2012 Economic Outlook. Marney Cox Chief Economist San Diego Association of Governments April 11, 2012

Size: px

Start display at page:

Download "2012 Economic Outlook. Marney Cox Chief Economist San Diego Association of Governments April 11, 2012"

Lillian Samantha Dalton
6 years ago
Views:

1 2012 Economic Outlook Marney Cox Chief Economist San Diego Association of Governments April 11, 2012

2 Big Picture State of the Recovery Three Key Growth Trends Jobs Disposable Income Consumption Expenditures

During Expansion Expansion Begins July 2009 Debt /

3 US Change in Payroll Jobs Steep Drop & Slow Rebound During Recession Recession 132% Starts December 2007 During Expansion Expansion Begins July 2009 Debt / Income Ratio 66% - 8% - 7.1M Jobs 5% - 3% 1% 26 Months 32 Months

4 Why Slow Job Growth? Did $787B (6% of GDP) Federal Stimulus Generate Jobs? Employment Multiplier is zero Job created is offset by a job lost. Government spending moves jobs & resources away from private to public Employment Multiplier is one or less Each dollar spent adds one dollar to GDP. Government spends on idle resources. Employment Multiplier exceeds one Earnings from newly employed resources create jobs for other idle resources.

5 US $787 Billion Stimulus Package Less than 10% of Stimulus Funds Spent Generated Earnings Targeted Stimulus (multiplier > 1) $62B - Tax incentives for homes and cars - Education layoff prevention Discretionary Spending (multiplier << 1) $428B - Jobless benefits - Health care for needy - Medicaid costs - Job training - Affordable housing programs Tax Incentives & Breaks (multiplier = 0) $279B - Renewable energy - Home energy efficiency - Faster depreciation for capital investments - Tax credits for workers

5.7% - 8% During During Expansion Expansion Expansion Begins Expansion Begins

6 US Change in Disposable Income Affects Sustainability-Gap Widening During Recession Recession 132% Starts Starts December Debt / Income Ratio - 5.7% - 8% During During Expansion Expansion Expansion Begins Expansion Begins Expansion July 2009 July Begins 2009 July % 5% - 3% -9.0% 1% 26 Months 327 Months

7 US Change in Consumer Consumption Consumption Represents 70%+ of GDP During Recession Recession 132% Starts December 2007 During Expansion Expansion Begins July 2009 Debt / Income Ratio - 8% 5% - 3% 66% 1% 8 Quarters 8 Quarters

8 US Why Slow Consumption Growth? Contributors to Slow Growth Household Credit Debt Outstanding Personal Savings Rate 132% 112% Debt / Income Ratio Debt / Income Ratio 5% 3.9% 66% 66% 1% 1% Years Years Years

9 Attempts to Stimulate Growth Have They Worked? Increase Deficit Spending Increase Loanable Funds Lower Interest Rates

10 US Deficit Spending & Job Openings Attempt to Stimulate Growth (1) Federal Federal Revenue Surplus & Expenditures & Deficit Expenditures Unemployed Per Per Job Opening 6.8-U / Opening 6.8-U / Opening $1.3 Trillion Deficit Revenues 4.3-U / Opening 3.8-U / Opening $1.3 Trillion Deficit Years Years

11 US Loanable Funds & Loans Attempt to Stimulate Growth (2) Excess Bank Reserves Business Loans Y-O-Y Change $1.3 Trillion Deficit $1.3 Trillion Years Years

12 US Interest Rates & Housing Starts Attempt to Stimulate Growth(3) Federal Reserve Interest Rates New Housing Starts FF Rate $1.3 Trillion Deficit 2.3M Starts 10 Year T- Rate $1.3 Trillion 0.698M Starts Years Years

13 Local Labor Market Concerns

14 SD Payroll Jobs Change Y-O-Y by Quarter ,000 60,000 40,000 20, ,000-40,000-60,000-80, ,000

15 SD Job Change Following 90s Recession Percent of Change in Jobs, First 6 Months of Job Growth Job Growth/Decline 11,600/ ,600/-15,700 Professional Services + 28% + 37% Government + 20% + 23% Education & Health Services + 18% + 19% Finance - 75% - 17% Construction + 7% - 45% Information + 10% - 25% W & R Trade + 15% - 13%

16 SD Venture Capital Funds Resources for High Tech Jobs, M$ per Year $2,500 $2,000 $1,500 $1,000 $500 $ '00 '02 '04 '06 '08 10

17 SD Housing Permits & Prices

18 SD Per Capita Income Real 2009$, % Growth 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5, (P)

19 SD Taxable Sales (Percent Change)

20 Monthly Unemployment Rates 14.00% 12.00% February 2012 San Diego 9.3% California (SA) 10.9% United States (SA) 8.3% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00%

LF Entrants of Unemployed 43% Expenditures 20% 9% Requires 1.

21 US Lowering the U-Rate Will Take Time Until U Falls Expect More Stimulus Policies % Unemployed 27 Weeks or More % New LF Entrants of Unemployed 43% Expenditures 20% 9% Requires 1.2M Jobs/Yr $1.3 Trillion Deficit Years Years

2012 Outlook Summary Slower Growth in 2012 National / International No Double-Dip, Not Out of Woods Headwinds to Robust Growth Jobs, consumption,

22 2012 Outlook Summary Slower Growth in 2012 National / International No Double-Dip, Not Out of Woods Headwinds to Robust Growth Jobs, consumption, income, Europe Fiscal & Monetary Policy-Working? San Diego Job Growth 1%; U-rate 8.5% Home Price -5%; -Ownership Rates Defense-Military Cutbacks?

23 2012 Economic Outlook Marney Cox Chief Economist San Diego Association of Governments April 11, 2012

2012 Economic Outlook. Marney Cox Chief Economist San Diego Association of Governments December 15, 2011

2012 Economic Outlook. Marney Cox Chief Economist San Diego Association of Governments December 15, 2011 2012 Economic Outlook Marney Cox Chief Economist San Diego Association of Governments December 15, 2011 Three Trends to Watch Job Growth Consumption Expenditures Disposable Income Growth US Payroll Jobs