct Jan

January 2009 12.4 Months Supply December 2014 4.7 Months Supply

U.S. Monthly New Home Inventory

(Seasonally Adjusted)

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SLIDE 23

1 2 3 4 5 6 7

Current Rate 0 - .25%

Monthly Federal Funds Rate 1996-2013

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SLIDE 24

Percentage Changes in CPI 1949-2013

  • 1

1 3 5 7 9 11 13 15

Annual Increases 2009

  • 0.4%

2010 1.6% 2011 3.0% 2012 1.7% 2013 1.5%

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SLIDE 25

1980-2013 U.S. Household Debt Payments as a Percent of Income

5 10 15 20 1/1/1980 10/1/1980 7/1/1981 4/1/1982 1/1/1983 10/1/1983 7/1/1984 4/1/1985 1/1/1986 10/1/1986 7/1/1987 4/1/1988 1/1/1989 10/1/1989 7/1/1990 4/1/1991 1/1/1992 10/1/1992 7/1/1993 4/1/1994 1/1/1995 10/1/1995 7/1/1996 4/1/1997 1/1/1998 10/1/1998 7/1/1999 4/1/2000 1/1/2001 10/1/2001 7/1/2002 4/1/2003 1/1/2004 10/1/2004 7/1/2005 4/1/2006 1/1/2007 10/1/2007 7/1/2008 4/1/2009 1/1/2010 10/1/2010 7/1/2011 4/1/2012 1/1/2013

Peak 2007 III 13.18% Current 9.93%

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SLIDE 26

20 40 60 80 100 120

Jul 07 Apr 08 Sep 08 Dec 08 May 09 Jan 10 Apr 10 Aug 10 Mar 11 Jul 11 Jan 12 Aug 12 Feb 13 13-Dec

112.6 95.2 62.8 56.9 38.0 44.9 25.0 40.8 47.4 54.1 46.0 57.7 63.3 51.053.5 70.4 65.4 59.2 64.9 69.6 81.5 81.7

Consumer Confidence

  • October 1992

54.6

  • March 2009

25.0

  • April 2014

82.3

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SLIDE 27

0.5 0.7 0.9 1.1 1.3 1.5 1.7

$0.87 $1.36

2000-2013 Dollar Price of Euro

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SLIDE 28

0.00 1.00 2.00 3.00 4.00 5.00 January February March 2012 April 2012 May 2012 June 2012 July 2012 August 2012 September 2012 October 2012 November 2012 December 2012 January 2013 February 2013 March 2013 April 2013 May 2013 June 2013 July 2013 August 2013 September 2013 October 2013 November 2013 December 2013 January February

3.44 3.64 3.91 3.96 3.79 3.60 3.50 3.78 3.91 3.81 3.52 3.38 3.39 3.74 3.78 3.64 3.68 3.69 3.66 3.64 3.60 3.42 3.32 3.36 3.39 3.43

Monthly Gas Prices 2012-2014

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SLIDE 29

Effect of Energy Price Increase on U.S. Economy

  • Annual Transportation Usage

– 187 billion gallons per year

  • Annual Total Usage

– 288 billion gallons per year

  • Effect of a $.50 increase in price

– Transportation $93.5 billion per year – Total $144.0 billion per year

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SLIDE 30

1980 – 2023 U.S. Budget Deficit

  • 1500
  • 1000
  • 500

500 1000 Year 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 f 2015 f 2017 f 2019 f 2021 f 2023 f

2013 Budget Deficit $672 billion 2015 Budget Deficit $388 billion

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SLIDE 31
  • Excess Reserves
  • Trade Deficit
  • Tax Increases

Negative Indicators

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SLIDE 32

2008 – 2014 Banking System Excess Reserves

200 400 600 800 1000 1200 1400 1600 1800 2000 2200 2400 2600 1/1/2008 3/1/2008 5/1/2008 7/1/2008 9/1/2008 11/1/2008 1/1/2009 3/1/2009 5/1/2009 7/1/2009 9/1/2009 11/1/2009 1/1/2010 3/1/2020 5/1/2010 7/1/2010 9/1/2010 11/1/2010 1/1/2011 3/1/2011 5/1/2011 7/1/2011 9/1/2011 11/1/2011 1/1/2012 3/1/2012 5/1/2012 7/1/2012 9/1/2012 11/1/2012 1/1/2013 3/1/2013 5/1/2013 7/1/2013 9/1/2013 11/1/2013 1/1/2014 3/1/2014 March Excess Reserves $2,545 billion

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SLIDE 33

1992-2013 U.S. Trade Deficits

  • 900000
  • 800000
  • 700000
  • 600000
  • 500000
  • 400000
  • 300000
  • 200000
  • 100000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

2009 Trade Deficit $382 Billion 2008 Trade Deficit $681 Billion 2006Trade Deficit $799 Billion 2013TradeDeficit $475 Billion

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SLIDE 34

Spending Cuts 2014 - 2015

  • Fiscal Year 2014
  • Original Sequestration

– $100 billion

  • New Sequestration

– $50 billion

  • Fiscal Year 2015
  • Original Sequestration

– $100 billion

  • New Sequestration

– $75 billion

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SLIDE 35

Outlook for 2014

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SLIDE 36

Employment Picture

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SLIDE 37
  • 2500
  • 2000
  • 1500
  • 1000
  • 500

500 1000 1500 Mining Construction Manufacturing Wholesale Trade Retail Trade TWU Information FIRE B&P Services H&E Services Leisure Services Other Services Government

  • 71
  • 1954
  • 2265
  • 591.4
  • 1173.3
  • 408.3
  • 292
  • 551
  • 1488

790

  • 607
  • 207

82 216 311 568 364.2 987.9 392.9

  • 62

191 2240 1428 1356 185

  • 621

U.S. Jobs Lost Jobs Gained

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SLIDE 38

The North Carolina Experiment

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SLIDE 39

NC Unemployment Benefit Changes Old Benefit

  • 26 Weeks
  • $535/week max benefit

New Benefit

  • 12-20 Weeks
  • $350/week max benefit
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SLIDE 40

July 2013 Unemployment Rates

State Rate NEVADA 9.5 ILLINOIS 9.2 NORTH CAROLINA 8.9 RHODE ISLAND 8.9 GEORGIA 8.8 MICHIGAN 8.8 CALIFORNIA 8.7 NEW JERSEY 8.6 MISSISSIPPI 8.5 TENNESSEE 8.5

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SLIDE 41

December 2013 Unemployment Rates

State Rate

RHODE ISLAND 9.3 NEVADA 9.0 ILLINOIS 8.9 CALIFORNIA 8.3 MICHIGAN 8.3 KENTUCKY 7.9 MISSISSIPPI 7.8 TENNESSEE 7.7 ARIZONA 7.6 ARKANSAS 7.4 CONNECTICUT 7.4 GEORGIA 7.4 NEW JERSEY 7.2 MASSACHUSETTS 7.1 OHIO 7.1 OREGON 7.1 NEW YORK 7.0 NORTH CAROLINA 6.9 INDIANA 6.8 PENNSYLVANIA 6.8 WASHINGTON 6.7 SOUTH CAROLINA 6.6

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SLIDE 42

2013 North Carolina Labor Force

4,600,000 4,620,000 4,640,000 4,660,000 4,680,000 4,700,000 4,720,000 4,740,000 4,760,000 4,780,000 4,800,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

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SLIDE 43

2013 North Carolina Unemployment

300,000 320,000 340,000 360,000 380,000 400,000 420,000 440,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

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SLIDE 44

2013 North Carolina Employment

4,300,000 4,310,000 4,320,000 4,330,000 4,340,000 4,350,000 4,360,000 4,370,000 4,380,000 4,390,000 4,400,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

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SLIDE 45

2013-2014 North Carolina Unemployment Rate

5 6 7 8 9 10 11 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR

NC Seasonally Adjusted NC Seasonally Adjusted Forecast US Seasonally Adjusted

December Rate 6.9%

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SLIDE 46

Housing in 2013

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SLIDE 47

100 200 300 400 500 600 700 800 I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV 2007 2008 2009 2010 2011 2012 2013

749.3 717.3 671.7 616.4 565.5 538.4 507.4 452.1 405.5 376.3 392 395.2 383.1 400.8 365.6 374.7 377.1 381 386.8 398.1 418.4 425.7 443.7 468.8 490.3 513.2 532.6 531

US Residential Construction (NIPA) 2007-2013

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SLIDE 48

US Residential Building Permits

Year Total Permits Single Family Permits

1991 948.8 753.5 1992 1,094.9 910.7 1993 1,199.1 986.5 1994 1,371.6 1,068.5 1995 1,332.5 997.3 1996 1,425.6 1,069.5 1997 1,441.1 1,062.4 1998 1,612.3 1,187.6 1999 1,663.5 1,246.7 2000 1,592.3 1,198.1 2001 1,636.7 1,235.6 2002 1,747.7 1,332.6 2003 1,889.2 1,460.9 2004 2,070.1 1,613.4 2005 2,155.3 1,682.0 2006 1,838.9 1,378.2 2007 1,398.4 979.9 2008 905.4 575.6 2009 583.0 441.1 2010 604.6 447.3 2011 624.1 418.5 2012 829.7 518.7 2013 957.0 608.5

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SLIDE 49

NC Residential Building Permits

Year Total Permits Single Family Permits 2002 79,824 66,400 2003 79,226 66,883 2004 93,077 77,147 2005 97,910 84,975 2006 99,979 82,672 2007 85,777 70,339 2008 54,652 39,082 2009 33,800 25,388 2010 33,889 26,047 2011 32,804 24,863 2012 48,692 29,945 2013* 50,510 35,399

* Based on 11 months of data

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SLIDE 50

2 4 6 8 10 12 14 16

Jan-05 Apr Jul Oct Jan-06 Apr Jul Oct Jan-07 Apr Jul Oct Jan-08 Apr Jul Oct Jan-09 Apr Jul Oct Jan-10 Apr Jul Oct Jan-11 Apr Jul Oct Jan-12 Apr Jul Oct Jan-13 Apr Jul Oct

January 2009 12.4 Months Supply November 2013 4.3 Months Supply

U.S. Monthly New Home Inventory

(Seasonally Adjusted)

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SLIDE 51

US Case Schiller Housing Price Index

(Composite 20)

Month Index Condition Percent Change January 2000 100.00 Base July 2006 206.52 Peak 106.5% March 2012 134.07 Trough

  • 35.1%

February 2013 146.51 9.3% February 2014 165.35 Current 12.9%

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SLIDE 52

Keys to Watch

  • Consumer Confidence
  • Consumer Debt
  • Housing Prices
  • Excess Reserves
  • US Monthly Job Growth (1st Friday)
  • Gasoline Prices
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SLIDE 53
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SLIDE 54
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SLIDE 55
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SLIDE 56

Babson Capital/UNC Charlotte Economic Forecast

May 13, 2014

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SLIDE 57

Updated Sept 2013 1980 1974 1969 19481953 19571981 1990 2001

2007 1960