Indiana Hospital Association Winds of Change

Transcription

1 Indiana Hospital Association Winds of Change Dr. Alan Beaulieu President

2 217 Forecast Results If you heard ITR around two years ago 2 Duration Accuracy US GDP % US Ind. Prod % Europe Ind. Prod % Canada Ind. Prod % China Ind. Prod % Retail Sales 2 98.% Housing % Employment % ITR Economics provides the best economic intelligence to reduce risk and drive practical and profitable business decisions. Summary September 218 Macroeconomic Rise for 218 US Global Segment Thinking Into 3 Time Periods Global Issues Impacting Our Businesses Tariffs Leading Indicator Signals are Mixed Know which ones matter to you How to track the leading indicators

3 US and Indiana GSP Growth Rate '6 '8 '1 '12 '14 '16 '18 '2 U.S. Indiana 3/12 Rates-of-Change Source: BEA 4 Indiana Leading Indicator / / % -.1% ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 '24 Rates-of-Change Source: Philadelphia Federal Reserve -4

4 US to Indiana Unemployment Rates July 218 IN 3.4% US 3.8% ' '1 '2 '3 '4 ' '6 '7 '8 '9 '1 '11 '12 '13 '14 '1 '16 US Indiana Source: BLS 6 State Gross Domestic Product Data Sources: BEA; IMF 7

5 US States GDPs Ranked vs. World Country GDPs 39 = Philippines Data Sources: BEA; IMF 8 US IP 12 Manage the Business Cycles to Maximize Profits US Industrial Production to Gross Domestic Product GDP % % -2.9% -.2% GDP US IP -1.% '82 '84 '86 '88 '9 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 '24 Year-over-Year, Quarter-to-Quarter (3/12) Sources: FRB, BEA

6 US Industrial Production Index US Industrial Production Index 12-Month Moving Average Record high 12MMA Year-over-Year Growth Rate 12/12 Rate-of-Change Annual Trend: 16. Phase: B Year-over-Year: 3.1% ITR Outlook 218: 2.9% 219: -1.2% 22: 2.3% Source: FRB US Real Gross Domestic Product Before Revision 19 Current GDP GDP - 3MMA Before Data Revision Sep '1 Forecast GDP - 3MMA June '18 Forecast '6 '7 '8 '9 '1 '11 '12 '13 '14 '1 '16 '17 '18 '19 '2 '21 3MMA Data Trend Source: BEA

7 Raw Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug MMT A Powerful Management Tool Rate-of-Change 3/12 12MMT /12 DATACAST! 1.9% 13.6% 13.6% 14.3% 14.6% 16.7% 13.3% 12.8% 1.4% 1.4% 26.7% 2.% 2.2% 22.4% 2.% 18.3% 1.4% 12.7% 3/12 Rate-of-Change = 1 1 = %. 12/12 Rate-of-Change = 1 1 = %. Hospital 1 US Hospitals Services Revenue to US Real Gross Domestic Product GDP 6 4.% 2.9% Hospital GDP -6 '6 '8 '1 '12 '14 '16 '18 '2 '22 '24 3/12 Rates-of-Change Sources: US Census Bureau, Bureau of Economic Analysis -3 13

8 US Hospitals Services Revenue R-O-C 1 3/12 12/12 4.% 3.7% MMT MMT 12MMT '6 '8 '1 '12 '14 '16 '18 '2 '22 '24 Billions of $ Source: US Census Bureau 14 Tariffs and other fun things

9 Ease of Doing Business Source: The World Bank 16 Nucor, US Steel Major US Steel Companies Sales Revenue Steel Tariffs Imposed $21.1 AK Steel $ $6.21 Nucor US Steel AK Steel 3 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 '24 Billions of Dollars Source: EDGAR (SEC) 7 3

10 Nucor, US Steel 2,4 Major US Steel Companies Profit / Loss Steel Tariffs Imposed AK Steel 9 1,6 8 $1,18.8 $74. $ ,6-2,4 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 '24 Nucor US Steel AK Steel Millions of Dollars Source: EDGAR (SEC) -6-9 US Raw Steel Production US Steel - 12MMT MMT Source: World Steel Association 19

11 R-O-C 1 3/12 Where Are We Going To Find the People? 12/12 US Steel Mill Employment 2.7% 2.6% MMA MMA 12MMA ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 '24 Thousands Source: BLS 12 Exports 4 US Trade in Goods with World (Exports) are an important part of economic health Exchange Rate /12: 11.2% C -.1% 8.1% Exports 1 Exchange Rate 2 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 '24 12/12 Rates-of-Change Sources: Census Bureau, FRED 21

12 US Top Goods Export by State Based on annual data, 217 Source: US Census Bureau 1 Tariffs 9 $ Value 8 7 6Proposed 4 Proposed Auto Imports, 3 Proposed Chinese Imports, Actual 1% Tariff Sep 24th Proposed Russia, 3.2 Chinese Imports Round 2, Proposed Japan, Proposed India, 1.4 2% Tariff Jan 1, 219 2% Chinese Imports Round 1, Aluminum, 17.4 Solar Panels, 8. Steel, 29 Washing Machines, 1.8 US Tariffs China Round 2, 6 China Round 1, 2.4 Reciprocal Tariffs Proposed Turkey, 1.8 Europe, 3.2 Mexico, 2.9 Canada, 12.8

13 Leveling the Manufacturing Field Around the Globe Years of 1% to 2% per annum labor cost increases in China without corresponding productivity increases Cheap and readily available energy in North America Aggressive reengineering and automation Exports from the US to China stand at $13.1bn, or.7% of US GDP. Exports from China to the US are a record high $436.9bn, or 3.8% of China GDP. 24: 1 Percentage Point Advantage The China Advantage? 216: Only 1 Percent Point Difference Real GDP Growth Rate 1.% 8.% 6.% 4.% 2.%.% -2.% Lower Taxes May Provide a Temporary Boost US Tax Rates and Real GDP Growth 1.% 9.% 8.% 7.% 6.%.% 4.% 3.% 2.% 1.% -4.%.% Real GDP Growth Rate - 3/12 Top Marginal Tax Rate Top Marginal Tax Rate Sources: Tax Foundation, BEA, 2

14 Issues Government Will and Won t Tackle Tax/Exp/Paym $3, $2,62 $2,2 $1,87 $1, $1,12 $7 $37 $ Current Tax Receipts Consumption Expenditures Current Transfer Payments Interest Payments Interest $3, $2,62 $2,2 $1,87 $1, $1,12 $7 $37 $ Billions of Dollars Source: BEA 26 Global Partners

15 Global Leading Indicators EZ Comp PMI EU Manufacturing PMI JP Morgan Global MFG PMI -1.1% -2.2% -4.9% -6 '7 '8 '9 '1 '11 '12 '13 '14 '1 '16 '17 '18 '19 '2 '21 '22 1/12 Rates-of-Change Source: Markit Economics -2-4 New Foreign Direct Investment Expenditures by Type Billions $ Expansions* Establishments Acquisitions *Expansions included in only Billions of Dollars Source: BEA

16 The Long View First US Industrial Production Index 3MMA 12 12MMA MMA 3MMA Roaring 2s (3 recessions) Great Depression '2 '21 '22 '23 '24 '2 '26 '27 '28 '29 '3 '31 '32 '33 '34 '3 '36 '37 '38 '39 '4 Data Trends Source: FRB

17 DEPRESSION DRIVERS 32 The US Economy

18 Leading Indicator System as a Powerful Tool US Industrial Production Index to Leading Indicators US IP, JP Morgan 1 PMI, Wilshire, G US IP - 12/12-2 US IP Forecast -1 G7 Indicator - 1/12 PMI - 1/12-4 Wilshire Market Cap - 3/12-1 JP Morgan Indicator - 3/12-6 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 Rates-of-Change Sources: FRB, OECD, ISM, Yahoo Finance, IHS Markit US IP 1 ITR s Leading Indicator Says Slowing Rise Ahead US Industrial Production to ITR Leading Indicator Reported in ITR Trends Report ITR Advisor Indicator Indicator - Monthly US IP - 12/12 '9 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 As seen in -1-1 USIP 12/12 Indicator - Monthly Sources: FRB, ITR Economics 3

19 US Non-Manufacturing Purchasing Managers Index R-O-C 6 MMA 6 6 Raw Data 12MMA '1 '11 '12 '13 '14 '1 '16 '17 '18 '19 '2 Above Indicates expansion Source: Institute for Supply Management 36 US Stock Prices Index to US Purchasing Managers Index Stock 6 PMI % 3.4% 2-2 Stock Prices PMI -2-4 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 '24-4 1/12 Rates-of-Change Sources: WSJ, Institute for Supply Management 37

20 Cyclically Adjusted Price Earnings (CAPE) Ratio January 19 December 217 Source: Robert Shiller Yale University Analysis prepared by : Baird Family Wealth Group 1/4/18 38 US Stock Prices Index to MCSI ACWI excluding USA Stock Prices 3 index composed of large and mid-capitalization non-us equities MCSI ACWI ex US '9 '1 '11 '12 '13 '14 '1 '16 '17 '18 '19 '2 '21 Stock Prices - 12/12 MCSI ACWI ex US - 1/12 Rates-of-Change Sources: Wall Street Journal, Yahoo Finance -3-4

21 Stock Prices Index 4 Tenet and HCA Healthcare Stock Prices to US Stock Prices Index Tenet, HCA Healthcare % 23.1% 1.9% Stock Prices Index Tenet Stock Price HCA Healthcare Stock -9 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 '24 12/12 Rates-of-Change Sources: Yahoo Financial, Wall Street Journal -6 R-O-C 2 Favorable CAPEX Trend US Nondefense Capital Goods New Orders w/o Aircraft A positive impact from the tax law will show up here 3/12 12/12 8.% 7.9% MMT MMT 12MMT $ ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 '24 Billions of Dollars Source: Census Bureau 41

22 US Nondefense Capital Goods New Orders (excl. Aircraft) to US Manufacturing Capacity Utilization New Orders 3 Utilization Rate /12 12/ New Orders - 12/12 New Orders Forecast Utilization Rate - 1/12 ' '1 '2 '3 '4 ' '6 '7 '8 '9 '1 '11 '12 '13 '14 '1 '16 '17 '18 '19 '2 Rates-of-Change Sources: Census Bureau, FRB New Orders 2 US Nondefense Capital Goods New Orders (excluding aircraft) to Small Business Optimism Index Business Optimism 1 8.% 4.1% New Orders -2 Business Optimism '91 '93 '9 '97 '99 '1 '3 ' '7 '9 '11 '13 '1 '17 '19 '21 '23 12/12 Rates-of-change Sources: US Census Bureau, NFIB -1 43

23 US Copper Futures Prices to US Nondefense Capital Goods New Orders(excluding aircraft) Copper 1 Capital Goods 2 8.% 1.1% Copper Futures Prices Capital Goods -3 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 '24 12/12 Rates-of-Change Sources: WSJ, Census Bureau 44-2 Architecture Billing Index Northeast Region Architecture Billings Index Mixed Sector Architecture Billings Index Midwest Region Architecture Billings Index West Region Architecture Billings Index Commercial/Industrial Sector Arch. Billings Architecture Billings Index Institutional Sector Architecture Billings Index Residential Sector Architecture Billings Index South Region Architecture Billings Index Architecture INQUIRIES Index Source: American Institute of Architects 4

24 R-O-C Rise with No Great Recession Cliff for Now US Single Unit Housing Starts As seen in MMT 6 2 3/12 12/12 8.% 6.% MMT 12MMT ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 '24 Million of Units Source: US Census Bureau 46 Indiana Housing Unit Building Permits R-O-C MMT /12 12/12.1% 4.8% MMT 12MMT ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 '24 Thousands of Units Source: US Census Bureau 47

25 IHA Revenue 18 IHA Operating Revenue to Indiana Housing Unit Building Permits Permits IHA Revenue Permits -4 '8 '9 '1 '11 '12 '13 '14 '1 '16 '17 '18 '19 '2 '21 '22 12/12 Rates-of-Change Sources: Indiana Hospital Association, US Census Bureau Indiana to Indianapolis Housing Price Index Indianapolis-Carmel-Anderson, IN MSA $ $22.8 Indianapolis ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 '24 Indiana Raw Data, 1991 = 1 Source: Federal Housing Finance Agency 12 49

26 US Private Hospital Construction R-O-C 3/12 12/12 1.% 6.4% MMT 4 3-3MMT 12MMT ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 '24 Billions of $ Source: US Census Bureau People

27 Servicing the Debt is What Matters Consumer Delinquency Rates (over 9 days delinquent) 1 1 Auto 12 Student Mortgage 1.9% 1 Year Average Year Average % 1.1% 1 Year Average '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 '24 Percent Source: FRBNY 3 Sales New ITR Leading Indicator Says Slowing Growth Ahead US Total Retail Sales to ITR US Retail Sales Leading Indicator Indicator Retail Sales - 12/12 Retail Sales Forecast - 12/12 Indicator - Monthly '91 '93 '9 '97 '99 '1 '3 ' '7 '9 '11 '13 '1 '17 '19 '21 '23 Retail Sales = 12/12, ITR Retail Sales = Monthly Sources: Census Bureau and ITR Economics -1 3

28 Retail Sales 16 Negative Indication for 219 US Retail Sales to US Personal Savings as a Percentage of Disposable Income Savings Rate Retail Sales - 12/12-8 Retail Sales Forecast - 12/12-1 Savings Rate - 12MMA '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 '24 12/12 Rates-of-Change Sources: Census Bureau, BEA 4 US IP 1 Searching for a Recession US Search Interest for "Recession" on Google to US Industrial Production Index Search Interest -8 12/ / US IP 12/12 US IP Forecast Search Interest 3/12 (post-log transformation) '6 '8 '1 '12 '14 '16 '18 '2 '22 ' Rates-of-Change (Search Interest has a 16 month lead time) Sources: Google, FRB

29 US Personal Consumption Expenditures For Net Health Insurance R-O-C 2 MMA 3 3/ /12 4.3% 3.9% MMA MMA 1-4 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 '24 Billions of dollars Source: US Dept of Commerce BEA US Medical Care Expenditures Without Health Insurance R-O-C 12 3/12 12/12 MMA % 4.% 3. 12MMA $ MMA ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 '24 Trillions of Dollars Source: BEA. 7

30 R-O-C US Personal Consumption Expenditures for Medical Care and Hospitalization Net Healthcare Insurance 3/12 3MMA 12/12 12MMA.%.% $18.3 MMA ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 '24 Billions of Dollars Source: BEA 8 Net Migration Between States, July 216-July ,8 +16,84 Does not include immigration into the US Source: Census Bureau 9

31 State Population Growth Rates Percent Change from Population Estimates 21 to 217 Source: Census Bureau 6 US Hospital Employment R-O-C % 1.7% MMA ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 '24 Millions Source: BLS 3.8

32 US Psychiatric and Substance Abuse Hospital Employment R-O-C 1 MMA % -.% ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 '24 Thousands Source: BLS 8 US Average Annual Earnings of Health Care Workers and Total Private Workforce Health Care Private 3 Health Care Private $ $ '8 '9 '1 '11 '12 '13 '14 '1 '16 '17 '18 '19 '2 '21 '22 Thousands of Dollars, Raw Data Source: BLS 1

33 US Average Annual Earnings of Health Care Workers ROC 6 3/12 12/12 MMA % 3.% 8-3 3MMA 12MMA $ '8 '9 '1 '11 '12 '13 '14 '1 '16 '17 '18 '19 '2 '21 '22 Thousands of Dollars Source: BLS 38 Bloomington, Indiana Bloomington, IN Metro Area Population: 164,33 Baby Boomers: 33, % Generation X: 2,421 1.% Millennials: 2, % Demographics Source: US Census Bureau

34 Evansville, Indiana Evansville, IN-KY Metro Area Population: 268,646 Baby Boomers: 7,6 26.3% Generation X: 48, % Millennials: 3, % Demographics Source: US Census Bureau Fort Wayne, Indiana Fort Wayne, IN Metro Area Population: 426,7 Baby Boomers: 12, % Generation X: 79, % Millennials: 84, % Demographics Source: US Census Bureau

35 Indianapolis, Indiana Indianapolis-Carmel-Anderson, IN Metro Population: 1,968,768 Baby Boomers: 48, % Generation X: 398,61 2.2% Millennials: 46, % Demographics Source: US Census Bureau South Bend, Indiana South Bend-Mishawaka, IN-MI Metro Area Population: 267,696 Baby Boomers: 64, % Generation X: 48, % Millennials:,39 2.7% Demographics Source: US Census Bureau

36 7

37 Prices US Consumer Price Index to US Producer Price Index % 2.9% Consumer Price Producer Price ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 '24 1/12 Rate-of-Change Source: FRB -1 73

38 Brands That Have or Will Be Increasing Prices Due to Tariffs COCA-COLA WINNEBAGO POLARIS INDUSTRIES WHIRLPOOL GENERAL MOTORS TOYOTA LG ELECTRONICS MILLER COORS SAMUEL ADAMS CAMPBELL SOUP I can't just go to the shareholders and say, 'You're just going to have to accept my profit's going to be $4 million less. It doesn't work that way - Gavin Hattersley, CEO MillerCoors NEWELL BRANDS (CROCK-POT, RUBBERMAID, YANKEE CANDLE, & SHARPIE) KLEENEX & HUGGIES Source: Business Insider, These popular brands say Trump's tariffs will force them to raise prices 74 Commodity Prices All Others 1 Copper & Steel % Steel 7.3% Alum -2.9% Copper -7.1% Zinc ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 '24 3/12 Rates-of-Change Source: WSJ, London Metal Exchange, Steel Market Update 7

39 US Truck Transportation of Freight Producer Price Index /12 12/12 7.%.3% MMA MMA -1 '1 '11 '12 '13 '14 '1 '16 '17 '18 '19 '2 Jan 29 = 1 Source: BLS 9 16 Protectionism & Future US Bond Yields '82 '84 '86 '88 '9 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 Source: FRB Yield on 1 Year Treasury Note 77

40 Summary September 218 Beware of Business Cycle Decline in 219 Some industries hit harder than others Cash, Market Share, Technology Additional Profit Margin Pressure Points Employment Inflation Issues The Long View is Unchanged Severe business cycle decline Day Trial Offer Receive monthly updates on the economy Text TR TRIAL to for a 9 day trial of our Trends Report

41 DR. ALAN BEAULIEU With a reputation as an accurate, straightforward economist, Alan has been delivering award-winning workshops and economic analysis seminars in countries across the world to thousands of business owners and executives for the last 2 years. He is co-author of Prosperity in the Age of Decline, a powerful look at how to make the most of the US and global trends over the next 2 years. Alan also coauthored Make Your Move, a practical and insightful guide on increasing profits through business cycle changes, and noted by one reviewer as simple, yet awesome. SPEAKER PROFILE p e. itr@itreconomics.com TESTIMONIALS The lessons and strategies you shared as part of the Strategies for a Tough Economy panel were of enormous value to the more than 7 entrepreneurs and small business partners in attendance. Mark Herlyn, Vice President, Advertising New York Times Many thanks for your excellent presentation at HMA s recent National Conference & Expo. As always, the information was extremely well-received, on point, and hit home to everyone in this room. And the subtle humor is always an extra bonus! Linda Jovanovich, Executive Vice President, Hardwood Manufacturers Association ITR gives us unique intelligence and insight that has helped us win during a severe recession and now win in a growing economy. Alan, you do a great job of presenting the information with a style that is engaging and fun for our audience. Reggie Dupré, CEO, Dupré Logistics, LLC Thank you for your wit, charm and levity in your presentation. I always thought economists were boring, but glad to see I was wrong. Rich Canote, Principal, Canote Group ABOUT ALAN Alan has been providing workshops and economic analysis seminars to countries and literally thousands of business owners and executives for the last 2 years. He is considered one of the country s most informed economists. As the chief economist for numerous US and European trade associations, it has been remarked that Alan s insight into our business, a track record of accurate forecasting, and unparalleled knowledge of global markets has earned him the respect and appreciation of key business leaders in our industry. Pronouncements from ITR Economics and/or Alan have appeared in/on: the Wall Street Journal, New York Times, USA Today, Knight Ridder News Services, Business Week, Associated Press, The Washington Times, CBS Radio, CNN Radio, Sirius talk radio, KABC, NPR affiliate WLRN and numerous other outlets. Click Here to View ITR Economics Speaker Videos BOOKING INFORMATION To book a speaker from ITR Economics, please call or itr@itreconomics.com. Visit and stay in touch with us through our blog and social media. ABOUT ITR ECONOMICS Founded in 1948, ITR Economics is the oldest, privately-held, continuously operating economic research & consulting firm in the United States. With a long-term 94.7% accuracy rating, ITR Economics has forecast major economic events, such as the 28 recession, well in advance and provides reliable industry and company forecasts tailored to client s needs. ITR Economics also offers economic webinars, subscription periodicals, consultative reports, and data collection services. //

42 Want to reduce your risk when deciding where and when to allocate your resources? Join the thousands of businesses who are doing just that by using ITR's forecasting tools ranging from monthly subscriptions to onsite consultations on industry trends that have a direct impact on your business. ITR has a 94.7% Forecast Accuracy. Our unmatched 94.7% forecast accuracy at four quarters out since 198 allows us to help business executives make strategic movements with confidence. Our team of expert economists are ready to coach your team on how to use economic foresight to truly maximize your profitability. We will work directly with you to customize a program that will meet your specific planning needs. Driving practical and profitable business decisions. Our mission is to drive practical, profitable business decisions and strengthen your company through strategic use of industry trends. Thousands of business leaders from around the world are turning to ITR s subscriptions, consultative programs, and onsite speaking engagements for guidance in increasing their foresight of what is to come for their business. Initiative Understanding events impacting business activity Resource Allocation Marketing Initiatives Sales Forecasting Setting Sales Goals Benchmarking for gauging internal success Budget Setting Increasing internal forecasting accuracy/ability Available Solutions from ITR Economics EVP Trends Company Insider Series Report Forecasts ITR s insight and ability to relate global and US leading and lagging indicators to our industry was astounding and quite informative. I highly recommend ITR to anyone interested in sound knowledge of future economic conditions. Jim Rohr, Co-Chairman, National Shipbuilding and Research Program //