Community Depository Institutions Advisory Council Meeting. Federal Reserve Bank of New York 33 Liberty Street, New York, New York October 14, 2016

Transcription

1 Community Depository Institutions Advisory Council Meeting Federal Reserve Bank of New York 33 Liberty Street, New York, New York October 14, 216 Agenda 11: am Presentations to the Council Members: o National Economic Outlook (Richard Peach, Macroeconomic and Monetary Studies) o Regional Economic Outlook (Jason Bram, Regional Analysis) 12:3 pm Discussion of questions posed by the Board of Governors over lunch

2 Community Depository Institutions Advisory Council Discussion Questions October 14, 216 Meeting Federal Reserve Bank of New York 1. Current Banking Conditions: What is the Council s view of the current condition of, and the outlook for, loan markets and financial markets generally? Please describe any significant changes in the creditworthiness of applicants for loans, loan demand, and lending standards in general. a. Small Business Lending: Has credit availability for, and demand for credit from, small businesses changed significantly? Have lending standards for these borrowers changed? b. Commercial Real Estate Lending: Have there been any changes in the Council s view of challenges in the commercial real estate market since the beginning of the year? How are commercial real estate loans performing compared to your expectations? c. Construction Lending: What is the Council s view of the availability of credit for construction and development projects? Have Council members seen any changes in the demand for construction loans since the beginning of the year? d. Home Mortgage Lending: What changes have you seen in the mortgage market since the beginning of the year? Is a trend developing among community banks to increase, decrease, or cease home mortgage originations, and if so, what are the likely causes for and effects of this trend? e. Consumer Lending: What changes have you seen in consumer lending? f. Agricultural Lending: Have there been any changes in agricultural lending? g. Deposits: Have Council members seen any changes in local deposit markets?

3 3 2. Economic Discussion: a. Overall Economic Conditions: How do Council members assess overall economic conditions in their regions? b. Particular Indicators: i. Inflation: Are the prices of products and services rising more or less quickly (or declining more) than in the recent past? Are the prices for the products and services you purchase rising more or less quickly? ii. iii. iv. Housing: How have house prices changed in recent months? Have there been any changes in housing activity overall in your region? Labor Markets: How have the labor markets in which you operate changed in recent months? In particular, assess the degree of job loss (how much and in which industries). What changes to wages have Council members observed in the past year? Consumer Confidence: Is the Council seeing signs of improved consumer confidence? What is the outlook for consumer credit losses? 3. Innovation and Community Banking: What are the most important innovations currently affecting banking practices, business models, and lines of business for both community banks and their competitors outside the banking system, which are popularly known as fintechs? What challenges for compliance with safety and soundness, anti money laundering, or consumer protection regulations are presented when community banks adopt innovations or partner with fintechs? What are the barriers, such as costs or regulatory concerns, for community banks seeking to meet the needs of their customers through innovations or fintech partnerships? 4. Examination Practices: Have Council members experienced problems with recent examinations? In particular, have examination practices constrained access to credit by creditworthy borrowers? What steps can be taken to address the Council s concerns? 5. Regulatory Matters and the Future of Banking: How are recent changes in the regulatory landscape affecting community depository institutions ability to continue to provide services to their customers? What has been the effect on the industry generally? 6. Additional Matters: Have any other matters affecting community depository institutions emerged that Council members want to present at this time?

4 US Macro Overview October 14, 216

5 Four Quarter Percent Change Source: Bureau of Economic Analysis Growth of Real GDP Four Quarter Percent Change Note: Shading shows NBER recessions.

6 Nominal Trade-Weighted Value of US$ and Rig Count Active Oil Rigs Rig Count (left axis) Index Broad Trade Weighted Exchange Value of US $ (right axis) Source: Federal Reserve Board and Baker Hughes 6 2 Note: Shading shows NBER recessions.

7 Y/Y % Change 6 5 Aggregate Weekly Hours Worked Y/Y % Change Goods-Producing Industries Private Service-Providing Industries Source: Bureau of Labor Statistics Note: Shading shows NBER recessions.

8 Labor Market Indicators Percent 68 Percent Labor Force Participation Rate (Left Axis) Unemployment Rate (Right Axis) Employment-Population Ratio (Left Axis) Source: Bureau of Labor Statistics, via Haver Analytics 4 Note: Shading shows NBER recessions.

9 month Percent Change Personal Saving Rate and Energy Price Index Energy Price Index Personal Saving Rate Personal Saving Rate (left axis) Real Personal Consumption Expenditures Sources: Bureau of Economic Analysis and Bureau of Labor Statistics via Haver Analytics 12-month Change (left axis) Energy Price Index (right axis) Monthly Percent Change (Annualized) Monthly Change (right axis) Note: Shading shows NBER recessions.

10 Household Liabilities/Disposable Personal Income Ratio Ratio Source: Federal Reserve Board 6 Note: Shading shows NBER recessions.

11 Consumer Debt by Credit Score % Change Year to Year % Change Year to Year rd Quintile 4 th Quintile nd Quintile st Quintile 5 (Highest) Quintile (Lowest) Source: FRBNY Consumer Credit Panel 7 8 Note: Includes Student Loans

12 Percent 7 Aggregate Homeownership Rate* Percent Contribution to Decline by Age of Household Head: Source: Census Bureau Under 35: 23.7% 35 to 44: 35.4% 45 to 54: 29.1% 55 to 64: 11.7% 65 plus:.9% *Owner occupied housing units divided by total occupied housing units

13 Housing Starts and Existing Homes Sales Per Capita Units (average over ) Existing Home Sales Units Housing Starts (average over ) Source: BLS, Census Bureau, NAR.5 9 Note: Shading shows NBER recessions.

14 Credit Score at Mortgage Origination: All First Mortgages Credit Score Credit Score Median th Percentile 25 th Percentile About 35 4 Million People Source: FRBNY / Consumer Credit Panel Note: Shading shows NBER recessions.

15 Transition of Mortgage Accounts from 3-6 Days Late Percent 6 Percent 6 5 To Current To 9+ Days Late Source: FRBNY Consumer Credit Panel

16 Real Business Fixed Investment 4Q % Change Q % Change Source: Bureau of Economic Analysis Note: Shading shows NBER recessions.

17 Equipment Investment Spending and Capacity Utilization Real Business Investment in New Equipment (% Change Year to Year) Real Business Investment in New Equipment (% Change Year to Year) 3.% 2.% Quarterly data 198Q1 216Q2 3.% 2.% 1.% 1.%.%.% -1.% -2.% 216 Q2: (75., -.2) -1.% -2.% -3.% -3.% Manufacturing Capacity Utilization (Percent of Capacity) Source: Federal Reserve Board, Bureau of Economic Analysis 13

18 Real Government Consumption and Gross Investment 4 Quarter % Change 4 Quarter % Change State & Local (Right Axis) Federal (Left Axis) Source: Bureau of Economic Analysis Note: Shading shows NBER recessions.

19 PCE Deflator 12 Month % Change 12 Month % Change Total PCE FOMC Objective Core PCE Source: Bureau of Economic Analysis, via Haver Analytics Note: Shading shows NBER recessions.

20 CPI Inflation: Core Goods and Core Services 12 Month % Change 12 Month % Change Core Services Total Core CPI Core Goods Source: Bureau of Labor Statistics Note: Shading shows NBER recessions.

21 Rental Vacancy Rate and Rent of Primary Residence Percent Month % Change 5 Rent of Primary Residence (Right Axis) Rental Vacancy Rate (Left Axis) Source: Census Bureau, BLS 17 Note: Shading shows NBER recessions.

22 Dollar Exchange Rate and Nonoil Import Prices 12 Month % Change 12 Month % Change Nonoil Import Prices (Right Axis) Dollar (Left Axis) Source: Federal Reserve Board, Bureau of Labor Statistics via Haver Analytics Note: Shading shows NBER recession and dollar is Board s trade-weighted measure.

23 Reference Charts 19

24 Personal Consumption Expenditures: Health Care Price Index 12 Month % Change 12 Month % Change % of total PCE deflator 19% of core PCE deflator Source: Bureau of Economic Analysis 2 Note: Shading shows NBER recessions.

25 TIPS Based Inflation Expectations Percent 4 Percent Years 3 2 September 29: Source: Federal Reserve Board Note: Carry-adjusted

26 Bank Assets: Domestically and Foreign Chartered Banks % Change Year-to-Year % Change Year-to-Year Commercial and Industrial Loans 2 15 (Left Axis) Commercial Real Estate Loans (Left Axis) Residential Real Estate Loans (Right Axis) Source: Federal Reserve Board 22 Note: Shading shows NBER recessions.

27 Percent 7 65 Labor Share of National Income and Unemployment Rate Labor Share of National Income (Left Axis) Unemployment Rate (Right Axis) Rate Source: Bureau of Economic Analysis, Bureau of Labor Statistics 23 Note: Shading shows NBER recessions.

28 Household Formations 2 Year Avg. Change 2 Year Avg. Change Total (Left Axis) Source: Bureau of the Census Owner (Right Axis) Renter (Left Axis) Note: Shading shows NBER recessions.

29 Single Family Housing Market 12 Month % Change Months Single Family House Price Index (Left Axis) Normal Range for Months Supply Source: CoreLogic, National Association of Realtors, via Haver Analytics Months Supply (Right Axis) Note: Shading shows NBER recessions

30 Overview of the Regional Economy Presentation to the Community Depository Institutions Advisory Council (CDIAC) Jason Bram, Research Officer October 14, 216 The views expressed here are those of the presenter and do not necessarily represent the views of the Federal Reserve Bank of New York or the Federal Reserve System.

31 The Second Federal Reserve District CDIAC Members FEDERAL RESERVE BANK OF NEW YORK 2

32 Overview of Regional Conditions Most of the regional economy has fared well, led by New York City; in contrast, Puerto Rico s economy remains depressed. Northern New Jersey s economy has registered tepid growth. New York City continues to boom as other industries, most notably tech, pick up the slack of a sluggish finance sector. Job growth in the Buffalo & Rochester metros is looking considerably stronger than preliminary estimates. Housing markets remain mixed with New York City and metro Buffalo out-performing. Recent business surveys indicate some negativity about current conditions in the region. FEDERAL RESERVE BANK OF NEW YORK 3

33 State Coincident Indexes Three-Month Change Ending August 216 Down more than 1% Down.6% to 1% Down.1% to.5% Unchanged Up.1% to.5% Up.6% to 1% Up more than 1% Source: Federal Reserve Bank of Philadelphia 4

34 Regional Economic Activity Index of Coincident Economic Indicators (CEI) 14 Index (Dec27=1) Aug 11 New York City 1 New York State 9 New Jersey Shading indicates NBER recession Source: Federal Reserve Bank of New York

35 Private-Sector Employment Seasonally Adjusted Index 12 Index (Dec27=1) Aug Sep 14 New York City 1 United States New York State New Jersey Puerto Rico Shading indicates NBER recession Source: Bureau of Labor Statistics and Moody's Economy.com

36 Employment Trends in and around NYC 215 Private-Sector Job Growth Strong Moderate Modest Little or None Declining Orange Ulster Dutchess Putnam Fairfield Westchester Sussex Rockland Passaic Warren Morris Essex Bergen Bronx Queens Nassau Suffolk Union Kings Hunterdon Somerset Middlesex Monmouth Source: Bureau of Labor Statistics and Moody s Economy.com. 7

37 The New York City Premium Average Earnings Per Worker in NYC as a Percent of the U.S. Average % of U.S. Average New York City Note: Ratio is based on nominal earnings of wage and salary workers in New York City and the nation Source: U.S. Bureau of Economic Analysis (earnings); U.S. Bureau of Labor Statistics (total employment); FRBNY staff calculations.. 8

38 NYC Finance and Securities Sectors Share of NYC Employment and Earnings 4% Finance Ex-Securities Securities 3% 2% 1% % Source: Bureau of Labor Statistics (QCEW). 9

39 NYC Tech and Securities Employment Thousands 2 Thousands of Jobs +12, 15 Securities Employment 21 to , 1 Technology Employment 5 Shading indicates NBER recession Technology Employment Computer manufacturing Electronic shopping Software publishing Data processing, hosting, etc. Internet/web search portals Computer systems design Scientific R&D services Source: Bureau of Labor Statistics and Moody s Economy.com, FRBNY staff calculations. 1

40 Buffalo MSA Payroll Employment Incorporating Estimates Based on QCEW 57 Thousands 565 Estimated Level Source: U.S. Bureau of Labor Statistics and Moody s Economy.com., FRBNY Staff Calculations 11

41 Rochester MSA Payroll Employment Incorporating Estimates Based on QCEW 54 Thousands Estimated Level Source: U.S. Bureau of Labor Statistics and Moody s Economy.com; FRBNY Staff Calculations. 12

42 Puerto Rico Payroll Employment Incorporating Estimates Based on QCEW 96 Thousands Estimated Level Source: U.S. Bureau of Labor Statistics and Moody s Economy.com; FRBNY Staff Calculations. 13

43 Home Prices CoreLogic Home Price Index, Seasonally Adjusted 12 Index (Mar26=1) Not for distribution without checking with Regional Analysis 11 Upstate NY 1 NYC Metro 9 New York State Aug 8 Downstate NY 7 United States Shading indicates NBER recession Source: CoreLogic Home Price Index (including distressed sales) 14

44 Home Prices CoreLogic Home Price Index, Seasonally Adjusted 12 Index (Mar26=1) Not for distribution without checking with Regional Analysis 11 1 NYC Metro 9 Westchester Aug 8 Rockland Fairfield 7 United States Shading indicates NBER recession Source: CoreLogic Home Price Index (including distressed sales) 15

45 Home Prices CoreLogic Home Price Index, Seasonally Adjusted 12 Index (Mar26=1) Not for distribution without checking with Regional Analysis 11 1 NYC Metro 9 Kingston Metro Aug 8 7 United States Dutchess Metro Shading indicates NBER recession Source: CoreLogic Home Price Index (including distressed sales) 16

46 Home Prices CoreLogic Home Price Index, Seasonally Adjusted 12 Index (Mar26=1) Not for distribution without checking with Regional Analysis Hudson United States Bergen Essex Union Aug 7 Passaic Shading indicates NBER recession Source: CoreLogic Home Price Index (including distressed sales) 17

47 Home Prices CoreLogic Home Price Index, Seasonally Adjusted 16 Index (Mar26=1) Not for distribution without checking with Regional Analysis Brooklyn 14 Manhattan 12 Queens Borough 1 Nassau County Aug 8 Suffolk County United States Shading indicates NBER recession Source: CoreLogic Home Price Index (including distressed sales) 18

48 Home Prices CoreLogic Home Price Index, Seasonally Adjusted 13 Index (Mar26=1) Not for distribution without checking with Regional Analysis 12 Buffalo 11 Upstate NY 1 Rochester Albany 9 Aug 8 7 United States Shading indicates NBER recession Source: CoreLogic Home Price Index (including distressed sales) 19

49 Current Economic Conditions FRBNY Business Surveys, Current Conditions 6 Diffusion Index 4 2 Empire State Manufacturing Survey Sep -2 Business Leaders Survey Shading indicates NBER recession Superstorm Sandy Source: Federal Reserve Bank of New York 2