Economic Forecast OUTPUT AND EMPLOYMENT WHAT THE TABLE SHOWS:

Transcription

1

2 Economic OUTPUT AND EMPLOYMENT United States Real GDP $ billions (fourth quarter) $,99 $,575 $,5 $,9 $5, $5,5 $5,9 $,5 $7, % change over the four quarters.9% -.8% -.%.8%.%.%.%.5%.8% Nonfarm employment Job count (fourth quarter) 8,, 5,9,7 9,877,7,5,,,7,85,7 7,7,7 9,9,88,79, % change over the four quarters.9% -.% -.%.%.5%.7%.8%.8%.% Average monthly change,7-9, -8,,58 5,889 8,5 8,5 8,5 8,5 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 fared better than the national economy during the recession and has been paralleling the national recovery since then. Real GDP $ billions (fourth quarter) $ $ $ $5 $8 $ $ $7 $ % change over the four quarters.9% -.% -.%.%.%.%.9%.9%.% Nonfarm employment Job count (fourth quarter),5,57,5,,,,7,7,9,,5,,5,9,55,5,57,8 % change over the four quarters.9% -.5% -.%.%.%.%.9%.9%.% Average monthly change,8-89 -,89 78,9,7,,,55 s economy is forecast to speed up gradually in and 5. 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 May 5, The Economy s Structure PERCENT OF TOTAL GDP DERIVED FROM SELECTED INDUSTRIES 8 US industry mix 's industry mix The figure compares the relative importance 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). s economy has a heavy concentration of businesses in manufacturing, finance and insurance. Its outsized exposure to agriculture is a benefit. s manufacturing and financial businesses provide a good balance to the state s economic performance. Source: US Department of Commerce. Updated through. Regional Perspectives: Economic Outlook Commercial Banking

4 Bankruptcies RATIO OF BANKRUPTCY FILINGS TO THE 7 Q NUMBER The figure illustrates trends in bankruptcy filings by businesses and persons relative to the number of filings in 7 Q, prior to the 5 Business bankruptcy filings Nonbusiness bankruptcy filings 5 recession. Bankruptcy filings are back to normal. All US bankruptcy filings (shaded area) Indicators of financial stress are a useful coincident indication of economic distress. The low level of bankruptcy filings implies that the state s business community was not as harmed by the recession, compared with states where real estate speculation was intense Source: Administrative Office of the U.S. Courts; Updated through March. Regional Perspectives: Economic Outlook Commercial Banking

5 FRB Chicago Business Survey REAL GDP (% CHANGE MONTHS EARLIER) DIFFUSION INDEX (7 = ) The figure traces GDP growth in along 8 real GDP (left scale) FRB Chicago's manufacturing survey (right scale) 5 with the Federal Reserve Bank of Chicago s survey of business conditions. Manufacturing conditions continue to improve, according to the Federal Reserve 5 Bank of Chicago s survey, but not fast enough to translate into faster growth. The nation s rebounding manufacturing sector will be an important source of support for the state Sources: Federal Reserve Bank of Chicago; US Department of Commerce. Updated through October (surveys) and Q (GDP) Note: diffusion indexes represent the percentage of respondents seeing an increase in activity plus one half of the percentage reporting no change in activity. Regional Perspectives: Economic Outlook Commercial Banking 5

6 Private Business Surveys REAL GDP (% CHANGE MONTHS EARLIER) DIFFUSION INDEXES (5 = NO CHANGE) Real GDP in the Midwest (left scale) -5 Business Barometer Index, Mid-America Purchasing - Managers (right scale) The figures shows the Business Barometer Index, based on the survey of purchasing managers, and real GDP growth in Illinois (a reading above 5 means the state s economy is growing, while less than 5 means the economy is shrinking). The index comprises seven business activity indicators, including production, new orders, order backlogs, inventories, employment, supplier deliveries, and prices paid. The index, which is a timely measure of the strength of the local economy, has rebounded recently. Business surveys are expected to liven up as the year progresses. Note: diffusion indexes represent the percentage of respondents seeing an increase in activity plus one half of the percentage reporting no change in activity. Sources: Institute of Supply Management; US Department of Commerce. Updated through April (survey) and Q (GDP). Regional Perspectives: Economic Outlook Commercial Banking

7 Initial Jobless Claims RATIO OF INITIAL CLAIMS FOR UNEMPLOYMENT INSURANCE TO THE 7 Q LEVEL The figure tracks layoffs in and the national level of claims. Weekly layoffs, both the state and national tallies, are illustrated in the figure as a ratio US (solid area) to the level of layoffs in the fourth quarter of 7, prior to the recession. Layoffs are down to very low (normal) levels Weekly jobless claims figures are reported on a timely basis and offer a comprehensive view of the state s labor market conditions. They are a credible leading indicator of business activity. The low level of applications for unemployment benefits implies that the recovery is getting traction. Source: US Department of Labor. Updated through May 7, (state) and May, (US). Regional Perspectives: Economic Outlook Commercial Banking 7

8 Economic Growth REAL GDP GROWTH (PERCENT CHANGE FROM FOUR QUARTERS EARLIER) US Real GDP growth in (the line in the figure) is superimposed on top of US real GDP growth (bars in the figure). s recovery remains moderate and steady. Growth is expected to speed up a bit as the year progresses. Source: US Department of Commerce. Updated through (state) and Q (US). Quarterly estimates for states after are interpolated from employment figures (through April ), based on the historical correlation of state and national employment changes. Regional Perspectives: Economic Outlook Commercial Banking 8

9 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, 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. s real GDP declined during the national recession, although not as much as for the broad US economy, but has been expanding.5.5 steadily since and now is bigger than ever...5 US..5, like the other farm states, benefits from new markets opening abroad Source: US Department of Commerce. Updated through (state) and Q (US). Quarterly estimates for states after are interpolated from employment figures (through April ), based on the historical correlation of state and national employment changes. Regional Perspectives: Economic Outlook Commercial Banking 9

10 Employment Growth NONFARM PAYROLL EMPLOYMENT (PERCENT CHANGE FROM MONTHS EARLIER) Job growth in the state, compared with the national average. US Employment is growing at a respectable pace. The outlook for the job market calls for more - - of the same steady progress. Source: US Department of Labor. Updated through April (state) and April (US) Regional Perspectives: Economic Outlook Commercial Banking

11 Employment NONFARM PAYROLL EMPLOYMENT (RATIO TO THE Q LEVEL) 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 US the ratio of employment at the time to employment in Q. s payroll count now has moved well beyond the previous peak. s jobs recovery is on a solid recovery trajectory. Source: US Department of Labor. Updated through April (state) and April (US) Regional Perspectives: Economic Outlook Commercial Banking

12 Intrastate Employment NONFARM PAYROLL EMPLOYMENT IN SELECTED COMMUNITIES (RATIO TO Q LEVEL) Job trends in local communities within the US forecast US City Des Moines Dubuque state. Employment is picking up in most of s communities. draws energy from its strong agriculture economy Waterloo Ames Cedar Rapids Source: US Department of Labor. Updated through April (state) and April (US) Sioux City forecast Regional Perspectives: Economic Outlook Commercial Banking

13 Unemployment UNEMPLOYMENT (PERCENT OF THE LABOR FORCE) 9 8 US (shaded) Unemployment rate trends in, compared with the national average. s unemployment rate is almost back to pre-recession levels. The unemployment rate is the single best indicator of the relative economic performance of a region. The state s unemployment rate is forecast to continue to head down in coming years. Source: US Department of Labor. Updated through April (state) and April (US). Regional Perspectives: Economic Outlook Commercial Banking

14 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. The correction of inflated conditions elsewhere returns the state s average house price level in line with historical trends The state s real estate prices are steady. Source: FHFA. Updated through Q. Regional Perspectives: Economic Outlook Commercial Banking

15 Real Estate Markets HOUSE PRICES IN SELECTED COMMUNITIES (RATIO TO THE 995 Q LEVEL) The figure tracks the cumulative percentage.. deviation in house prices since 995 in selected local markets and compares those US with the national average Sioux City Council Bluffs Des Moines Dubuque City Davenport Ames Waterloo-Cedar Falls House prices have been on a steady ascent in virtually all local markets. KEY MESSAGE: Steady house price trends signal no excesses in local real estate markets. Source: FHFA. Updated through Q Regional Perspectives: Economic Outlook Commercial Banking 5

16 New Home Building HOUSING STARTS (RATIO TO THE JULY 99 LEVEL) New home construction in, compared with the US average level of construction. New home building in the state has dropped US back about 5 percent since the peak of the boom, but that compares favorably with the national home building pace. Home building is reviving. New home building is forecast to continue to improve. Source: Census Department. Updated through March (state) and April (US). 9 5 Regional Perspectives: Economic Outlook Commercial Banking

17 CONTACT: James E. Glassman Telephone: () JPMorgan Chase & Co. All rights reserved. Chase, JPMorgan and JPMorgan Chase are marketing names for certain businesses of JPMorgan Chase & Co. and its subsidiaries worldwide (collectively, JPMC ). The material contained herein is intended as a general market commentary. To the extent indices have been used in this commentary, please note that it is not possible to invest directly in an index. Opinions expressed herein are those of James Glassman and may differ from those of other J.P. Morgan employees and affiliates. This information in no way constitutes J.P. Morgan research and should not be treated as such. Further, the views expressed herein may differ from that contained in J.P. Morgan research reports. The above summary/prices/quotes/statistics have been obtained from sources deemed to be reliable, but we do not guarantee their accuracy or completeness.