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Presented by: Elliot F . Eisenberg, Ph.D. President: GraphsandLaughs, LLC November 16, 2016 Madison, WI
THE ECONOMY I N 2017: MUCH LI KE 2016, I THI NK!
THE ECONOMY I N 2017: MUCH LI KE 2016, I THI NK! Presented by: - - PowerPoint PPT Presentation
THE ECONOMY I N 2017: MUCH LI KE 2016, I THI NK! Presented by: - - PowerPoint PPT Presentation
THE ECONOMY I N 2017: MUCH LI KE 2016, I THI NK! Presented by: Elliot F . Eisenberg, Ph.D. President: GraphsandLaughs, LLC November 16, 2016 Madison, WI The Economy is Stable! GDP = C+I+G+(X-M) Households are Repairing their Balance
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Households are Repairing their Balance Sheets
Trillions in Net Worth Recovered, at a New Record Level
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More Home Equity
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Households are Repairing their Balance Sheets
More Income to Spend Elsewhere
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Households Deleveraging is Done!!!!!!
Lack of income growth hurts, but debt is growing once again. Down 6.5% from peak
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Home Equity Lines of Credit are Back in Fashion!
Volume is double what is was at the trough in ‘09-’10-’11.
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Households Deleveraging is Done!!!!!!
Household delinquency rates are lower than before the recession but are no longer falling
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12
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Household Delinquencies are Steadily Improving
Total late and derogatory debt is lower now than in 2003! Steady improvement.
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Conference Board Consumer Confidence is Fine
Index is near its post-recession high.
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Hotel Occupancy Rates are Excellent!
Occupancy is superb as is the ADR and the RevPAR
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As has Las Vegas
The gamblers are back, the conventioneers a bit less so. Housing related?
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US Light Vehicle Sales are Absolutely Fantastic!
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Annual Y-o-Y Percent Change in PCE
A solid growth rate of 2.75%
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Oil Prices are a Huge Wildcard
But cheaper oil is a huge benefit, and cheaper is better, but only in the long-run
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The Ying and Yang of Natural Gas Prices
One CF is (roughly) equal to 1,020 BTU’s
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Milk Prices are in a Bear Market
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Corn Prices are in a long Bear Market
Corn prices have flat-lined at a level first reached in a decade ago.
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Soybean Prices are in a Long Bear Market
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Corporate Profits Grew Rapidly but have Stopped
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Profits For Financial Firms are Flat
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Bank Net Interest Margins Have Been Shrinking
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- OK. Now, Look at Capital Goods Orders!
Minus Defense and Aircraft
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Y-o-Y % Chng in Real Final Sales to Domestic Buyers
Measures spending and investment by U.S. businesses and households. Strips out gov’t spending, inventory swings and exports. Steady if undramatic growth at 2.5%.
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More of Us are Working in State and Local Gov’t!
Employment is rising
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Fiscal Policy Looks Increasingly Expansionary
Defense, infrastructure, tax cuts will boost the deficit
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The Dollar is Strengthening Against all Currencies
It will hurt employment growth but will reduce inflation
Weak Stronger Strong
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Manufacturing Employment is Climbing Again
Or is it falling? Strong dollar, weak global growth and weak energy prices are why.
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The Trade Deficit is Improving
The deficit in stuff (red) is finally flattening. Our shrinking petroleum deficit (black) helps.
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Annual Y-o-Y Percent Change in GDP
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GDP Growth Drivers – Fiscal Policy Uncertainty
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No Real Volatility or Fear!
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Best of All, No Recession is in the Cards!
Designed to track real macroeconomic activity in real time
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Best of All, No Recession is in the Cards!
Yield Curve Inversion Test: 1-Year Treasury Yield – 10-Year Treasury Yield
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Labor Markets:
They’re on the mend
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Great Job Growth!
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You Want A Job, You Got A Job
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We are All Quitters
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Wage Growth is Weak, but Improving!
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Wages Really Are Rising (But Slowly!)
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I Really Mean It!
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Changes in Median Wage Growth Looks Good!
- f those continuously full-time employed
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Inflation? What Inflation!
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Import Prices for all Commodities: Inflation!!
Rising, but largely due to energy price increases
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Export Prices for all Commodities: Inflation!!
Rising nicely and due to general rise in all prices except agriculture commodities
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Producer Prices Show Signs of Inflation!!
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Inflation is Rising
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By This Measure too!
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Inflation Expectations? Rising of Late?
5 year and 10 year breakeven rates
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Federal Reserve Behavior
Rates Will Rise. But, How Fast?
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Federal Reserve Behavior
Lower bound estimates
- Fed Funds is 0.375%
- By 12/31/16: 0.625%. (90% Prob.)
- By 12/31/17: 1.125%.
- By 12/31/18: 1.875%
- By 12/31/19: 2.875%
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Fed Funds and 30-Yr Mortgage Rates
The relationship is a very weak one
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Housing?
It’s Improving but In Fits and Starts!
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Residential Fixed Investment Slowly Rises!
Up 4.4% Y-o-Y. Non-residential up 3%, public down 17%, Residential down 33% from peaks
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Household Formation is Finally on the Move
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Credit is Generally Very Hard to Get
It was getting easier, but now not so much!
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Subprime Credit is Available Elsewhere
consumer loans, auto loans, credit cards, personal loans etc….
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Change in Wealth by Median Household 2003 -2013
Credit Source: Russell Sage Foundation
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Price Growth Appears to Finally be Slowing.
Prices rise faster than wages! Y-o-Y prices up 4.2% 5.1% or 5.1% depending on the measure
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Existing Home Inventory and Duration Move Together!
Every 300K change in units equals 1 month of inventory
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Bigger Houses Continue to Get Built
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New Home Prices Are Recovering Too Nicely
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Apartment Vacancy Rates
MF vacancy decline is over. Appreciation may be starting to wind down. Vacancy rate is up 3 quarters in a row, 1st time since Q4/09. Too much building. Rents still rise, but more slowly.
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Apartment Vacancy Rates
The multifamily party is winding down especially at the upper end! S > D. Rent growth should slow and vacancy rates will rise. 4 quarters in a row below 50
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Single-Family and Multifamily Starts from 2005 Forward
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Residential Remodeling – Slowly Rising
Owner-Occupied Improvements. Expected slight slowdown late in 2015
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Existing Home Sales
1st-time buyers remain largely MIA. Distressed sales are just 6% of total. Where is inventory? TRID was the reason for the 14% November decline.
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Recent Existing Home Sales
Slow steady improvement. Taper tantrum is the reason for the 15% decline in 2013, TRID was the reason for the 14% November decline.
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Purchase Application Activity
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Refinance Activity Growth Is Done
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Delinquencies & Foreclosures Continue Falling
30 and 60 day delinquencies are below normal!
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Cash Sales are Down from Peak
Cash sales were 29.7% in 7/16, down 190 BP Y-o-Y. Resales are 80% of all sales. Historically cash sales are 25%. Peak was 46.5% in 1/11. At lowest level since 2007
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Negative Equity is Less and Less of a Problem
Percent of Loans in Negative Equity Situation
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Demographics Will Start to Really Help
Beginning to approach the Peak. Chase Millennials, move-up buyers and Boomers
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What About Things Here?
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Things May Not Be Great, But they Are O.K.
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The Future Looks Better than the Present
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State Unemployment Rates
Significant differences exist: However, unemployment is below 7% everywhere!
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Population Growth within the Madison, WI MSA
Dane County grows fastest, while the remaining counties converge on the state rate
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State of Wisconsin Real GSP
After bottoming in 2009 it has been rising nicely since.
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Unemployment Rates in Wisconsin MSAs
Madison, Appleton, and GB are #1, #2, #3. Milwaukee, J’ville Racine follow. J’ville improves!
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Labor Force Growth Rates Around Wisconsin
All are rising!!!! Jamesville is on the move! Madison and Appleton are very good. Elsewhere, growth is 1% or slower. Racine is weak.
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Non-Farm Payroll Growth Around Wisconsin
Janesville is super. Madison & Appleton are OK, GB and Milwaukee are fair. Racine is weak.
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Per Capita Personal Income in Wisconsin MSAs
Madison and Milwaukee on top. GB and Appleton are next, Racine and Janesville suffer.
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Let’s Do this Without A Lawyer, Thank You!
Foreclosure inventory is 1% of homes with mortgage, still double the historic average.
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House Price Recovery Rates around Wisconsin Vary
Madison is tops. Appleton is good. GB, J’ville, and Milwaukee are recovering. Racine….
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Madison, WI MSA Housing Starts
Single-family, is at the level of 1997 but, multifamily rocks!
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Elliot F . Eisenberg, Ph.D.
Cell: 202.306.2731
elliot@graphsandlaughs.net www.econ70.com
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Thank YOU all very very much!
@ECON70
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