Hydraulic Institute Annual Conference A Good Year Ahead

Transcription

1 Hydraulic Institute Annual Conference A Good Year Ahead Dr. Alan Beaulieu President

2 Preliminary 216 Forecast Results 2 Duration Accuracy US GDP % US Ind. Prod % Eur Ind. Prod % Canada Ind Prod % China Ind Prod % Retail Sales % Housing % Employment % ITR Economics provides the best economic intelligence to reduce risk and drive practical and profitable business decisions.

3 Percent of 215 World GDP by Country 19.6%.9%.9% 1.% 1.2% 1.% 1.6% 1.6% 1.7% 1.8% 1.9% 2.1% 2.4% 2.5% Australia 2.9% 3.3% Rest of World 3.9% 4.6% United States Japan 5.6% China 24.5% 15.% *Total 215 World GDP: $ Trillion, US$ Source: IMF, *67% are IMF Estimated Figures 3

4 US States Renamed for Countries with Similar GDPs Data Sources: BEA; IMF 4

5 Net Migration Between States, July 214-July 215 Darla Cameron Washington Post Source: William H. Frey - Census Estimates 5

6 State Population Growth Rates Percent Change from Population Estimates 21 to 215 Source: Census Bureau

7 US IP 12 8 US Industrial Production to Gross Domestic Product GDP US IP GDP % -2.9% -5.3% Manufacturing: highest 12MMA in 8 yrs Mining: normal seasonal rise Industrial Production had a steeper than normal increase in Dec, the best since % '82 '84 '86 '88 '9 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 Year-over-Year, Quarter-to-Quarter (3/12) Sources: FRB, BEA

8 US Industrial Production Index 114 US Industrial Production Index 12-Month Moving Average Year-over-Year Growth Rate 12/12 Rate-of-Change '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 ' '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19-15 Annual Trend: 14.2 Phase: A Year-over-Year: -.8% Industry Outlook 216: 217: 218: 2.7% 1.1% -1.1% Source: FRB

9 US Gross Domestic Product 25 US Gross Domestic Product 3-Month Moving Average 25 9 Quarter-over-Quarter Growth Rate 3/12 Rate-of-Change '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19-9 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19-9 Annual Trend: $16.7 trillion Phase: B Year-over-Year: 1.6% Industry Outlook 217: 218: 219: 3.7% 1.7% -1.9% Source: BEA 9

10 Data Preparation Raw Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar MMT /12 12MMT /12 DATACAST! 15.9% 13.6% 13.6% 14.3% 14.6% 16.7% 13.3% 12.8% 1.4% 1.4% 26.7% 25.5% 25.2% 22.4% 2.% 18.3% 15.4% 12.7% 3/12 Rate-of-Change = MMMMMMMMM 217 3MMMMMM MMMMMMMMM 216 3MMMMMM 1 1 = = 1.4% /12 Rate-of-Change = MMMMMMMMM MMMMMM MMMMMMMMM MMMMMM 1 1 = = 12.7% 18.

11 Rig Count 1,75 1,5 1,25 1, Oil Rigs United States Overview Weekly Oil Price & Rig Count WTI Price - Shifted 13 Weeks Extraction 3MMA is 3.1% below year-ago level 3/12 rising off a Sep 16 low 3MMA up a MTN 1.8% since Sep 16 L % % USD/bbl $12 $1 $8 $6 $4 $2 $ Jan 214 May 214 Sep 214 Jan 215 May 215 Sep 215 Jan 216 May 216 Sep 216 Jan 217 May 217 Sep 217 Rigs: Weekly Count WTI: Average Weekly Price Sources: EIA, Baker Hughes 11

12 US Total Renewable Energy Consumption Quadrillion Btu Source: EIA 12

13 US Carbon Dioxide Emissions Mar 1993: Jul MMT 47 '9 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 ' Million Metric Tons Source: EIA.gov 13

14 US Petroleum Refineries Production Index Petroleum Refineries Production Index 12-Month Moving Average 3/12 -.2% A T Nov 16 L Slightly STN 3MMA seasonal decline Year-over-Year Growth Rate 12/12 Rate-of-Change '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 ' '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19-8 Annual Trend: 16.6 Phase: C Year-over-Year:.4% C Industry Outlook 217: 218: 219:.2% 3.6% -.2% 14

15 US Utilities Production Index US Utilities Production Index 12-Month Moving Average Year-over-Year Growth Rate 12/12 Rate-of-Change /12 1.4% B 12MMA May 16 L STN Q4 drop Data Revision Annual Trend: 12.2 Phase: A Year-over-Year: -.4% Sep 16 L Industry Outlook 217: 218: 219: 1.4% -.2% 1.% 15

16 Inorganic Chemicals Production Index Inorganic Chemicals Production Index 12-Month Moving Average 3/12 -.6% A 12MMA T Dec 16 L 4Q 3MMA rise ST Y Year-over-Year Growth Rate 12/12 Rate-of-Change '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 ' '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19-3 Annual Trend: 91.8 Phase: A Year-over-Year: -.3% T Dec 16 L Industry Outlook 217: 218: 219: 5.5% 2.9% -1.3% Source: FRB 16

17 Organic Chemicals Production Index Organic Chemicals Production Index 12-Month Moving Average 3/12 B Oct 16 L 12MMA flat Steepest 4Q 3MMA Year-over-Year Growth Rate 12/12 Rate-of-Change Data Revision Annual Trend: 14.5 Phase: C Year-over-Year:.4% Industry Outlook 217: 218: 219: 4.6% 2.6% -1.5% Source: FRB 17

18 Ongoing Concerns China NAFTA and International Trade Brexit South America US Debt Health Care 18

19 Exports 4 US Trade in Goods with World: Exports to Trade Weighted Exchange Rate Index Exchange Rate /12: 2.2% B % -3.3% Exports Exchange Rate '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 12/12 Rates-of-Change Sources: Census Bureau, FRED

20 Total Expenditure on Health as a Percent of GDP ( ) Repeal Obamacare? USA FRA SWI GER CAN NLD NZL DEN SWE UK NOR AUS Percent Source: World Bank

21 Total U.S. Public Debt The Long View 122.2% (% of GDP) Source: USgovernmentspending.com 21

22 Federal Government Current Tax Receipts to Consumption Expenditures to Current Transfer Payments to GDP Tax/Exp/Paym $3, $2,625 $2,25 Current Tax Receipts Consumption Expenditures Current Transfer Payments GDP GDP $2, $17,5 $15, $1,875 $12,5 $1,5 $1, $1,125 $7,5 $75 $5, $375 $2,5 $ $ Billions of Dollars Source: BEA 22

23 Federal Government Current Tax Receipts to Consumption Expenditures to Current Transfer Payments as a Percent of GDP 2% 2% 15% 15% 1% 1% 5% % Current Tax Receipts Consumption Expenditures Current Transfer Payments Percent Source: BEA 5% % 23

24 CBO Projection Statistics A B C D E B+C+D/E Net Interest Healthcare Social Security Total Spending % , % 1,176 2,251 2,49 7, % 1,62 3,41 2,589 1,11 Billions of Dollars Data Source: CBO, 215

25 US/Global Recovery Good Days Ahead Consumers are in great shape Interest Rates remain favorable Employment rising, as are wages Banks are lending Retail Sales at a record high level Housing Starts Commodity Prices are experiencing some upside pressure 25

26 Global Leading Indicators OECD plus 6 major NME up 5 Major Asia up Brazil up Canada up China up India up Japan up 3.5% 3.2%.2% '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 EZ Comp PMI EU Manufacturing PMI JP Morgan Global MFG PMI 1/12 Rates-of-Change Source: Markit Economics -4-6

27 Trends 1 Medical B C Nonresidential Financial Construction Consumer HousingPrices Retail Soft Landing A D Production Wholesale Trade New Orders Hard Landing Foreign

28 US Total Foreign Direct Investment $ MMT 1 Billions of Dollars Source: BEA

29 US Total Manufacturing Production Index Near Sourcing 2. Technology 3. Capital vs. Labor 4. Energy 5. Consumer base Record High Repeal NAFTA? Manufacturing 3 '72 '74 '76 '78 '8 '82 '84 '86 '88 '9 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 212 = 1, Raw Data Source: FRB 3

30 216 Global Manufacturing Competitiveness Index 216 (Current) Rank Country Index Score 1 China 1. 2 United States Germany Japan South Korea United Kingdom Taiwan Mexico Canada Singapore 68.4 Talent is the most important driver of a country s ability to compete on the global stage 22 (Projected) Rank Country Index Score 1 United States 1. 2 China Germany Japan India South Korea Mexico United Kingdom Taiwan Canada 68.1 Cost competitiveness is the second most influential driver Index Score: 1 = High, 1 = Low Source: Deloitte Touche Tohmatsu Ltd and US Council on Competitiveness

31 Paper & Paper Products Production Index Paper & Paper Products Production Index 12-Month Moving Average 3/12 1.1% B 12MMA Oct 16 L Q4 3MMA drop MT Y-9 Jan rise STN Y-5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 ' Year-over-Year Growth Rate 12/12 Rate-of-Change '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 ' Annual Trend: 96.3 Phase: A Year-over-Year: -1.3% Industry Outlook 217: 218: 219:.1% -2.3% -2.1% Source: FRB 31

32 US IP 15 US Industrial Production to ITR Leading Indicator Reported in ITR Trends Report ITR Advisor Indicator Indicator - Monthly US IP - 12/12 As seen in '9 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 USIP 12/12 Indicator - Monthly Sources: FRB, ITR Economics

33 US IP 1 US Industrial Production to US Total Industry Capacity Utilization Rate 12/12 Utilization Rate 2 5 1/ US IP US IP Forecast Utilization Rate -15 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 Rates-of-Change Source: FRB

34 US IP 1 US Industrial Production Index to US Owner Occupied Housing Inventory Inventory US IP US IP Forecast Inventory '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 12/12 Rates-of-Change Sources: FRB, Census Bureau -6 34

35 Purchasing Managers Index Leads US Economy by 9-14 months % As seen in /12 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 1/12 Rate-of-Change Source: Institute for Supply Management -5 35

36 Non-Manufacturing Purchasing Managers Index Raw Data 6 12MMA '1 '11 '12 '13 '14 '15 '16 '17 '18 Above 5 Indicates expansion Source: Institute for Supply Management 45 36

37 Chicago Fed National Activity Index MMA '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 6-Month Moving Average Source: Chicago Federal Reserve Board

38 Stock Prices Index 38 R-O-C 6 3 1/12 12/ % 8.1% MMA Actual '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 12MMA 2 S&P 5, = 1 Source: WSJ 38

39 R-O-C 2 3/12 12/12 Nondefense Capital Goods New Orders w/o Aircraft 1.% -2.6% MMT MMT 12MMT $ '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 5 Billions of Dollars Source: Census Bureau 39

40 Nondefense Capital Goods New Orders (excl. Aircraft) to Manufacturing Capacity Utilization New Orders 3 Utilization Rate 3 2 1/12 12/ Utilization Rate -3 ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19 '2 New Orders New Orders Forecast Rates-of-Change Sources: Census Bureau, FRB

41 US Crude Oil Futures Prices to US Nondefense Capital Goods New Orders (excluding aircraft) Oil Prices 9 New Orders New Orders Forecast -9 ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19 '2 Oil Prices Oil Prices Forecast New Orders 12/12 Rates-of-Change Sources: WSJ, Census Bureau

42 US Copper Futures Prices to US Nondefense Capital Goods New Orders(excluding aircraft) Copper 1 Capital Goods % -2.6% Copper Futures Prices Capital Goods '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 3/ % B 3MMA up 2717% Jan 16 Low Typical Aug 17 H FMR July 18 H 12/12 Rates-of-Change Sources: WSJ, Census Bureau

43 US Overall Wage Growth Raw Data '6 '8 '1 '12 '14 '16 '18 '2 Percent Source: FRB Atlanta 43

44 US Median Annual Earnings (deflated) $ Median Earnings - Raw Data Constant ( ) Dollars Source: BLS 3 44

45 US Consumer Credit R-O-C 4 MMA /12 12/12 7.9% 7.6% Actual 12MMA '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 Trillions of Dollars Source: FRB.4 45

46 US Real Personal Income Less Transfer Receipts Average per Person Age 18 to 65 $65, $6, $55, $5, $45, $4, $35, $3, $25, $2, 12MMA Data Trend Sources: Federal Reserve Bank of St. Louis, BLS 46

47 R-O-C 9 3/12 12/12 US Total Retail Sales (deflated) MMT % 2.2% MMT 12MMT $ '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 Trillions of Dollars Source: Census Bureau 47

48 Percent Who Think They Will Marry and Have Kids Percent Source: The Council of Economic Advisers 48

49 Single Unit Housing Series R-O-C /12 The square footage 3MMT is rising at a MTN pace off a June 216 low. 2, /12 9.3% 6.3% MMT MMT As seen in 12MMT 12MMT highest in 8.5 years Normal 3MMT seasonal decline % '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 Millions of Units Source: Census Bureau 49

50 US Housing Price Index $228.3 $ Raw Data '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 Year over Year % Change Source: Federal Housing Finance Agency 1

51 US Construction Segments 12/12 Phase 3/12 Annual Trend (bils) Direction Notes Federal Gov -.3% A -.6% $22.5 Up Mild, but normal, seasonal rise Educational 6.2% C 8.3% $88.7 Up 6.8% More 12MMT rise ahead Lodging 24.8% C 21.7% $27.1 Up 1.8% More 12MMT rise ahead Offices 24.9% B 28.6% $68.9 Up 8.7% More 12MMT rise ahead Warehouses 22.1% B 23.3% $19.7 Up 14.1% More 12MMT rise ahead Manufacturing -4.3% D -9.8% $74.2 Down 4.2% Near-term 12MMT low Heavy Nonres 1.4% B 13.6% $71. Up Mild rise in 217 Source: Census Bureau

52 US Private Nonresidential Construction Private Nonresidential Construction 12-Month Moving Total 3/12 8.7% B MTM seasonal decline Year-over-Year Growth Rate 12/12 Rate-of-Change '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 ' '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19-3 Annual Trend: $417.5 billion Phase: B Year-over-Year: 8.% T Nov 16 L Industry Outlook 217: 218: 219: 2.7% 7.9% 2.6% 52

53 US Private Nonresidential Construction to ITR Leading Indicator Construction 45 3 ITRLI Leads by 2 Indicator Construction -3 Construction Forecast Indicator Indicator Forecast -45 '96 '97 '98 '99 ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19 ' Rates-of-Change Sources: US Census Bureau, ITR Economics

54 Construction 45 3 US Private Nonresidential Construction to US Total Construction Job Openings Job Openings Lead by 18 Construction Construction -3 Construction Forecast Construction Construction Forecast -45 '96 '97 '98 '99 ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19 ' /12 Rates-of-Change Sources: US Census Bureau, BLS

55 Construction 45 US Private Nonresidential Construction to US Crude Oil Futures Commodity Prices Prices Construction -3 Construction Forecast Prices Prices Forecast -45 '96 '97 '98 '99 ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19 ' /12 Rates-of-Change Sources: US Census Bureau, Wall Street Journal

56 Public Water Supply Facility Construction to US State and Local Tax Revenue Current Tax Receipts Construction 21 Index Constructio n Index Phase C Decelerating Growth 4 Month Lead Time to Company -21 ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19 ' /12 Rates-of-Change 56

57 Public Water Supply Facility Construction Public Water Supply Facility Construction 12-Month Moving Total 3/12-3.4% A STM seasonal decline 12MMT 15 yr low Year-over-Year Growth Rate 12/12 Rate-of-Change '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 ' '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19-15 Annual Trend: $11.7 billion Phase: A Year-over-Year: -6.6% Industry Outlook 217: 218: 219:.2% 8.1% -1.% 57

58 US Sewage & Waste Disposal Facility Construction Sewage & Waste Disposal Facility Construction 12-Month Moving Total Aging systems EPA standards Steep, but normal 3MMT seasonal decline Year-over-Year Growth Rate 12/12 Rate-of-Change Data Revision Annual Trend: $21.3 billion Phase: D Year-over-Year: -11.5% Industry Outlook 217: 218: 219: -3.8% 6.8% -.5% Source: US Census Bureau 58

59 US Consumer Price Index to US Producer Price Index % 2.5% Consumer Price Producer Price '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 1/12 Rate-of-Change Source: FRB -1 59

60 Commodity Prices All Others 2 Copper & Steel % Zinc 49.5% Steel 39.4% Tin 32.6% Lead 25.4% Copper 16.5% Alum '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 3/12 Rates-of-Change Source: WSJ, London Metal Exchange, Metalprices.com, Steel Market Update -1 6

61 Commodity Prices All Others, $ per pound 15 Lead, Copper, Steel, $ per ton $8.8 Tin $ Lead $1895. Alum $92. Steel $2.7 Copper $1.3 Zinc '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 Monthly Source: WSJ, London Metal Exchange, Metalprices.com, Steel Market Update 8 61

62 US Metal Ore Mining Production Index US Metal Ore Mining Production Index 12-Month Moving Average Commodity Prices 3/12-3.8% A 12MMA T Dec 16 L STN Q4 3MMA Rise Year-over-Year Growth Rate 12/12 Rate-of-Change '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 ' '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19-15 Annual Trend: 89.6 Phase: A Year-over-Year: -6.9% Industry Outlook 217: 218: 219: 2.6% -.1% -.7% 62

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