Economic Outlook Ted C. Jones May 17, 2018 The webinar will begin - - PowerPoint PPT Presentation

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Economic Outlook Ted C. Jones May 17, 2018 The webinar will begin - - PowerPoint PPT Presentation

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Welcome to todays webinar! Economic Outlook Ted C. Jones May 17, 2018 The webinar will begin shortly. Phone | 1-800-619-3315 Passcode | 4597908 PLEASE NOTE: THE FOLLOWING PRESENTATION IS INTENDED TO PROVIDE TITLE INSURANCE LICENSEES WITH

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Welcome to today’s webinar!

Economic Outlook

Ted C. Jones

May 17, 2018

The webinar will begin shortly.

Phone | 1-800-619-3315 Passcode | 4597908

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PLEASE NOTE: THE FOLLOWING PRESENTATION IS INTENDED TO PROVIDE TITLE INSURANCE LICENSEES WITH INFORMATION ABOUT VARIOUS ECONOMIC ISSUES RELEVANT TO THEIR TITLE INSURANCE BUSINESS AND TO ASSIST IN THEIR PLANNING FOR RUNNING THEIR AGENCIES AND

  • OFFICES. THIS MATERIAL IS NOT INTENDED NOR

SHOULD IT BE USED TO MAKE INVESTMENT DECISIONS REGARDING STOCKS, BONDS OR OTHER SECURITIES OF ANY COMPANY INCLUDING STEWART INFORMATION SYSTEMS OR ANY OTHER COMPANY.

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  • In order to obtain a CE Certificate or CLE Credit, you must
  • listen to the webinar for a minimum of 55 minutes
  • btain the password (provided at the end of the presentation)
  • follow the instructions as given
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ATTORNEY INFORMATION

Because of opinions expressed by the Texas Department of Insurance (TDI) concerning rebates, legal credit is available only to:  Attorneys who own title agencies that are Stewart Title Guaranty Agents  Attorneys employed by a title insurance agent licensed with Stewart Title Guaranty or Stewart entities  Fee attorneys who have an Escrow Officer license through a Stewart Title Agent or Stewart entity

We welcome any other lawyers to listen, but cannot provide continuing education credit to you.

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  • 25
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Hurricanes & Disasters

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How Deep The Water Got In Houston

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Immediate Impact

  • Loss of Jobs
  • Declining Home

Sales 6-12 Months Later

  • Strong Job

Growth

  • Rising Home

Sales

Disaster Economic Impact

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400 450 500 550 600 650

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

New Orleans MSA Employment

Thousands – Seasonally Adjusted

Hurricane Katrina

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SLIDE 15

35 38 40 43 45 48 50

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Punta Gorda MSA Employment

Thousands – Seasonally Adjusted

Hurricane Charlie

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SLIDE 16

Cape Coral-Ft Myers MSA Home Sales

200 400 600 800 1,000 1,200 1,400 1,600

'02 '03 '04 '05 '06 '07

Closings Per Months

Hurricane Charlie August 2004 12,281 Aug 2003- July 2004 13,646 +11.1% Sep 2004- Aug 2005

+11.1%

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SLIDE 17

U.S. Existing Home Sales

200 400 600 800

'02 '03 '04 '05 '06

Closings Per Months

Thousands Hurricane Charlie August 2004 6.609 Million Aug 2003- July 2004 7.027 Million +6.3% Sep 2004- Aug 2005

+6.3%

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SLIDE 18

125 130 135 140 145 150

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

U.S. Jobs

Jobs (Millions) Seasonally Adjusted

1.56% Prior 12 Months 2.28 Million Net New Jobs in Past 12-Months

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SLIDE 19

U.S. Leisure & Hospitality Jobs

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 12.5 13.0 13.5 14.0 14.5 15.0 15.5 16.0 16.5

Recession Millions of Jobs Seasonally-Adjusted

+1.74% Past 12 Months

The Blood Pressure Test of the U.S. Economy

Hurricanes Harvey & Irma

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U.S. Net Job Gains – Trailing 12-Months

1 2 3 4 '11 '12 '13 '14 '15 '16 '17 '18

Jobs - Millions

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$23 $24 $25 $26 $27

'12 '13 '14 '15 '16 '17 '18

U.S. Average Hourly Earnings

$US Per Hour

Up 2.6 Percent in Past 12-Months To $26.84 Per Hour

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220,0 220,000 00

1st

st Time

Time Applicants pplicants Une Unemplo mployme yment nt Benefits Benefits Week Ending eek Ending Januar anuary 13 y 13 2018 2018

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210,0 210,000 00

1st

st Time

Time Applicants pplicants Une Unemplo mployme yment nt Benefits Benefits Week Ending eek Ending Febr bruar uary 24 y 24 2018 2018

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215,0 215,000 00

1st

st Time

Time Applicants pplicants Une Unemplo mployme yment nt Benefits Benefits Week Ending eek Ending Mar March h 24 24 2018 2018

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211,0 211,000 00

1st

st Time

Time Applicants pplicants Une Unemplo mployme yment nt Benefits Benefits Week Ending eek Ending May 5 May 5 2018 2018

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1.81 1.81 Milli Million

  • n

Total

  • tal People

eople

  • n
  • n

Une Unemplo mployme yment nt Benefits Benefits April pril 2018 2018

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90% of workers should

see an increase when new guidelines are implemented

January 16, 2018

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13.6% 13.6%

Per ercent cent of

  • f

U.S. .S. Popula

  • pulation

tion Aged 25 Aged 25-34 34

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36% 36%

Per ercent cent of

  • f

Home Homebuy buyer ers Prior Prior Year ear Aged 25 Aged 25-34 34

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130,000+ Millennial Poll

Would You Rather? 47% Have an Easy Job Working for Someone Else 53% Work for Yourself But Work Incredibly Hard

9GAG + GfK Research

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130,000+ Millennial Poll

Would You Rather? 29% Commit to a Guaranteed Job for Next 3 Years 71% Commit to a Start-Up Opportunity

9GAG + GfK Research

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130,000+ Millennial Poll

Would You Rather? 95% Gain 10 Friends in Real Life 5% Gain 10,000 Friends on Instagram-Twitter

9GAG + GfK Research

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130,000+ Millennial Poll

Would You Rather? 33% Lose the Right to Vote 67% Lose the Right to Say Anything on Social Media

9GAG + GfK Research

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130,000+ Millennial Poll

Would You Rather? 43% Give Up Sex 57% Give Up the Internet

9GAG + GfK Research

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SLIDE 35 Utah 3.29% Pennsylvania 1.42% Minnesota 0.73% Idaho 3.26% Michigan 1.40% Iowa 0.67% Nevada 2.95% Rhode Island 1.30% West Virginia 0.67% Washington 2.77% New Hampshire 1.26% Illinois 0.65% Texas 2.42% Hawaii 1.26% Nebraska 0.64% Colorado 2.35% Mississippi 1.25% Montana 0.64% Arizona 2.30% Wyoming 1.25% Louisiana 0.61% Oregon 2.20% New York 1.19% Delaware 0.55% Florida 2.03% Massachusetts 1.16% Dist of Columbia 0.51% California 1.92% New Mexico 1.16% Maine 0.46% South Carolina 1.71% Wisconsin 1.01% Connecticut 0.46% Oklahoma 1.69% Virginia 1.00% Maryland 0.40% North Carolina 1.67% Missouri 0.99% Arkansas 0.36% Tennessee 1.63% Ohio 0.98% Kentucky 0.23% New Jersey 1.63% Alabama 0.96% Vermont 0.19% Georgia 1.47% Indiana 0.89% Alaska
  • 0.21%
South Dakota 1.45% Kansas 0.76% North Dakota
  • 1.27%
State Job Growth -- 12 Months Ending March 2018
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125 130 135 140 145 150

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

Texas Jobs

Jobs (Thousands) Seasonally Adjusted

2.42% Prior 12 Months 294,100 Net New Jobs in Past 12-Months

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SLIDE 38 Percent Rank MSA-Division State Change New Total 1 Midland Texas 9.29% 8.40 98.8 2 Odessa Texas 6.16% 4.40 75.8 3 Elkhart-Goshen Indiana 6.12% 8.30 143.9 4
  • St. George
Utah 5.08% 3.20 66.2 5 Crestview-Fort Walton Beach-Destin Florida 4.89% 5.50 117.9 6 College Station - Bryan Texas 4.76% 5.50 121.1 7 Yakima Washington 4.69% 4.00 89.3 8 Greeley Colorado 4.65% 4.80 108.1 9 Lake Charles Louisiana 4.49% 5.10 118.7 10 Carson City Nevada 4.39% 1.30 30.9 11 Walla Walla Washington 4.36% 1.20 28.7 12 Gettysburg Pennsylvania 4.06% 1.40 35.9 13 Rockford Illinois 4.06% 5.90 151.3 14 Wenatchee-East Wenatchee Washington 4.04% 1.80 46.3 15 Reno Nevada 4.04% 9.20 237.2 MSA & Division Job Growth -- 12 Months Ending March 2018 12-Months Jobs-Thousands
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SLIDE 39 Percent Rank MSA-Division State Change New Total 16 Boise City Idaho 3.96% 12.40 325.4 17 Provo-Orem Utah 3.90% 9.60 255.6 18 Pocatello Idaho 3.86% 1.40 37.7 19 Kokomo Indiana 3.86% 1.60 43.1 20 Albany Oregon 3.85% 1.70 45.8 21 Bend-Redmond Oregon 3.84% 3.10 83.9 22 Gainesville Georgia 3.82% 3.40 92.4 23 Ocean City New Jersey 3.76% 1.60 44.1 24 Yuba City California 3.74% 1.60 44.4 25 Orlando-Kissimmee-Sanford Florida 3.60% 44.70 1,284.7 26 Madera California 3.49% 1.30 38.5 27 Austin-Round Rock-San Marcos Texas 3.49% 35.80 1,060.3 28 Augusta - Richmond County GA-SC 3.41% 8.00 242.9 29 Idaho Falls Idaho 3.40% 2.20 67.0 30 Medford Oregon 3.37% 2.90 88.9 MSA & Division Job Growth -- 12 Months Ending March 2018 12-Months Jobs-Thousands
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Percent MSA-Division Change New Total Abilene 1.61% 1.1 69.4 Amarillo 1.43% 1.7 120.6 Austin-Round Rock-San Marcos 3.64% 37.2 1,058.5 Beaumont-Port Arthur

  • 0.97%

(1.6) 162.6 Brownsville - Harlingen

  • 0.14%

(0.2) 141.2 College Station - Bryan 5.06% 5.8 120.4 Corpus Christi

  • 0.98%

(1.9) 191.4 Dallas-Ft Worth-Arlington 2.62% 93.5 3,657.8 Dallas-Plano-Irving Metro Div 2.73% 69.4 2,613.1

MSA & Division Job Growth -- 12 Months Ending March 2018

12-Months Jobs-Thousands

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Percent MSA-Division Change New Total El Paso 0.99% 3.1 314.9 Ft Worth-Arlington Metro Div. 2.38% 24.3 1,044.7 Houston-The Woodlands-Sugar Land 2.20% 66.1 3,068.3 Killeen-Temple 1.26% 1.8 144.3 Laredo 1.75% 1.8 104.8 Longview 0.94% 0.9 96.8 Lubbock 1.91% 2.8 149.5 McAllen Edinburg-Mission 1.88% 4.8 260.6 Midland 8.59% 7.7 97.3

MSA & Division Job Growth -- 12 Months Ending March 2018

12-Months Jobs-Thousands

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Percent MSA-Division Change New Total Odessa 7.10% 5.0 75.4 San Angelo 1.23% 0.6 49.5 San Antonio-New Braunfels 2.38% 24.5 1,055.5 Sherman-Denison 1.28% 0.6 47.5 Texarkana 0.33% 0.2 60.3 Tyler 2.31% 2.4 106.1 Victoria

  • 0.24%

(0.1) 41.1 Waco 0.08% 0.1 121.2 Wichita Falls 0.34% 0.2 59.1

MSA & Division Job Growth -- 12 Months Ending March 2018

12-Months Jobs-Thousands

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U.S. Existing Home Sales & Median Prices

Sales Trailing 12 Months

$175 $200 $225 $250 $275 '14 '15 '16 '17 '18 4.8 5.0 5.2 5.4 5.6

Median Price Homes Sales

Median Price $ Thousands Home Sales 12-Months Millions

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U.S. Residential Building Permits

400,000 800,000 1,200,000 1,600,000 2,000,000 2,400,000

'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 *18 Single Family Multi

Number of Dwelling Units

2018 is Latest 12-Months

1,160,025 New Dwelling Units in Past 12-Months 2,281,000 Net New Jobs

1.97 Net New Jobs Per New Dwelling Unit, 1.25 to 1.50 Normal

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Texas Existing Home Sales & Median Prices

Sales Trailing 12 Months

$150 $175 $200 $225 $250 '14 '15 '16 '17 '18 275,000 300,000 325,000 350,000

Median Price Homes Sales

Median Price $ Thousands Home Sales 12-Months

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Texas Building Permits

50,000 100,000 150,000 200,000 250,000

'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 *18 Single Family Multi

Number of Dwelling Units

2018 is Latest 12-Months

166,712 New Dwelling Units in Past 12-Months 294,100 Net New Jobs

1.76 Net New Jobs Per New Dwelling Unit, 1.25 to 1.50 Normal

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United States 12,471 $ New York 22,169 $ Connecticut 19,665 $ California 18,438 $ New Jersey 17,850 $ District of Columbia 16,443 $ Massachusetts 15,572 $ Minnesota 12,954 $ Maryland 12,931 $ Oregon 12,617 $ Illinois 12,524 $ Texas 7,824 $

Average State & Local Tax Deductions 2015

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Mega Themes 2018

  • More Jobs Than Ever in History
  • Tax Reform Implications MID SALT
  • Entry Level Homebuyers Strong
  • Rising Interest Rates
  • Commercial Sales Cooling - End of Cycle
  • Strong Economy Potential!
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Household Debt Service as a Percent of Household Disposable Income

9 10 11 12 13 14 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16

Percent

FED Board of Governors, BEA
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$150 $160 $170 $180 $190 $200 $210

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

U.S. Real Retail & Food Service Sales

$ Billions – Seasonally Adjusted

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4 8 12 16 20

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

Light Weight Vehicle Sales

Millions – Seasonally Adjusted Annual Rate

Bureau of Economic Analysis

Cash For Clunkers Harvey-Irma

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Federal Debt – Total Public Debt

3 6 9 12 15 18 21 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16

$ Trillions

St Louis Federal reserve
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Federal Debt Interest Payments In March 2017 30% Greater Than March 2016, 10.7% Greater in March 2018 vs Year Ago

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Commercial Real Estate Unscathed In Tax Reform

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Texas Made Up

44.5 Percent

Of All U.S. Commercial Sales in 12-Months Ending Q1 2018

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$0 $100 $200 $300 $400 $500 $600

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

U.S. Commercial Real Estate Sales Volume

$ Billions – Trailing 12 Months

Property and Portfolio Sales $2.5 Million and Up

  • 5.6 Percent Year-Over-Year
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$0 $50 $100 $150 $200 $250 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

Texas Commercial Real Estate Sales

$ Billions – Trailing 12 Months

Property and Portfolio Sales $2.5 Million and Up +10.1 Percent

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$0 $20 $40 $60 $80

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

U.S. Industrial Commercial Real Estate Sales Volume

$ Billions – Trailing 12 Months

Property and Portfolio Sales $2.5 Million and Up

+20.6 Percent Year-Over-Year

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$0 $50 $100 $150 $200 $250

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

U.S. Office Commercial Real Estate Sales Volume

$ Billions – Trailing 12 Months

Property and Portfolio Sales $2.5 Million and Up

  • 14.8 Percent Year-Over-Year
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$0 $20 $40 $60 $80 $100

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

U.S. Retail Commercial Real Estate Sales Volume

$ Billions – Trailing 12 Months

Property and Portfolio Sales $2.5 Million and Up

  • 25.8 Percent Year-Over-Year
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$0 $50 $100 $150 $200

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

U.S. Apartment Sales Volume

$ Billions – Trailing 12 Months

Property and Portfolio Sales $2.5 Million and Up

+5.2 Percent Year-Over-Year

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5% 6% 7% 8% 9%

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 All Property Types Retail Industrial Office Apartments

Commercial Real Estate Cap Rates Percent – 12-Month Moving Average

Property and Portfolio Sales $2.5 Million and Up

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1% 2% 3% 4% 5% 6% 7% 8% 9%

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 US Cap Rates 10-Year Treasury Texas

Commercial Real Estate Cap Rates & 10-Year Treasury Percent – All Property Types

Property and Portfolio Sales $2.5 Million and Up

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Basis Months Number Points Duration Increases Increase June 2004 - June 2006 25 17 425 June 1999 - May 2000 12 6 175 March 1997 1 1 25 February 1994 - Feb 1995 13 7 300 Average 231.25 Median 237.5 Source: Federal Reserve Bank of New York

Fed Funds Target Rate Increases

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SLIDE 65

10-Year Treasury 2.19% 30-Year Residential 3.94% Lower Quartile 115.6 1/3rd 173.4 Median Quartile 231.3

November 2015

Rate Increase Impact - Basis Points

Rate Moves Over Cycle Lower Quartile 3.35% 1/3rd 3.92% Median Quartile 4.50% Lower Quartile 5.10% 1/3rd 5.67% Median Quartile 6.25% 30-Year Residential Rates 9-15 Months Treasury Forecasts 9-15 Months

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$4,758 Electricity Cost to Mine 1 Bitcoin In U.S.

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19 Days

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Days to Drill & Fracture 4 Years Ago -- 40 Days Now – 19 Days

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500 1,000 1,500 2,000 2,500

4-Jan-02 6-Dec-02 7-Nov-03 8-Oct-04 9-Sep-05 11-Aug-06 13-Jul-07 13-Jun-08 15-May-09 16-Apr-10 18-Mar-11 17-Feb-12 18-Jan-13 20-Dec-13 21-Nov-14 23-Oct-15 23-Sep-16 25-Aug-17

North American Drilling Rig Counts

Number of Operating Rigs

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2018

  • Strong Potential Economy corporate tax cut
  • Mortgage Interest some states
  • State Tax Deductions some states
  • Inflation – Unraveling Quantitative Easing QE
  • Rising Interest Rates
  • Increased Incomes
  • Cheap Energy Drives Overall US Economy

Tax Law Impacts

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SLIDE 75

https://taxfoundation.org/2018-tax-reform-calculator-explainer/

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Twitter witter DrT DrTCJ CJ

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Are You Kidding Me????

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Per the TDI and the State Bar, in order to

  • btain a CE Certificate or CLE Credit you

must:

– listen to the webinar for a minimum of 55 minutes – obtain the password (provided at the end of the presentation) – follow the instructions as given

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To Receive CE Credit

Each individual seeking credit hours must send their own certificate request to: CEcertificate@stewart.com

Please include the following information:
  • Provide only this Presentation Name in the Subject Line of your e-mail – “Economic Outlook”
In the body of your e-mail:
  • Name of Participant (as it appears on your Escrow Officer License);
  • Presentation PASSWORD given at the end of the webinar;
  • License Number Only (located on left side of Escrow Officer Certificate of License – for example: License Number:
1234567-890123) For Attorney CLE Credit also include:
  • Texas State Bar Number
  • Affiliation with Stewart
– Employed by Stewart Title Guaranty Company; – an affiliate; or – a Stewart agent

For more details, see the CE and CLE FAQs at:

http://www.stewart.com/en/stg/texas/education/texas-tips/ce-cle-faqs.html 81
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Recordings www.stewart.com/texas Under “Texas TIPS” tab

  • Posted online 10 days after live presentation
  • Other current courses available

Certificates

  • Processing can take up to 10 business days.
  • Contact us if you haven’t received your certificate after

the allotted processing time. CEcertificate@stewart.com

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Join us for the next Texas TIPS webinar!

June 21, 2018

Please Advise: The 10 Most Common Underwriter Questions

Bill Pratt

For Questions/Comments Email john.rothermel@stewart.com
  • r
heidi.junge@stewart.com 83