The U.S. and California A Bifurcated Recovery

Transcription

1 Sonoma County State of The County Conference The U.S. and California A Bifurcated Recovery Jerry Nickelsburg Senior Economist and Lecturer UCLA Anderson Forecast January 13,

2 The U.S. Economy Main Themes Why Such Slow Growth? What Can Government Do? The Big Forecast Risk: Europe 2

3 The Deleveraging Consumer Total Consumer Revolving Credit Outstanding Source: Federal Reserve Bank of St. Louis 3

4 Exports Are Helping Real Exports, F (Percent Change, Annual Data) 15% 10% 5% 0% -5% -10% -15% Sources: U.S. Department of Commerce and UCLA Anderson Forecast 4

5 Autos Are Wearing Out Automobile Sales, 2005Q1 2013Q4 (Millions, SAAR) Source: Bureau of Economic Analysis and UCLA Anderson Forecast 5

6 Housing: The Recovery That Never Was Housing Starts, 2005Q1-2013Q4F (Thousands, SAAR) Sources: U.S. Department of Commerce and UCLA Anderson Forecast 6

7 State & Local Government Retrenching Real State & Local Government Expenditures, F (Percent Change, Annual Data) 2% 1% 0% -1% -2% -3% Sources: U.S. Department of Commerce and UCLA Anderson Forecast 7

8 No Double-Dip, but Slow Growth Real GDP Growth, 2005Q1-2013Q4 (Percent Change, SAAR) 6% 4% 2% 0% -2% -4% -6% -8% -10% Sources: U.S. Department of Commerce and UCLA Anderson Forecast 8

9 Fiscal Consolidation in an Era of Unsustainable Deficits Federal Surplus/Deficit, FY 2000 FY2021F (Annual Data, Billions $) $500 $0 $-500 $-1000 $-1500 $ Sources: Office of Management and Budget and UCLA Anderson Forecast 9

10 Zero Rates Through 2012 Federal Funds vs. 10-Year Treasury Yields, 2005Q1 FY2013Q4F (Rates) 6% 5% 4% 3% 2% 1% 0% -1% Fed Funds 10-Yr. T-bonds Sources: Federal Reserve Board and UCLA Anderson Forecast 10

11 The Policy Problem Permanent Displacements 2 million construction jobs 2.5 million manufacturing jobs 800 thousand retail jobs = 5.3 Million Jobs 11

12 Employment Fails to Recover by 2013 Payroll Employment, 2005Q1-2013Q4F (Millions, SAAR) Sources: Bureau of Labor Statistics and UCLA Anderson Forecast 12

13 Unemployment Hangs High (Rate) 10% 9% 8% 7% 6% 5% 4% Sources: Bureau of Labor Statistics and UCLA Anderson Forecast 13

14 Stall Speed? Seven Stalls Without a Recession a unique approach. critical answers. Accurate. 16 Stall Speed: Really? 4-Quarter Average GDP Growth Recessions Shaded: Peak+1 to Trough S S S S S S S S = Episodes of Weak Growth In the Middle of Expansions 14

15 What about the recession precursors? Housing Starts Weekly Hours in Manufacturing The Yield Curve 15

16 The Housing Market Does July 2011 Look Like a Peak? Housing Starts Around Cycle Peak High and Falling Signals a Recession, Not Low and Flat Thousands of Units Apr-60 Dec-69 Nov-73 Jan-80 Jul-81 Jul-90 Mar-01 Dec-07 Jul Peak Months Before and After Peak 16

17 Manufacturing Does August 2011 Look Like a Peak? Weekly Hours in Manufacturing - 3 Month Moving Average High and Falling Signals a Recession, Not High and Rising 42 Weekly Hours Nov-48 Jul-53 Aug-57 Apr-60 Dec-69 Nov-73 Jan-80 Jul-81 Jul-90 Mar-01 Dec-07 Aug-11 AVG Peak Months Before and After Cycle Peak

18 U.S. Forecast Slow/No Growth But, we will likely avoid a contraction. Gradual growth to return in mid- 12 Downside risk: Europe Collapse in Consumer Demand 18

19 The Two Californias 19

20 Main Themes Employment a restart of the recovery? Trade Data & The Two Californias Housing The Big Shift Forecast 20

21 Job Formation a unique approach. critical answers. Accurate. Thousands Change in Private Non-Farm Payroll Employment (000 jobs, SA) -1,247K K 80K -150 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 21

22 CA Geography of Growth The Recovery Year 7% 6% 5% 4% 3% 2% 1% 0% -1% -2% -3% Real GDP (Metro Area) Growth

23 CA Geography of Employment The Pause 3.0% Employment Gain March to August % 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% Bay Area Inland Empire Sac. Delta OC, SD, VC U.S. Los Angeles SJ Valley Mid Coast Santa Rosa 23

24 CA Geography of Employment A Restart 7.0% Employment Gain August to November % 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% SJ Valley Inland Empire Mid Coast Sac. Delta OC, SD, VC U.S. Los Angeles Bay Area Santa Rosa 24

25 20000 California Net Job Gain/Loss June to October

26 Export growth shows a hint of life Thousands California Seaport Traffic (000 TEU's, SA) Import By Sea Exports By Sea 26

27 International High Value & Time Sensitive Goods California International Air Cargo (Tons Loaded) Outbound Inbound 27

28 International Arrivals Continue to Grow Thousands International Passenger Arrivals (S.A. Monthly) LAX SFO

29 Housing Stress Everywhere But More in Inland California Foreclosures per 1,000 homes, Nov San Francisco San Mateo Santa Clara Alameda Orange County Yolo San Diego Los Angeles Sonoma Ventura El Dorado Tulare Merced Contra Costa Fresno Placer Sacramento Kern Stanislaus Solano Riverside San Joaquin San Bernardino 29

30 Construction Has Shifted To Multi-Family 9000 New Building Permits California (SA, 3 Mo. Average) Single Family Permits Multi-Family Permits 30

31 Recovery Inland Remains Distant 100% Percent of Pre-Recession Peak Non-Farm Employment 98% 96% 94% 92% 90% 88% Inland Empire Stanislaus Fresno San Joaquin Solano Sacramento East Bay Sonoma 86%

32 Coastal Recovery Slow But Steady 100% 98% Percent of Pre-Recession Peak Non-Farm Employment 96% 94% 92% 90% SF SV Orange County San Diego Los Angeles 88% 86% Source: California Employment Development Department 32

33 Income & Unemployment Forecast P. INC. 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q UNEMP. 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Real Personal Income % Change Unemployment Rate Payroll Employment 1.4% 1.2% 2.0% Unemployment 11.9% 11.6% 10.5% Personal Income 3.9% 2.6% 2.1% 33