Some Big Trends of Interest

Transcription

1 Some Big Trends of Interest EDA University Center Showcase Madison, WI June 20, 2018 Bill Testa Vice President Federal Reserve Bank of Chicago

2 Big Trends U.S. Economic Integration/Convergence of Regions Sunbelt Shift of Population to South and West Globalization/Technological Change Greying of America (and other Developed Economies) & The Age of Slow Growth of Workers and U.S. Economy 2

3 Big Trends U.S. Economic Integration/Convergence of Regions Sunbelt Shift of Population to South and West Globalization/Technological Change Greying of America (and other Developed Economies) & The Age of Slow Growth of Workers and U.S. Economy 3

4 Convergence: U.S. Regions Accomplished what EU Aspires (Yet breakout can be achieved, and legacy still inherent) 1.8 Per Capita Personal Income by BEA Region Index = 1.00 (U.S. Average) 1.6 The West GLakes New England U.S. = The South New England Mideast Great Lakes Plain Southeast Southwest Rocky Mountain Far West United States Source: Bureau of Economic Analysis, U.S. Dept. of Commerce. 4

5 Regional economies largely deviate from trend in tandem Seventh District unemployment rates Through April 2018 June 20, 2018 Federal Reserve Bank of Chicago 5

6 Yet, industrial legacy continues to impact growth for many places Chicago MSA, Midwest Region, and U.S. (percentage of total nonfarm employment) Great Lakes Region U.S. Chicago MSA Source: BEA/Haver Analytics. 6

7 Correlation in Large GL MSAs Job/population growth and per capita income are negatively correlated with a region s historical manufacturing concentration? Pittsburgh has succeeded in raising incomes, but the price (trade-off) in out-migration has apparently been heavy 7

8 The Midwest continues to increase its share of national manufacturing employment Midwest share of US manufacturing employment percent '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

9 Big Trends U.S. Economic Integration/Convergence of Regions Sunbelt Shift of Population to South and West Globalization/Technological Change Greying of America (and other Developed Economies) & The Age of Slow Growth of Workers and U.S. Economy 9

10 Shift away from NEMW 10

11 Population migrates to coasts and parts of the south and west 11

12 Demographics: Sunbelt-bound returns 12

13 Yet, Migration Tendencies Abating (The rise of stickiness?) Source: Raven Molloy, Christopher L. Smith, and Abigail Wozniak, Internal Migration in the United States, Journal of Economic Perspectives, Vol 25, no. 3, Summer

14 Challenge for the Region?: Loss of political representation Congressional Delegates Loss Change (%) U.S % WI % MN % IL % IN % MI % OH % PA % NY % GLS % 14

15 GL Water Restoration Initiative Projects 15

16 16

17 Ethanol production by state Source: June Renewable 20, 2018 Fuels AssociationFederal Reserve Bank of Chicago 17

18 Big Trends U.S. Economic Integration/Convergence of Regions Sunbelt Shift of Population to South and West Globalization/Technological Change Greying of America (and other Developed Economies) & The Age of Slow Growth of Workers and U.S. Economy 18

19 Open Border Policies Technological changes Globalization It s a small small world. 1. Goods and services 2. Capital flows direct and portfolio 3. Workers, tourists and immigrants; travel 4. Culture, ideas and all that and more 19

20 Industry Upheaval--Dairy exports and milk prices Price per cwt. $26 $22 $18 $14 $ Exports Price Billion dollars 2018 USDA forecast Source: USDA, World Agricultural Outlook Board 20

21 U.S. and regional real output growing: Labor needed constant to falling Manufacturing Index (2002=100) 120 Millions of w orkers Output -left scale Employment - right scale '50 '60 '70 '80 '90 ' Midwest Mfg. output Mfg. employment

22 Changing technology/globalization not kind to small places 22

23 Young, especially BA+, are living in cities Source: Jeff Kolko. 23

24 Rising Inequality Domestically: (Though More Equal Globally) Source: Emmanuel Saez, U.C. Berkeley 24

25 Income inequality of MSAs Note: Ratio of average income of top 1 percent to bottom 99 percent. U.S. avg. 2013,

26 Returns to Education/Skill Sharpen 26

27 Big Trends U.S. Economic Integration/Convergence of Regions Sunbelt Shift of Population to South and West Globalization/Technological Change Greying of America (and other Developed Economies) & The Age of Slow Growth of Workers and U.S. Economy 27

28 U.S. Economic potential growth slows: Short term: Buoyed by Global Recovery and Fiscal Stimulus (but productivity lags) Longer/medium term: -- Workers (skilled especially) as the Scarce Resource -- High and climbing debt burdens may cause some hiccups, and at least create inter-generational burden for the lower/middle income young 28

29 Productivity Nonfarm Business Sector Real Output Per Hour - Percent Change Year / Year Percent Pre-recession 2.7% Post-Recession 1.2% Q % Source: Author s calculations using Bureau of Labor Statistics data. 29

30 Aging population adds to slowing workforce as boomers drop age out (and fertility declines) 30

31 Aging adding to workforce dearth in many places Source: University of Va., Weldon Cooper Center (based on Census). Source: NFIB. 31

32 Working Age Pop..Would decline if no immigration 32

33 Immigration bolsters workforce in selected areas 33

34 Intergenerational Burden Sharpens at least on the non-wealthy young 34

35 Federal Expenditures and Receipts Actual and CBO Projections (Percent of GDP) Index FY 2028 Expenditure Projections 23.6% 20.0 Revenues Projections 18.5% '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24 '26 '28 Baseline Revenues (Actual / Projections) Baseline Expenditures (Actual / Projections) Source: April 2018 Congressional Budget Office Estimates June 20, Federal Reserve Bank of Chicago

36 Federal Debt Held by the Public Fiscal Year Percent of GDP Percent % The Federal debt is projected to increase by $13.2 trillion from 2018 to % % '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24 '26 '28 Actual CBO Projections Source: Author s calculations using U.S. Bureau of Economic Analysis and Congressional Budget Office data. June 20, Federal Reserve Bank of Chicago

37 Claims by Foreign entities have risen along with greater debt levels 37

38 DISCUSSION Dystopia or Utopia? Challenges or Opportunities? June 12,