Economic Forecast OUTPUT AND EMPLOYMENT WHAT THE TABLE SHOWS:

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2 December, Economic Forecast OUTPUT AND EMPLOYMENT United States Real GDP $ billions (fourth quarter) $,996 $,575 $,5 $,9 $5, $5,5 $5,97 $6,6 % change over the four quarters.9% -.8% -.%.8%.%.%.%.5% Nonfarm employment Job count (fourth quarter) 7,9, 5,5, 9,56,667,8,667,86,667,6,667 6,79, 8,88,95 % change over the four quarters.9% -.% -.%.6%.5%.6%.7%.% Average monthly change 99,75 -,7-68,889 6,8 66,97 8, 8, 8, Real GDP $ billions (fourth quarter) $86 $86 $8 $85 $85 $87 $89 $9 % change over the four quarters.8% -.7% -.8%.8%.%.%.%.% Nonfarm employment Job count (fourth quarter),58,9,5,,86,67,9,67,9,6,8,,6,776,5,6 % change over the four quarters.7% -.% -.%.7%.%.%.7%.8% Average monthly change 68 -,99 -,56 667,,57 76 WHAT THE TABLE SHOWS: s GDP forecast is derived from the national forecast by allocating output to each of the 5 states based on employment shares. So, forecast misses reflect surprises in the aggregate forecast as well as unexpected shifts in a state s GDP share. s economy has been in a stall since Hurricane Katrina s disruptions. s economy is expected to perform a little better in. Note: GDP figures are based on quarterly values that are interpolated from annual GDP estimates using quarterly employment changes. Unbolded figures are reported actual values and bold figures represent forecasts. Sources: US Department of Commerce; US Department of Labor. Regional Perspectives: Economic Outlook Commercial Banking

3 Agriculture Mining Utilities Construction Durable manufacturing Nondudrable manufacturing Wholesale trade Retail trade Transportation Information Finance and insurance Real estate Professional and technical services Management of companies Administrative and waste management services Educational services Health care and social assistance Arts, entertainment, and recreation Hotel and food service Other services Government December, The Economy s Structure PERCENT OF TOTAL GDP DERIVED FROM SELECTED INDUSTRIES The figure compares the relative importance US industry mix industry mix of selected industries to the state s economy with the national footprint of each industry (state and national figures reflect the value added of each industry as a percent of aggregate state or US nominal GDP, respectively). Retail and manufacturing businesses are more significant contributors to the local economy, compared with the national average and that may be a liability in the current economy. But the outsized presence of the government sector provides some stability. The firming manufacturing sector is a new plus for the state. Source: US Department of Commerce. Updated through. Regional Perspectives: Economic Outlook Commercial Banking

4 December, Bankruptcies RATIO OF BANKRUPTCY FILINGS TO THE 7 Q NUMBER The figure illustrates trends in bankruptcy 5 5 filings by businesses and persons relative to the number of filings in 7 Q, prior to the Business bankruptcy filings Nonbusiness bankruptcy filings recession. Financial distress is receding. All US bankruptcy filings (shaded area) Indicators of financial stress are a useful coincident indication of economic distress. From this angle, economic pressures are stabilizing. Source: Administrative Office of the U.S. Courts; Updated through September Regional Perspectives: Economic Outlook Commercial Banking

5 December, Oil & Gas Activity NUMBER OF DRILLING RIGS ON LAND, INLAND WATERS, AND OFFSHORE, 5 The figure illustrates recent trends in the rig count for petroleum drilling operations. Oil and gas drilling activity in is,5, United States (left scale) (right scale) 5 relatively robust. s modest energy sector is bringing welcome help to an otherwise slow,5 economy., Source: Baker Hughes Rig Count. Updated through Q Regional Perspectives: Alabama Economic Outlook Commercial Banking 5

6 December, FRB Atlanta Business Survey REAL GDP (% CHANGE MONTHS EARLIER) DIFFUSION INDEXES ( = NO CHANGE) real GDP, line (left) FRB Atlanta D6 Factor, columns (right) Forecast The figure compares an index of business activity produced by the Federal Reserve Bank of Atlanta with s real GDP growth. The index is an estimate of the trend common to 5 distinct monthly series of economic data for the six states in the Bank s. The D6 Factor filters out idiosyncratic shocks that disproportionately affect individual states. A value for the index appears to match trend-like growth for the national economy. The FRB Atlanta s index stands at a level consistent with moderate growth. The Southeast is recovering but at a slow pace. Sources: Federal Reserve Bank of Atlanta; US Department of Commerce. Updated through June (surveys) and Q (GDP). Regional Perspectives: Economic Outlook Commercial Banking 6

7 December, Initial Jobless Claims RATIO OF INITIAL CLAIMS FOR UNEMPLOYMENT INSURANCE TO THE 7 Q LEVEL The figure tracks layoffs in and.5.5 the national level of claims. Weekly layoffs, both the state and national. US (solid area). tallies, are illustrated in the figure as a ratio to the level of layoffs in the fourth quarter of 7, prior to the recession Layoffs have dropped off to low levels..5.5 The outlook appears to be improving..5.5 Source: US Department of Labor. Updated through August, (state) and August 7, (US)... accounts for.6% of auto manufacturing employment Regional Perspectives: Economic Outlook Commercial Banking 7

8 December, Economic Growth REAL GDP GROWTH (PERCENT CHANGE FROM FOUR QUARTERS EARLIER) US Forecast Real GDP growth in (the line in the figure) is superimposed on top of US real GDP growth (bars in the figure). s recovery has been slow, but appears to be picking up speed. The local economy is expected to fare better heading into. Source: US Department of Commerce. Updated through (state) and Q (US). Quarterly estimates for states after are interpolated from employment figures, based on the historical correlation of state and national employment changes. Regional Perspectives: Economic Outlook Commercial Banking 8

9 December, Economic Output REAL GDP LEVEL (RATIO TO Q) The figure illustrates the evolution of real.. GDP of the state and the overall US economy since the fourth quarter of,.5. Forecast.5. the peak of the previous business cycle that is, at any point in time the lines trace the ratio of real GDP to its level in Q..5. US.5. s economy lagged the national recovery, but didn t contract as much in the recession The state s economy is expected to begin to turn up gradually. Source: US Department of Commerce. Updated through (state) and Q (US). Quarterly estimates for states after are interpolated from employment figures, based on the historical correlation of state and national employment changes. Regional Perspectives: Economic Outlook Commercial Banking 9

10 December, Employment Growth NONFARM PAYROLL EMPLOYMENT (PERCENT CHANGE FROM MONTHS EARLIER) Employment growth in the state, compared 7 7 with the national job trends. 6 5 US Forecast 6 5 s employment trends have been speeding up. The job market probably will continue to grow at a moderate but steady pace in the coming year. Source: US Department of Labor. Updated through October Regional Perspectives: Economic Outlook Commercial Banking

11 December, Employment NONFARM PAYROLL EMPLOYMENT (RATIO TO THE Q LEVEL).5... US Forecast The figure illustrates the evolution of employment in the state compared with the nation since Q, the peak of the previous business cycle. The lines trace out the ratio of employment at the time to employment in Q. s businesses have recovered more than half of the jobs lost during the national recession. s economy has been on a slower recovery track than the national economy for all of this decade. Source: US Department of Labor. Updated through October. Regional Perspectives: Economic Outlook Commercial Banking

12 December, Intrastate Employment NONFARM PAYROLL EMPLOYMENT IN SELECTED COMMUNITIES (RATIO TO Q LEVEL) Job trends in local communities within the.5. Forecast.5. US forecast US state. Economic conditions vary considerably across the state..5.5 Hattiesburg s economy rebounded quickly.. Jackson from the damage from Hurricane Katrina, but has been pulled down by the national Paskagoula recession..9.9 Gulfport-Biloxi Source: US Department of Labor. Updated through April forecast Regional Perspectives: Economic Outlook Commercial Banking

13 December, Unemployment UNEMPLOYMENT (PERCENT OF THE LABOR FORCE) Unemployment rate trends in, compared with the national average. s unemployment rate is coming down in parallel with the national economy s. 8 US (shaded) Forecast 8 The unemployment rate is the single best indicator of the relative economic performance of a region. 6 6 s unemployment rate is expected to continue to descend. Source: US Department of Labor. Updated through October Regional Perspectives: Economic Outlook Commercial Banking

14 December, Relative House Prices RATIO OF THE STATE S HOUSE PRICES TO THE NATIONAL AVERAGE (995 Q =.) The figure tracks the relative price of houses in the state versus the nation that is, it reflects the ratio of the state price index to the national house price index, with that ratio set to unity in the summer of 995. A drop in the line means that house prices in the state lag the national trend. States that did not suffer from speculative conditions saw a decline in the relative price of houses in this last decade. Speculative conditions were relatively muted in the state s real estate markets House prices are back in normal alignment with the national average. Source: FHFA. Updated through Q. Regional Perspectives: Economic Outlook Commercial Banking

15 December, Real Estate Markets HOUSE PRICES IN SELECTED COMMUNITIES (RATIO TO THE 995 Q LEVEL) The figure tracks the cumulative percentage US Hattiesburg Jackson Pascagoula Gulfport-Biloxi deviation in house prices since 995 in selected local markets and compares those with the national average. House prices appear to be drifting lower still. KEY MESSAGE: Slower activity in s energy-heavy.5.5 neighbors may dampen activity. Source: FHFA. Updated through Q Regional Perspectives: Economic Outlook Commercial Banking 5

16 December, New Home Building HOUSING STARTS (RATIO TO THE JULY 99 LEVEL) New home building in compared with the nation, in proportionate terms. Home building trends are measured as a ratio to summer 99 levels. US New home construction remains relatively flat. Forecast benefits by having avoided most of the speculative conditions that now plague Florida and housing activity isn t quite as depressed as the trends elsewhere. Source: Census Department. Updated through August Regional Perspectives: Economic Outlook Commercial Banking 6

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