Economic Forecast OUTPUT AND EMPLOYMENT WHAT THE TABLE SHOWS:

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2 Economic Forecast OUTPUT AND EMPLOYMENT United States Real GDP $ billions (fourth quarter) $1,996 $1,575 $1,5 $1,9 $15, $15,5 $15,97 $16,6 % change over the four quarters 1.9% -.8% -.%.8%.%.%.% 3.5% Nonfarm employment Job count (fourth quarter) 137,93, 135,153,333 19,56,667 13,83,667 13,86,667 13,6, ,79, 138,88,195 % change over the four quarters.9% -.% -.%.6% 1.5% 1.6% 1.7% 1.1% Average monthly change 99,75-3,7-68,889 63,83 166, , , ,333 Real GDP $ billions (fourth quarter) $77 $78 $79 $81 $83 $8 $85 $88 % change over the four quarters.%.6% 1.% 3.1% 1.7% 1.3% 1.7% 3.1% Nonfarm employment Job count (fourth quarter) 963,1 963,67 936,833 9, ,833 96,767 97,8 98,58 % change over the four quarters 1.8%.% -.8%.6% 1.% 1.1% 1.%.9% Average monthly change 1,8 31 -, 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 lagged the national economy s recovery and the state s slow-healing job market echoes many of the themes in the national economy. The Corn Husker state s economy should do better in 1. 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 7, 13 The Economy s Structure PERCENT OF TOTAL GDP DERIVED FROM SELECTED INDUSTRIES US industry mix 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). Agriculture, utilities, nondurable manufacturing, transportation and government represent an outsized footprint in the n economy. Real estate represents a much smaller share of the local economy than the national average, and this is an asset in the current turbulent housing market. s important businesses are in better shape than many. Source: US Department of Commerce. Updated through 11. Regional Perspectives: Economic Outlook Commercial Banking 3

4 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 stress has eased back to normal levels. 3 All US bankruptcy filings (shaded area) 3 Indicators of financial stress are a useful coincident indication of economic distress. The business community is mending. 1 1 Source: Administrative Office of the U.S. Courts; Updated through September Regional Perspectives: Economic Outlook Commercial Banking

5 FRB KC Business Survey REAL GDP (% CHANGE 1 MONTHS EARLIER) DIFFUSION INDEXES ( = NO CHANGE) 8 6 real GDP (left scale) - FRB-Kansas City's manufacturing survey (right scale) Forecast The Kansas City Federal Reserve Bank survey of local businesses has recovered from last summer s lull, and that is a positive omen for the economy s future. The index readings represent the net difference in the percent expecting improving conditions and those expecting worsening conditions. The survey is picking up new strength in recent months. The business outlook remains favorable in. Note: Survey data unavailable prior to. Sources: Federal Reserve Bank of Kansas City; US Department of Commerce. Updated through November 13 (surveys) and 13 Q3 (GDP). Regional Perspectives: Economic Outlook Commercial Banking 5

6 Initial Jobless Claims RATIO OF INITIAL CLAIMS FOR UNEMPLOYMENT INSURANCE TO THE 7 Q LEVEL The figure tracks layoffs in and the.5.5 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 remain somewhat elevated in, confirming the slow pace of the economic recovery, at least compared with the national economy s high layoff rate implies the state still faces significant challenges despite otherwise favorable economic trends Source: US Department of Labor. Updated through November 16, 13 (state) and November 3, 13 (US). Regional Perspectives: Economic Outlook Commercial Banking 6

7 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 economy fared relatively well during the recession, bolstered by strength of the agriculture sector, and the pace of the recovery remains moderate. s economy is forecast to strengthen. Source: US Department of Commerce. Updated through 1 (state) and 13 Q3 (US). Quarterly estimates for states after 1 are interpolated from employment figures, based on the historical correlation of state and national employment changes. Regional Perspectives: Economic Outlook Commercial Banking 7

8 Economic Output REAL GDP LEVEL (RATIO TO Q) US Forecast 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 economy has performed impressively during the recession, recording steady growth in this decade, so it is not expected to speed up as much as the national economy. Still, the road ahead is promising. Source: US Department of Commerce. Updated through 1 (state) and 13 Q3 (US). Quarterly estimates for states after 1 are interpolated from employment figures, based on the historical correlation of state and national employment changes. Regional Perspectives: Economic Outlook Commercial Banking 8

9 Employment Growth NONFARM PAYROLL EMPLOYMENT (PERCENT CHANGE FROM 1 MONTHS EARLIER) Job growth in, compared with the 5 5 nation. 3 US Forecast 3 Employment gains have slowed a bit in the recent year, but are expected to remain respectable in the coming year. 1 1 The outlook calls for a steady improvement in job markets in Source: US Department of Labor. Updated through October Regional Perspectives: Economic Outlook Commercial Banking 9

10 Employment NONFARM PAYROLL EMPLOYMENT (RATIO TO THE Q LEVEL) US.99 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. All of the jobs lost during the recession have been recovered or replaced and the state s employment count now is at a record high. Hiring is steady but slow, like the trends in real GDP growth. Source: US Department of Labor. Updated through October 13. Regional Perspectives: Economic Outlook Commercial Banking 1

11 Intrastate Employment NONFARM PAYROLL EMPLOYMENT IN SELECTED COMMUNITIES (RATIO TO Q LEVEL) Job trends in local communities within the Forecast US forecast state. Employment conditions are positive in most of the state s communities US Lincoln The performance within the state is following similar trends Omaha-Council Bluffs Source: US Department of Labor. Updated through April forecast Regional Perspectives: Economic Outlook Commercial Banking 11

12 Unemployment UNEMPLOYMENT (PERCENT OF THE LABOR FORCE) Unemployment rate trends in, 1 1 compared with the national average. s unemployment rate has come 1 8 US (shaded) Forecast 1 8 down from 5 percent to about percent, low by national standards but still relatively high for the Corn Husker State. 6 6 The unemployment rate is the single best indicator of the relative economic performance of a region. Falling unemployment at least points to an improving economy. Source: US Department of Labor. Updated through October Regional Perspectives: Economic Outlook Commercial Banking 1

13 Relative House Prices RATIO OF THE STATE S HOUSE PRICES TO THE NATIONAL AVERAGE (1995 Q = 1.) 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 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 state did not get caught up in the housing speculation that plagued many and prices are about in normal alignment with the national average, now that the speculative conditions have vanished is not plagued by the housing excesses that were common in other states. Source: FHFA. Updated through 13 Q3. Regional Perspectives: Economic Outlook Commercial Banking 13

14 Real Estate Markets HOUSE PRICES IN SELECTED COMMUNITIES (RATIO TO THE 1995 Q LEVEL) The figure tracks the cumulative percentage US Sioux City Omaha-Council Bluffs Lincoln deviation in house prices since 1995 in selected local markets and compares those with the national average. s real estate values are steady. KEY MESSAGE: Trends across the state are similar. Source: FHFA. Updated through 13 Q Regional Perspectives: Economic Outlook Commercial Banking 1

15 New Home Building HOUSING STARTS (RATIO TO THE JULY 199 LEVEL) New home building conditions in, compared with the nation. Home building in has come down.5. US.5. significantly, echoing the trend in other states, but not as much as in many other states. New home building is climbing back to normal levels. 1.5 Forecast Home building activity likely will remain near the current steady-state pace..5.5 Source: Census Department. Updated through August Regional Perspectives: Economic Outlook Commercial Banking 15

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