Chad Wilkerson. Vice President, Economist, and Oklahoma City Branch Executive Federal Reserve Bank of Kansas City

Transcription

1 Chad Wilkerson Vice President, Economist, and Oklahoma City Branch Executive Federal Reserve Bank of Kansas City

2 Overview of the Federal Reserve System The Fed consists of three main entities: Board of Governors: 7 members appointed by U.S. President Federal Reserve Banks: 1 total; semi-independent by design Federal Open Market Committee: 19 members; 1 voting As with most central banks, the Fed s primary responsibilities fall within four general areas: Lender of last resort provide liquidity in times of crisis Monetary policy promote full employment and low inflation Bank regulation ensure safety and soundness of banks Financial services bank for banks, bank for federal govt.

3 Federal Reserve Districts and Office Locations

4 The Oklahoma City Branch of the Federal Reserve Bank of Kansas City History, staff, and functions Branch office opened in 19; currently have about 35 staff Functions include economic research, bank examinations, public outreach 11 branch board of directors Steve Agee (chairman), Interim Dean of OCU Business School, OKC Bill Anoatubby, Governor, Chickasaw Nation, Ada Jim Dunn, Chairman, Mill Creek Lumber and Supply Co., Tulsa Jacque Fiegel, Senior EVP and COO, Coppermark Bank, OKC Rose Washington Rentie, Executive Director, TEDC Creative Capital, Tulsa Doug Tippens, President and CEO, Bank of Commerce, Yukon K. Vasudevan, Chairman, Service and Technology Corp., Bartlesville

5 The U.S. Economic Outlook The pace of U.S. recovery has picked up but job growth remains moderate Inflation remains low and is forecast to stay contained heading forward As always, there are several risks to the near- and long-term outlooks

6 U.S. economic activity has picked up in 11, but job growth remains moderate U.S. Private Payroll Employment and Business Indexes 6 Change from previous month, thousands Index Private Employment (left axis) 4-6 ISM Manufacturing Index (right axis) 35-8 ISM Non-Manufacturing Index (right axis) 3-1 Feb-6 Feb-7 Feb-8 Feb-9 Feb-1 Feb-11 5 Source: Institute for Supply Management, Bureau of Labor Statistics

7 Fed policymakers expect continued moderate U.S. GDP recovery 8 6 Percent change, year-over-year Real Gross Domestic Product Jan. FOMC Forecast Ranges in Yellow Long Term Source: U.S. Bureau of Economic Analysis, FOMC

8 But for U.S. unemployment to remain relatively high for some time Percent Unemployment Rate Seasonally Adjusted Jan. FOMC Forecast Ranges in Yellow Long Term Source: U.S. Bureau of Labor Statistics, FOMC

9 Inflation is expected to remain tame in the near term, but will require careful oversight PCE Inflation Index 1 Percent change, year-over-year Jan. FOMC Forecast Ranges in Yellow Long Term Source: U.S. Bureau of Economic Analysis, FOMC

10 U.S. consumer and federal debt levels present obstacles for future growth U.S. Debt as a Share of GDP 1% Percent 1% Federal government debt Household debt 8% 6% 4% % % Sources: Federal Reserve, BEA, CBO

11 Our regional survey shows a surge in the share of factories expecting higher prices Six-month-ahead Expectations for Tenth District Manufacturing Prices Index Raw materials Finished goods Feb-1 Feb-3 Feb-5 Feb-7 Feb-9 Feb-11 - Source: FRBKC

12 And the Fed s balance sheet is expanding further, following recent FOMC decisions Federal Reserve Balance Sheet 3 Dollars, Trillions Assets Rescue Operations Projection 3 1 Targeted Lending Short Term Lending MBS & Agency Debt 1 Treasury Securities Currency -1-1 Reserves - SFA - Liabilities Other -3-3 Jan-8Apr-8 Jul-8 Oct-8 Jan-9Apr-9 Jul-9 Oct-9 Jan-1Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Source: Federal Reserve Board

13 The Oklahoma Economic Outlook Oklahoma s recession and early recovery are similar to the usual historical pattern The state is now outpacing the nation, led by oil and gas but also some other sectors Stephens County s overall outlook appears similar to the state relatively good

14 Oklahoma had a shorter recession than the nation and is now adding jobs faster Payroll Employment 6 Year-over-year percent change OK - U.S Dec-5 Dec-6 Dec-7 Dec-8 Dec-9 Dec-1-6 Source: U.S. Bureau of Labor Statistics

15 Recent state job growth has been led by energy, but other sectors are growing Employment Growth December 1 Percent change year-over-year 18 U.S OK Total Energy Const Finance Educ & Health Prof & Bus Svcs Leis & Hosp Mfg Trade, Transp. & Utilities Info State & Local Govt Source: Bureau of Labor Statistics

16 Recent strong growth in energy activity has been primarily for oil Oklahoma Rig Count 5 Number of rigs 5 Gas Oil Feb-8 Feb-9 Feb-1 Feb-11 Source: Baker Hughes

17 Agricultural conditions in the state have also improved after bottoming in 9 Oklahoma Agricultural Conditions 15 Index Index Farm Income Q1 Expectations Capital Spending Source: KCFRB Ag Credit Survey

18 And Oklahoma banks remain in much better shape than in the nation as a whole Noncurrent Loans as a Share of Total Loans Commercial Banks 6. Percent U.S.. 1. OK 1.. Q4 Q4 1 Q4 Q4 3 Q4 4 Q4 5 Q4 6 Q4 7 Q4 8 Q4 9 Q4 1. Source: FDIC

19 The state is at risk of further foreclosures, though much less so than the nation Foreclosures and Negative Equity Mortgages U.S. and Tenth Federal Reserve District, Q3 1 5 Percent of all mortgages In or near foreclosure* Negative equity US 1J NM OK MO CO KS NE WY n/a *Over 9 days past due Source: MBA, Corelogic

20 OK non-metro home prices have edged down recently, now slightly lower than the nation Quality-Adjusted Home Price Growth Percent change year-over-year US OKC/Tulsa OK Non-Metro :Q4 :Q4 4:Q4 6:Q4 8:Q4 1:Q4-1 Source: FHFA

21 Unemployment remains relatively low in Oklahoma, including in Stephens County Unemployment Rate by County December 1 Source: Oklahoma Employment Commission

22 Stephens County entered the recession late, fell sharply in 9, and turned up in 1 Current Recession and Recovery Path Employment level before and after U.S. jobs peak (Jan-8) 8 Percent change year-over-year U.S. Stephens County -1-1 Dec-5 Jun-6 Dec-6 Jun-7 Dec-7 Jun-8 Dec-8 Jun-9 Dec-9 Jun-1 Dec-1 Source: U.S. Bureau of Labor Statistics

23 The main employment industries in Duncan seemed to be growing fairly well in mid-1 Industry Stephens County Industry Breakdown June 1 % Total Employment Total 3.8 Trade, Transportation, & Utilities Education & Health Services Government State & Local Manufacturing 13.1 (.) Natural Resources & Mining Leisure & Hospitality Professional & Business Services Financial Activities 4.8 (4.3) % Growth, Y-O-Y Construction 3.7 (14.1) Government Federal Information Source: Oklahoma Employment Commission

24 Summary The U.S. economy is recovering and expected to continue to grow moderately, with low inflation Oklahoma s economy is also recovering and remains in much better shape than the nation