NEW ENGLAND ECONOMIC OUTLOOK

Transcription

1 NEW ENGLAND ECONOMIC OUTLOOK 13 th Annual Regional & Community Bankers Conference November 17, 2014 Mary A. Burke Senior Economist Federal Reserve Bank of Boston Disclaimer: The views expressed here are those of the speaker and do not necessarily represent the views of the Federal Reserve Bank of Boston or the Federal Reserve System.

2 Economic activity exceeds pre-recession peak in all NE states except Maine 1.2 Indexed to Pre-recession Peaks Recession CT ME MA NH RI VT US 0.8 Sep-00 Sep-02 Sep-04 Sep-06 Sep-08 Sep-10 Sep-12 Sep-14 Source: Federal Reserve Bank of Philadelphia, NBER, Haver Analytics

3 Employment falls short of pre-recession peak in all states except Massachusetts 1.04 Indexed to Pre-recession Peaks Recession CT ME MA NH RI VT US Sep-00 Sep-02 Sep-04 Sep-06 Sep-08 Sep-10 Sep-12 Sep-14 Source: Bureau of Labor Statistics, NBER, Haver Analytics

4 Employment growth near or above trend in all states except Vermont Annual Long-term Trend Last 12 months Since Peak Percent Percent Number Percent Number United States ,635, ,070,000 New England , ,000 Connecticut , ,800 Maine , ,200 Massachusetts , ,000 New Hampshire , ,800 Rhode Island , ,800 Vermont ,500 Source: Bureau of Labor Statistics, Haver Analytics

5 VT RI NH MA ME CT Some metro areas seeing robust job growth; others still shedding jobs Percent Change, September September 2014 Bridgeport-Stamford-Norwalk Danbury Hartford-West Hartford-East Hartford New Haven Norwich-New London Waterbury Bangor Lewiston-Auburn Portland-South Portland-Biddeford Barnstable Town Boston-Cambridge-Quincy Brockton-Bridgewater-Easton Framingham Haverhill-North Andover-Amesbury Leominster-Fitchburg-Gardner Lowell-Billerica-Chelmsford New Bedford Peabody Pittsfield Springfield Worcester Manchester Nashua Portsmouth Rochester-Dover Providence-Fall River-Warwick Burlington-South Burlington Percent Source: Bureau of Labor Statistics, Haver Analytics

6 Region s information sector leads job growth; manufacturing lags Percentage Change, September September 2014 Manufacturing Government Financial Activities Other Services Private Education & Health Services Trade, Transportation & Utilities Professional & Business Services US NE Construction Leisure & Hospitality Information Source: Bureau of Labor Statistics, Haver Analytics Percent

7 Pct. change emp., since trough Prof. and business services strongest sector in recovery; manufacturing weakest Source: Bureau of Labor Statistics, Haver Analytics

8 Employment exceeds pre-recession peak in serviceoriented industries Pct. change emp., since peak Source: Bureau of Labor Statistics, Haver Analytics

9 Percent New England no longer enjoys lower unemployment than U.S Recession US NE 2 0 Sep-00 Sep-02 Sep-04 Sep-06 Sep-08 Sep-10 Sep-12 Sep-14 Source: Bureau of Labor Statistics, NBER, Haver Analytics

10 Unemployment rate fell sharply in RI over past twelve months Sep-13 Sep-14 United States New England Connecticut Maine Massachusetts New Hampshire Rhode Island Vermont Source: Bureau of Labor Statistics, Haver Analytics

11 Share employed posts substantial increase; share not in labor force falls slightly Source: Bureau of Labor Statistics, Haver Analytics

12 Labor force participation still falling in some states; overall increase may not be robust Source: Bureau of Labor Statistics, Haver Analytics

13 Despite recent improvement, employment-to-population ratios still languishing Source: Bureau of Labor Statistics, Haver Analytics

14 Initial claims back down to pre-recession lows in region and U.S. Indexed to Average of Recession US NE Sep-00 Sep-02 Sep-04 Sep-06 Sep-08 Sep-10 Sep-12 Sep-14 Source: Department of Labor, NBER, Haver Analytics, Federal Reserve Bank of Boston

15 Percent Change from Year Earlier Personal income growth up sharply in past two quarters; still below post-recession highs Recession US NE Q1-03 Q2-04 Q3-05 Q4-06 Q1-08 Q2-09 Q3-10 Q4-11 Q1-13 Q2-14 Source: Bureau of Economic Analysis, NBER, Haver Analytics

16 Percent Change from Year Earlier Inflation in Boston has stayed at or below 2 percent since early Recession US Boston Sep-00 Sep-02 Sep-04 Sep-06 Sep-08 Sep-10 Sep-12 Sep-14 Source: Bureau of Labor Statistics, NBER, Haver Analytics

17 Percent Change from Year Earlier House price growth receding in region and U.S. since third quarter of Recession NE FHFA-Purchase Only US FHFA-Purchase Only US S&P Case-Shiller Q2-00 Q2-02 Q2-04 Q2-06 Q2-08 Q2-10 Q2-12 Q2-14 Source: FHFA, NBER, S&P/Case-Shiller, Haver Analytics

18 MA leads region in house price growth; CT trails Percent Change, Q Q United States Boston New England Connecticut Maine Massachusetts FHFA-Purchase Only FHFA-HPI Case Shiller New Hampshire Rhode Island Vermont Percent Source: FHFA, S&P/Case-Shiller, Haver Analytics

19 Percent of Mortgages Foreclosures back to boom-period lows in MA; still elevated in CT All Loans Recession CT ME MA NH RI VT NE US Q2-00 Q2-02 Q2-04 Q2-06 Q2-08 Q2-10 Q2-12 Q2-14 Source: Mortgage Bankers Association, NBER, Haver Analytics

20 Growth in housing permits slower in past 18 months; levels still well below pre-recession values Source: Census Bureau, Haver Analytics

21 Source: Census Bureau, Haver Analytics Revenue collections surge in CT; lag in ME and NH

22 Growth in exports stalled in region since mid-2011 Source: WISER, Haver Analytics

23 Consumer confidence approaches pre-recession high in region 160 Indexed to U.S. Average of Recession US NE Oct-00 Oct-02 Oct-04 Oct-06 Oct-08 Oct-10 Oct-12 Oct-14 Source: The Conference Board, NBER, Haver Analytics

24 Confidence in present situation increased more sharply than future expectations Oct-13 Oct US NE US NE US NE Consumer Confidence Present Situation Future Expectations Source: The Conference Board, Haver Analytics

25 Percent State leading indexes volatile since January; contraction foreseen in VT Recession CT ME MA NH RI VT US -6-8 Sep-08 May-09 Jan-10 Sep-10 May-11 Jan-12 Sep-12 May-13 Jan-14 Sep-14 Source: Federal Reserve Bank of Philadelphia, NBER, Haver Analytics

26 Outlook for MA: solid econ. growth foreseen; rising business confidence affirms forecast Massachusetts Leading Economic Index (Left Axis, Quarterly) AIM Business Confidence (Right Axis, Monthly) Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 0 Sources: MassBenchmarks; Associated Industries of Massachusetts

27 New England Economic Partnership foresees stronger regional economy over next 5 years Actual or Forecasted Ann. Growth Rates in: Employment Personal Income Gross State Product Population Labor Force Unemployment Rate Housing Permits FHFA House Price Index Source: New England Economic Partnership, Fall 2014 forecast

28 FOMC expects rebound in GDP growth in 2015; further declines in unemployment through 2017 Source: FOMC September 2014 Minutes, Figure 1

29 FOMC forecasts see inflation creeping up to ~2 percent by 2017 Source: FOMC September 2014 Minutes, Figure 1

30 Risks factors in the outlook Weakness in foreign markets contributing to: drag on exports, could worsen downward pressure on oil prices boosts disposable income and, possibly, consumer spending downward pressure on long-term Treasury yields could help housing market, consumption of durables Timing of short-term rate increase expected mid-2015, could be later if inflation stays low Progress likely to continue to be uneven within region VT most exposed to weak export demand