Economic Update Birmingham Bloomfield Chamber Breakfast

Transcription

1 Economic Update Birmingham Bloomfield Chamber Breakfast Federal Reserve Bank of Chicago February 2, 2016 Paul Traub Senior Business Economist

2 Overview U.S. Economy (C + I + G + Nx) U.S. Consumer Monetary Policy Michigan Economy Questions 1

3 Main Economic Indicators Annual Comparison 2009, 2014 and GDP Annual Growth Rate -2.8% 2.4% 2.4% PCE Core Inflation Yr. / Yr. 1.2% 1.5% 1.3% * Unemployment Rate Annual Avg. 9.3% 6.2% 5.3% Nonfarm Job Growth (Monthly Avg.) -298, , ,800 * November 2015 YTD Source: U.S. Bureau of Economic Analysis, Census Bureau and Bureau of Labor Statistics 2

4 U.S. Real GDP Billions Chained $2009, % Change Q/Q at SAAR $ Billions 17,000 16,500 Q4 15 $16,442 Percent , ,500 15,000 Q4 07 $14, % , ,000 Q2 09 $14, ,500 '07 '08 '09 '10 '11 '12 '13 '14 ' Source: U.S. Bureau of Economic Analysis 3

5 Real Personal Consumption Expenditures Billions Chained $2009, % Change Q/Q at SAAR $ Billions 11,500 11,250 11,000 Q3 15 $11,323 Percent ,750 10,500 10,250 10,000 9, % ,500 '07 '08 '09 '10 '11 '12 '13 '14 ' Source: U.S. Bureau of Economic Analysis 4

6 Real Personal Consumption Expenditures Index, 2007 = 100 Index Q '07 '08 '09 '10 '11 '12 '13 '14 '15 Durables Nondurables Services Source: Author s calculations using data from the BEA 5

7 Real Gross Domestic Investment Billions Chained $2009, % Change Q/Q at SAAR $ Billions 3,000 2,750 2,500 2,250 2,000 1,750 1,500 1,250 Q3 15 $2, % Percent ,000 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 ' Source: U.S. Bureau of Economic Analysis 6

8 Real Private Fixed Investment Index, 2005 = 100 Index Q '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Fixed Investment Nonresidential Residental Source: Author s calculations using data from the BEA 7

9 ISM Manufacturing U.S. & SE Michigan PMI Composite Indexes, SA - Greater than 50 = Expansion Index Dec Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 United States SE Michigan Source: Institute for Supply Management, Haver Analytics and FRED 8

10 New Privately Owned Housing Starts In Thousands of Units Annual Data (000) s 2,400 2,000 2,073 1,812 1,600 1,342 1, ,001 1, '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Note: The United States averaged 1.5 million housing starts per year 1990 and Source: U.S. Census Bureau 9

11 Government Consumption & Investment Billions Chained $2009, Index 2007 = 100 Index Q '07 '08 '09 '10 '11 '12 '13 '14 '15 Total Federal State & Local Source: U.S. Bureau of Economic Analysis 10

12 Stronger U.S. Dollar Select Currencies Jan 3, 2014 to Jan 22, 2016, Index 2014 = 100 Index Canadian Dollar to U.S. Dollar Index Euro to U.S. Dollar Stronger U.S. Dollar 115 Stronger U.S. Dollar Weaker U.S. Dollar Weaker U.S. Dollar J M M J S N J M M J S N J J M M J S N J M M J S N J Index Japanese Yen to U.S. Dollar Index Chinese Yuan to U.S. Dollar Stronger U.S. Dollar Stronger U.S. Dollar Weaker U.S. Dollar Weaker U.S. Dollar J M M J S N J M M J S N J J M M J S N J M M J S N J Source: Board of Governors Federal Reserve System 11

13 Real Imports and Exports Billions Chained $2009, Index 2005 = 100 Index '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Net Exports Exports Imports Q $566.5 $1,000 $800 $600 $400 $200 $0 -$200 -$400 -$600 -$800 -$1,000 Source: U.S. Bureau of Economic Analysis 12

14 U.S. Real GDP Contribution to Percent Change Q/Q at SAAR Percent GDP Consumption Private Investment Net Exports Government Note: Private domestic investment includes: nonresidential -0.24, residential +0.27, and inventory change. Source: U.S. Bureau of Economic Analysis 13

15 China PMI Manufacturing & Nonmanufacturing - SA, +50 Signifies Expansion Index Jan '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 Manufacturing Nonmanufacturing Source: China Federation of Logistics & Purchasing and Haver Analytics 14

16 U.S. Goods Exports to China Percent of Total Goods Exports and GDP Percent '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Nov YTD % of GDP (Right) % of Exports (Left) % % Percent Source: U.S. Census Bureau and Bureau of Economic Analysis 15

17 Global Outlook IMF Forecast for Growth (Jan 16 Update), % Chg. Yr./Yr. Percent Advanced Economies Emerging and Developing Economies World 3.6 Source: IMF - World Economic Outlook 16

18 U.S. Real GDP Billions Chained $2009, % Change Q/Q at SAAR & Yr./Yr. Percent '10 '11 '12 '13 '14 '15 '16 ' Macro Advisors Forecast % Chg. Q/Q - SAAR % Chg Q/Q Estimate % Chg.Y/Y - SAAR % Chg. Y/Y Estimate Source: U.S. Bureau of Economic Analysis, Macro Advisors & Haver Analytics 17

19 U.S. Consumer 18

20 Real Disposable Personal Income Percent Change Year/Year - $2009 Percent Dec % Pre-recession 1.9% Dec % Dec % May % Dec % '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Post Recession 1.9% Source: U.S. Bureau of Economic Analysis 19

21 Total Consumer Credit Revolving and Non-revolving Credit as % of DPI Percent Nov % Average 17.3% to Present Average '60 '64 '68 '72 '76 '80 '84 '88 '92 '96 '00 '04 '08 '12 Source: U.S. Bureau of Economic Analysis February 2, 2016 Federal Reserve Bank of Chicago 20

22 Personal Interest Payments As a Percent of Disposable Personal Income Percent Dec % '60 '64 '68 '72 '76 '80 '84 '88 '92 '96 '00 '04 '08 '12 Source: U.S. Bureau of Economic Analysis February 2, 2016 Federal Reserve Bank of Chicago 21

23 Unemployment Claims 4 Week Moving Average (000) s Jan 23, Source: Bureau of Labor Statistics 22

24 Stock Market S&P 500 and Dow Jones Indices, Index 2007 = 100 Index Jan Jan '14 Apr '14 Jul '14 Oct '14 Jan '15 Apr '15 Jul '15 Oct '15 Jan '16 S&P 500 Dow Jones Source: St Louis Fed and S&P Dow Jones 23

25 Household Net Worth Trillions of Dollars, Q1 00 to Q Q2 07 $65.2 Q3 15 $82.2 $ Total Decline Q3 07 Q1 09 -$ '00 '02 '04 '06 '08 '10 '12 '14 Home Equity Financial and Other Source: Federal Reserve Z.1 Statistical Release,Table B100, Households and Nonprofit Organizations 24

26 Consumer Sentiment University of Michigan Index January Jan Jan '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 Source: Thomson Reuters / University of Michigan February 2, 2016 Federal Reserve Bank of Chicago 25

27 Monetary Policy Employment & Inflation 26

28 Unemployment Rate & PCE Inflation Percent Unemployed, PCE % Change Yr./Yr. Percent 11.0 Unemployment Percent 3.0 Inflation Core PCE % Dec % Dec % '09 '10 '11 '12 '13 '14 ' '09 '10 '11 '12 '13 '14 '15 Actual Target Annual Actual Target Source: U.S. Department of Labor: Bureau of Labor Statistics, Bureau of Economic Analysis and the Federal Reserve 27

29 U.S. Nonfarm Payrolls Total Employment and Annual Job Change In Thousands of Jobs 145,000 6, , , ,500 1,066 2,257 3,116 2,650 4,000 2, , , , , ,000-3,577-5,088 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Annual Job Change Nonfarm Employment -2,000-4,000-6,000 28

30 Underutilization - U6 Unemployment Rate Total Unemployed, Marginally Attached and Part-time for Economic Reasons Percent Dec % Dec % '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Source: U.S. Department of Labor: Bureau of Labor Statistics data. 29

31 Average Hourly Earnings & Hours Worked Total Private, Production & Nonsupervisory % Chg. Y/Y & Hours, SA Percent Jun % Dec Hours % '07 '08 '09 '10 '11 '12 '13 '14 '15 Earnings (Left) Hours (Right) 32.6 Source: Author s calculations using U.S. Department of Labor: Bureau of Labor Statistics data. 30

32 Producer Prices for Intermediate Demand Index 2010 = 100 Index Special Groupings Materials Less Food & Energy Index Select Industries and Services Dec Dec '10 '11 '12 '13 '14 ' '10 '11 '12 '13 '14 '15 Processed Unprocessed Mfg. Constr. Trans. & Ware. Source: Author s calculations using U.S. Department of Labor: Bureau of Labor Statistics and Haver Analytics data. 31

33 Inflation Expectations PCE Core Inflation Yr./Yr. & Q4/Q4 Percent Survey of Professional Forecasters Q3 15 Forecast Source: Bureau of Economic Analysis and FRB Philadelphia Q3 15 Survey Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 ' Actual Expectations 32

34 Appropriate pace of policy firming Midpoint of target range or target level of the Fed Funds Rate Percent Longerrun Source: Board of Governors Federal Reserve System, December

35 The Fed Balance Sheet Assets of the Federal Reserve Monthly Average $Billions The Fed s balance sheet has expanded in size and composition $5,000 $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 '07 '08 '09 '10 '11 '12 '13 '14 '15 Other Securities and Asstes Other Large Scale Asset Purchases (LSAP) Central Bank Liquidity Swaps Mortgage Backed Securities Federal Agency Debt Source: Board of Governors of the Federal Reserve System 34

36 Maturity Distributions Securities, Loans, and Select Assets & Liabilities Percent Within 15 Days 16 to 90 Days 91 to 1 Year 1 to 5 Years 5 to 10 Years Over 10 Years Mortgage Backed Securities Source: Board of Governors of the Federal Reserve System 35

37 Michigan Economy 36

38 Real Per Capita Income Index 2000 = $2009 Dollars Index Est $36, $36, Est $43, $38, '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Est. Michigan United States Source: Bureau of Economic Analysis and Haver Analytics February 2, 2016 Federal Reserve Bank of Chicago 37

39 Michigan Annual Job Growth Thousands of Jobs Thousands (50.0) (100.0) (22.6) (65.3) (3.1) (26.9) (78.5) (49.0) (150.0) (200.0) (250.0) (172.6) (190.6) (219.6) '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Source: U.S. Department of Labor: Bureau of Labor Statistics 38

40 Michigan Unemployment Percent of Labor Force - SA Percent Percent '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 Unemployment Rate (Left) Participation Rate (Right) Dec Source: U.S. Department of Labor: Bureau of Labor Statistics and Haver Analytics 39

41 Michigan Housing Starts Thousands of Units Annual (000) s '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Source: U.S. Census Bureau Note: Michigan averaged 48,000 housing starts per year 1990 and February 2, 2016 Federal Reserve Bank of Chicago 40

42 U.S. Light Vehicle Industry Millions of Units Millions Trend Blue Chip Consensus Source: Ward s Automotive 41

43 Michigan Real GSP Billions Chained $2009, % Change Yr./Yr. $ Billions $500.0 Percent 10.0 $ $450.0 $425.0 $ $ e $ % $ $ $ $ $ $250.0 '90 '94 '98 '02 '06 '10 ' Source: Author s calculations based on data from the U.S. Bureau of Economic Analysis 42

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