Economic Outlook Ahmad Ijaz Center for Business and Economic - - PowerPoint PPT Presentation

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Economic Outlook

The Greater Shelby Chamber of Commerce

Birmingham, Alabama January 31, 2017 Ahmad Ijaz

Center for Business and Economic Research Culverhouse College of Commerce

2

Overview: U.S. Economy

• The current economic recovery (now into its 8thyear) has been the slowest recovery in

postwar history.

• Compared to its peak in 4th quarter 2007, GDP is only about 12 percent higher while the

number of employed is only 3.4 million higher.

• Inflation adjusted GDP growth slowed in the first half of 2016 but is expected to be around 2.5

percent in the second half of 2016, for an annualized rate of 1.6 percent. GDP is forecasted to grow 2.3 percent in 2017.

• Consumer spending will remain the main source of growth, rising by 2.8 percent in 2017, at

approximated the same rate as 2016.

• Nonresidential business spending will rise 4.6 percent in 2017, following a 0.2 percent drop in

2016.

• Weak income growth, relatively high debt levels will continue to keep consumers cautious,

despite the job growth seen in recent months, historically employment growth is still relatively sluggish, and most of the jobs being added are either temporary (about 30 to 40 percent), part-time and/or in low wage sectors of the economy.

Center for Business and Economic Research, Culverhouse College of Commerce, The University of Alabama 2

3

U.S. Economy

GDP, Consumer Spending and Investments

Inflation Adjusted Chained 2009 Dollars (Annual Percent Change)

Source: Bureau of Economic Analysis and IHS Global Insight.

• 30
• 25
• 20
• 15
• 10
• 5

5 10 15 20 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 GDP

• CONS. SPENDING

NON-RESIDENTIAL INVESTMENTS RESIDENTIAL INVESTMENTS

4

U.S. Economic Outlook

Source: IHS Global Insight, January 2017.

(Percent change unless otherwise noted) 2014 2015 2016 2017 2018

Real GDP 2.4 2.6 1.6 2.3 2.6 Consumption 2.9 3.2 2.7 2.8 3.2 Residential Investment 3.5 11.7 4.7 2.7 3.1 Commercial, Healthcare Structures 12.9 10.1 15.4 6.1 5.1 Nonresidential Fixed Investment 6.0 2.1

• 0.2

4.6 4.5 Federal Government

• 2.5

0.0 0.7 0.3

• 0.8

State & Local Government 0.2 2.9 0.9 0.8 1.4 Exports 4.3 0.1 0.4 1.9 2.3 Imports 4.4 4.6 0.9 4.4 6.4 Payroll Employment 1.9 2.1 1.7 1.3 1.2 Unemployment Rate 6.2 5.3 4.9 4.6 4.3 CPI Inflation 1.6 0.1 1.3 2.5 2.1 Light Vehicle Sales (Millions) 16.46 17.40 17.41 17.38 17.57

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Shares of nonfarm employment (2015) and Alabama Gross Domestic Product (2015) by industry

.

17.20 13.22 7.05 11.86 9.20 11.70 7.62 11.68 3.13 9.74 16.28 19.38 39.52 22.42 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1 2 All Other Government Leisure and Hospitality Education and Healthcare Service Professional and Business Services Retail Trade Manufacturing Share of Alabama GDP Share of Alabama Non-farm Employment

Source: Bureau of Economic Analysis, Bureau of Labor Statistics.

6

Percent Change in Alabama Real GDP

• 4%
• 2%

0% 2% 4% 6% 8% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Employment: Avg. (1991 to 2007) 21,730

• Avg. (2010 to 2016) 12,250

GDP: Avg. (1991 to 2007) 2.5%

• Avg. (2010 to 2016) 1.3%

7

Labor Force Participation Rate

(Annual)

7 Source: Bureau of Labor Statistics.

Labor Force Participation Rate (Annual)

55.0 57.0 59.0 61.0 63.0 65.0 67.0 69.0 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

United States Alabama

8

Census Population Estimates (July 1) 2000-2015 2000 2015 Number Percent

Under 15 years

931,589 908,974

• 22,615
• 2.4%

15 to 64 years 2,935,713 3,185,843 250,130 8.5% 65 years and over 579,798 764,162 184,364 31.8%

Under 20 years

1,256,169 1,228,535

• 27,634
• 2.2%

20 to 64 years 2,611,133 2,866,282 255,149 9.8% 65 years and over 579,798 764,162 184,364 31.8% Total 4,447,100 4,858,979 411,879 9.3%

Source: U.S. Census Bureau, Population Division.

Aging Alabama Population

9

Alabama Monthly Employment Indicators

(December 2016)

9 Source: Alabama Department of Labor, Labor Market Information Division.

Not Seasonally Adjusted Seasonally Adjusted Civilian Labor Force 2,181,837 2,203,251 Percent Change from Year Ago Level 1.7% 2.7% Absolute Change from Year Ago Level 36,291 57,373 Employed 2,052,963 2,066,842 Percent Change from Year Ago Level 1.7% 2.8% Absolute Change from Year Ago Level 33,692 55,367 Unemployed 128,874 136,409 Percent Change from Year Ago Level 2.1% 1.5% Absolute Change from Year Ago Level 2,599 2,006 Alabama Unemployment Rate 5.9% 6.2% Alabama Unemployment Rate (Dec. 2015) 5.9% 6.3% U.S. Unemployment Rate 4.5% 4.7% U.S. Unemployment Rate (Dec. 2015) 4.8% 5.0%

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Alabama Nonagricultural Employment Change in Number of Jobs

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Source: Alabama Department of Labor, Labor Market Information Division.

December 2014 to December 2015 December 2015 to December 2016 Total Nonagricultural

14,900 18,600

Mining and Logging

• 800
• 400

Construction

• 4,700

Manufacturing

700 8,300

Durable Goods Manufacturing

• 600

2,900

Nondurable Goods Manufacturing

1,300 5,400

Trade, Transportation and Utilities

4,900 800

Wholesale Trade

600

• 3,000

Retail Trade

3,000 3,200

Transportation, Warehousing and Utilities

1,300 600

Information

• 800

300

Financial Activities

1,100 4,200

Professional and Business Services

1,100 1,900

Educational and Health Services

4,300 1,900

Leisure and Hospitality

6,900

• 1,100

Other Services

1,500 800

Government

• 4,000

6,600

Federal Government

• 200

900

State Government

• 1,600

3,300

Local Government

• 2,200

2,400

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Total Annual Nonfarm Employment and Unemployment Rate (Annual)

11

Employment (Thousands), Unemployment Rate (Percent), 1990-2015

Source: Alabama Department of Labor.

Nonfarm Employment Unemployment Rate

2 4 6 8 10 12 1,500 1,600 1,700 1,800 1,900 2,000 2,100 1990 1995 2000 2005 2010 2015 Employment Unemployment Rate

12

Change in Alabama Employment From the Beginning of the Recession

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Number of months 90 92 94 96 98 100 102 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 105 1980 1981 1990 2001 2007

13

NonFarm Employment

Only four metros past 2007/2008 annual peak in 2016 (December)

2007 or 2008 Job Loss to 2016 Nonfarm Employment Peak Year Number Percent Alabama 2,005,700

• 22,100
• 1.1

Anniston-Oxford 53,400

• 6,900
• 12.9

Auburn-Opelika 54,800 9,600 17.5 Birmingham-Hoover 533,400

• 8,600
• 1.6

Daphne-Fairhope-Foley 66,800 4,000 12.7 Decatur 58,600

• 4,400
• 7.5

Dothan 63,100

• 5,900
• 9.4

Florence-Muscle Shoals 57,300

• 700
• 1.2

Gadsden* 38,000 500 1.3 Huntsville* 214,300 11,500 2.8 Mobile* 184,600

• 5,600
• 3.0

Montgomery 178,000

• 4,900
• 2.8

Tuscaloosa 100,200 6,900 6.9 Net Jobs in Metropolitan Areas

• 26.600

Net Jobs in Nonmetro Counties 4,500

* Gadsden, Huntsville and Mobile employment peaked in 2008; Tuscaloosa stayed even across 2007-2008; all others saw peaks in 2007. Note: Nonfarm employment (jobs) is by place of work. Source: Alabama Department of Industrial Relations and U.S. Bureau of Labor Statistics.

14

Tax Revenues (FY2017, Year to Date December 2016)

14

Source: Alabama Department of Revenue.

Percent Change From Year Ago Change in Revenue from Year Ago Level Tax Total Collection Total $2,518,612,171 5.7% $134,878,530 Income (Individual) $927,352,416 3.3% $29,869,620 Sales $571,109,718 3.0% $16,593,479

15

ABCI

Expectations from Previous Quarters

Source: Center for Business and Economic Research, The University of Alabama.

55.5 54.2 57.4 57.6 54.8 51.2 53.0 55.1 52.4 52.6 62.7 10 20 30 40 50 60 70 80 90 100 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2015 2016 2017

Index

16

ABCI History

30 35 40 45 50 55 60 65 70 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: Center for Business and Economic Research, The University of Alabama.

17

• 3%
• 2%
• 1%

0% 1% 2% 3% 4% 5% 35 40 45 50 55 60 65 70 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 % Change from prior year ABCI ABCI, Annualized Index US GDP Percent Change in Chained 2009 Dollars

Source: U.S. Bureau of Economic Analysis and Center for Business and Economic Research, The University of Alabama.

ABCI and Real GDP

18

ABCI U.S. Index vs. U.S. GDP

• 3%
• 2%
• 1%

0% 1% 2% 3% 4% 5% 35 40 45 50 55 60 65 70 75 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 % Change from prior year National Economy Index ABCI National Economy, Annualized Index US GDP Percent Change in Chained 2009 Dollars

Source: U.S. Bureau of Economic Analysis and Center for Business and Economic Research, The University of Alabama.

19

ABCI Alabama Index vs. Alabama GDP

• 4%
• 3%
• 2%
• 1%

0% 1% 2% 3% 4% 5% 6% 35 40 45 50 55 60 65 70 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Alabama Real GDP, Annual % Change National Economy Index ABCI Alabama Economy, Annualized Index % Change AL Real GDP

Source: U.S. Bureau of Economic Analysis, IHS Global Insight, and Center for Business and Economic Research, The University of Alabama

20

Alabama and National Economic Outlook

0.0 5.2 20.3 64.6 9.9 0.0 6.8 31.3 54.2 7.8 Much Worse Somewhat Worse Remain the Same Somewhat Better Much Better Alabama National

Source: Center for Business and Economic Research, The University of Alabama.

21 3.1 10.4 43.2 39.6 3.6

10 20 30 40 50 60

Strong Decrease Moderate Decrease No Change Moderate Increase Strong Increase 1.6 13.5 39.1 41.1 4.7

10 20 30 40 50 60

Strong Decrease Moderate Decrease No Change Moderate Increase Strong Increase

Hiring Plans Capital Expenditures

Industry Performance Expectations

Q1 2017 compared to Q4 2016

Source: Center for Business and Economic Research, The University of Alabama.

22

U.S. and Alabama Economies

Expectations versus Prior Quarter

40 45 50 55 60 65 70 75 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2015 2016 2017 Alabama United States 65.8 69.8

23

Sales and Profits

Expectations versus Prior Quarter

40 45 50 55 60 65 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2015 2016 2017 Sales Profits 63.4 61.2

24

Hiring and Capital Expenditures

Expectations versus Prior Quarter

40 42 44 46 48 50 52 54 56 58 60 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2015 2016 2017 Hiring Capital Expenditures 58.5 57.6

25

This Alabama GDP and employment forecast summary is the CBER January 2016 forecast Preliminary 2018 forecast also included below

Alabama Forecast Summary

25

Probability: Forecast (60 Percent) and Range (90 percent)

(Percent change) 2015 2016 2017 2018

Real GDP 1.6 1.3 1.9 2.0 range 1.0 to 2.0 0.5 to 2.0 1.0 to 3.5 Employment 1.3 1.0 0.9 1.1 range 0.5 to 1.5 0.5 to 1.5 Total Tax Receipts, FY 4.0 1.2 2.0 2.2 range 1.5 to 3.5 1.0 to 3.5

26

Alabama GDP and employment by metro areas

2.4 3.1 26.5 3.6 2.8 2.9 2.9 1.9 11.3 9.1 8.7 5.4 19.4 10 20 30 40 50 60 70 80 90 100

2015

Share of Alabama Employment by Metro Area

Non-Metro Areas Tuscaloosa Montgomery Mobile Huntsville Gadsden Florence-Muscle Shoals Dothan Decatur Daphne-Fairhope-Foley Birmingham-Hoover Auburn-Opelika Anniston-Oxford 1.9 2.4 31.0 3.2 2.7 2.5 2.4 1.5 11.8 9.1 8.3 5.2

17.8

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0

2014

Share of Alabama GDP by Metro Area

Non-metro areas Tuscaloosa Montgomery Mobile Huntsville Gadsden Florence-Muscle Shoals Dothan Decatur Daphne-Fairhope-Foley Birmingham-Hoover Auburn-Opelika Anniston-Oxford- Jacksonville

27

Gross Domestic Product 2014 Millions of Current Dollars

Anniston-Oxford 3,777 Auburn-Opelika 4,866 Birmingham-Hoover 62,187 Daphne-Fairhope-Foley 6,488 Decatur 5,498 Dothan 5,017 Florence-Muscle Shoals 4,813 Gadsden 2,915 Huntsville 23,738 Mobile 18,284 Montgomery 16,703 Tuscaloosa 10,359 Alabama 197,535

28

Metro Area Unemployment Rates

Source: Alabama Department of Labor.

• Dec. 2015
• Dec. 2016

U.S. 4.8% 4.5% Alabama 5.9% 5.9%

Anniston-Oxford 6.6% 6.6% Auburn-Opelika 5.0% 5.0% Birmingham-Hoover 5.4% 5.4% Daphne-Fairhope-Foley Decatur 5.6% 6.0% 5.0% 5.7% Dothan 5.8% 5.9% Florence-Muscle Shoals 6.8% 6.5% Gadsden 5.8% 5.8% Huntsville 5.1% 5.1% Mobile 6.8% 7.1% Montgomery 5.6% 5.6% Tuscaloosa 5.6% 5.8% Shelby County 4.1% 4.3%

29

30

Alabama’s Goods Export Industries, 2015

(Millions $)

Source: U.S. Census Bureau, USA Trade Online and Center for Business and Economic Research, The University of Alabama.

31

Alabama Employment in Foreign-Owned Firms by Industry (2014, Total: 92,800)

Source: U.S. Bureau of Economic Analysis and Center for Business and Economic Research, The University of Alabama.

32

Total Homes Sold

Note: Data for both 2016 and 2015 cover the period January through September. Source: Alabama Center for Real Estate, The University of Alabama.

33

Metro Share of State GDP, 2015

Source: U.S. Bureau of Economic Analysis, Center for Business and Economic Research, The University of Alabama.

34

Metro Exports, 2015

Source: U.S. Department of Commerce, International Trade Administration.

35

Metro Share of State Exports (Percent)

Source: U.S. Department of Commerce, International Trade Administration.

36

Median Family Income, FY2016

Source: U.S. Department of Housing and Urban Development, Office of Economic Affairs, Economic and Market Analysis Division.

37

Educational Attainment, 2015

Note: Percent of population 25 years and over. Source: U.S. Census Bureau, 2015 American Community Survey 1-year estimates.

38

Birmingham-Hoover Nonagricultural Employment

Change in Number of Jobs

• Dec. 2014 – Dec. 2015
• Dec. 2015 – Dec. 2016

Total Nonfarm 3.7 4.2 Mining and Logging 0.1 Construction 1.2

• 1.2

Manufacturing

• 1.6

1 Durable Goods

• 1.9

1.1 Nondurable Goods 0.3

• 0.1

Trade, Transportation and Warehousing 0.9 1.2 Wholesale Trade

• 0.6

Retail Trade 1.2 1.1 Transportation and Utilities 0.3 0.1 Information

• 0.2
• 0.2

Financial Activities 1 Professional and Business Services 1.4 1.1 Education and Health Services 1.2 1.4 Leisure and Hospitality 0.2

• 1.4

Other Services 0.3 Government 0.3 1.2 Federal Government 0.3 0.1 State Government 0.8 0.7 Local Government

• 0.8

0.4

Source: Alabama Department of Labor

39

Change in Shelby County Population

Census Population Estimates (July 1) 2000-2015 2000 2015 Number Percent

Under 15 years

31,732 41,151

9,419 29.7%

15 to 64 years 99,382 139,461

40,079 40.3%

65 years and over 12,179 28,101

15,922 130.7% Under 20 years

41,064 55,347 14,283 34.8% 20 to 64 years 90,050 125,265 35,215 39.1% 65 years and over 12,179 28,101

15,922 130.7%

Total 143,293 208,713 65,420 45.7%

Source: U.S. Census Bureau, Population Division.

40

Educational Attainment, 2015: Shelby County vs Alabama & U.S.

Shelby County Alabama U.S.

High school graduate or higher 91.7% 84.9% 87.1% Bachelor’s degree or higher 40.4% 24.2% 30.6%

Note: Percent of population 25 years and over. Source: U.S. Census Bureau, 2015 American Community Survey 1-year estimates.

41

Shelby County Per Capita Income (PCI)

$44,396 $41,199 $41,572 $43,588 $45,597 $45,703 $47,730 $49,212 2008 2009 2010 2011 2012 2013 2014 2015

Source: U.S. Bureau of Economic Analysis and Center for Business and Economic Research, The University of Alabama.

2015: Percent of Alabama PCI ($38,030): 129.4% Percent of U.S. PCI ($48,112): 102.3%

42

Population gains since 2010: Shelby County ranks 5th

7/1/2010 - 7/1/2015 7/1/15 Number Change Percent Change

Alabama 4,858,979 73,818 1.5 Anniston-Oxford-Jacksonville Metro Area 115,620

• 2,817
• 2.4

Auburn-Opelika Metro Area 156,993 16,211 11.5 Birmingham-Hoover Metro Area 1,145,647 16,768 1.5 Daphne-Fairhope-Foley Metro Area 203,709 20,516 11.2 Decatur Metro Area 152,680

• 1,228
• 0.8

Dothan Metro Area 148,171 2,301 1.6 Florence-Muscle Shoals Metro Area 146,950

• 311
• 0.2

Gadsden Metro Area 103,057

• 1,385
• 1.3

Huntsville Metro Area 444,752 25,451 6.1 Mobile Metro Area 415,395 2,063 0.5 Montgomery Metro Area 373,792

• 1,331
• 0.4

Tuscaloosa Metro Area 239,908 9,480 4.1 Shelby County 208,713 12,665 6.5

Source: U.S. Census Bureau, Population Division.

43

Shelby County Population Pyramid, 2015

Source: U.S. Census Bureau, Population Division and Center for Business and Economic Research, The University of Alabama.

8,000 6,000 4,000 2,000 2,000 4,000 6,000 8,000 0-4 years 5-9 years 10-14 years 15-19 years 20-24 years 25-29 years 30-34 years 35-39 years 40-44 years 45-49 years 50-54 years 55-59 years 60-64 years 65-69 years 70-74 years 75-79 years 80-84 years 85+ years

women men

Baby Boomers

Millennials

44

Shelby County Employment Recovery After Recession

0.94 0.95 0.96 0.97 0.98 0.99 1 1.01 1.02 5 10 15 20 25 30

Months since start of recession

1990 2001 2007

45

Ahmad Ijaz Center for Business and Economic Research Cu Culv lverhouse Col Colle lege of

• f Com

Commerce The Un Univ iversit ity of

• f Alabama

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