Small Business & Agricultural Advisory Board Federal Reserve Bank of New York 33 Liberty Street 10F, Paul Volcker Boardroom Tuesday, November 15, 2016

Transcription

1 AGENDA 1:3am 1:35am 1:4am-11:1am 11:1am-11:4am 11:4am-12:pm 12:pm 12:15pm 12:15pm-1:55pm Small Business & Agricultural Advisory Board Federal Reserve Bank of New York 33 Liberty Street 1F, Paul Volcker Boardroom Tuesday, November 15, 216 Welcome, Claire Kramer Mills, AVP Introductory Remarks, Kausar Hamdani, Senior Vice President The National Economy, Richard Peach, Senior Vice President International Update, Matthew Higgins, Vice President Regional Update, Jason Bram, Officer Adjourn to NWC Room-1F Lunch Round Table Discussion with William Dudley, President and Michael Strine, First Vice President Your experience and that of your customers and suppliers can give us insight into current economic conditions. Questions for discussion with President Dudley: 1. Has your firm s sales volume increased, decreased, or stayed the same in the second half of 216? 2. Do you expect your firm s sales to increase, decrease, or stay the same in the first quarter of 217? 3. Do you plan to increase investment in your firm (plant & equipment) in the first half of 217? 4. Has your firm faced any recent shortage of labor that has limited your ability to meet demand? 5. Do you plan to increase employment in 217? Why or why not? 6. Do you expect input prices to increase in 217? Do you expect prices of products/services sold to increase? 7. Over the past two quarters, have you made any recent changes to your firm s financing? How have the terms and conditions for obtaining financing changed (tightened, eased, not changed)? 2: pm Adjourn

2 Small Business & Agricultural Advisory Council Federal Reserve Bank of New York 33 Liberty Street New York, NY Tuesday, November ATTENDEE LIST Council Members Michael Arnoff President Arnoff Moving & Storage Adenah Bayoh Co-Founder Kapwood, LLC Eric Caslow President Acme Smoked Fish Corporation Charles Feit President and Founder OnForce Solar Gabriel Hernández Co-Founder and Head of Tax Division BDO Puerto Rico Deborah Leo President Retail Solutions, Inc. Kevin Ellis Chief Executive Officer Cayuga Milk Industries Federal Reserve Bank of New York William Dudley Michael Strine Richard Peach Kausar Hamdani Matthew Higgins Anand Marri Claire Kramer Mills Jason Bram Luis Uranga Javier Silva Edison Reyes Angela Sun President First Vice President SVP, Research & Statistics SVP, Communications & Outreach VP, Integrated Policy Analysis VP, Outreach & Education AVP, Outreach & Education Officer, Research & Statistics Officer, Chief of Staff s Office Senior Associate, Outreach & Education Associate, Outreach & Education Associate, Legal

3 US Macro Overview Richard Peach, Senior Vice President November 15, 216

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

5 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 8 2

6 Manufacturing Output and Real I/S Ratio Quarterly Growth (Annualized) Real I/S Ratio Source: Federal Reserve Board and Bureau of Economic Analysis via Haver Analytics

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 -1 4

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 5 Note: Shading shows NBER recessions.

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

10 Consumer Debt by Credit Score % Change Year to Year % Change Year to Year rd Quintile 4 th 2 Quintile > nd Quintile < st Quintile 5 (Highest) Quintile (Lowest) Source: FRBNY Consumer Credit Panel 7 8 Note: Includes Student Loans

11 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 8 Note: Shading shows NBER recessions.

12 Credit Score at Mortgage Origination: All First Mortgages Credit Score Credit Score Median th Percentile 25 th Percentile About 2 25 Million People Source: FRBNY / Consumer Credit Panel Note: Shading shows NBER recessions.

13 Real Business Fixed Investment 4Q % Change Q % Change Source: Bureau of Economic Analysis -2 1 Note: Shading shows NBER recessions.

14 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) Quarterly data 198Q1 216Q Q3: -2 (75., - 4.5) Manufacturing Capacity Utilization (Percent of Capacity) Source: Federal Reserve Board, Bureau of Economic Analysis 11

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

16 PCE Deflator 12 Month % Change 12 Month % Change Total PCE FOMC Objective Core PCE Source: Bureau of Economic Analysis, via Haver Analytics 13 Note: Shading shows NBER recessions. -2

17 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.

18 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 Note: Shading shows NBER recessions.

19 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.

20 Reference Charts 17

21 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 18 Note: Shading shows NBER recessions.

22 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 19 Note: Shading shows NBER recessions.

23 Percent 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 2 Note: Shading shows NBER recessions.

24 Household Formations 2 Year Avg. Change 2 Year Avg. Change 2 2 Total 15 (Left Axis) Renter (Left Axis) Source: Bureau of the Census Owner (Right Axis) 21 Note: Shading shows NBER recessions.

25 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

26 Excess Supply of Housing Thousands of Units 35 Thousands of Units Excess Units: Total Held Off Market Renter (For Rent) Owner (For Sale) Source: US Bureau of the Census, Housing Vacancy Survey, and author s calculations. Note: Shading represents NBER recessions. 23

27 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

28 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 25

29 Unemp. Rate CBO NAIRU vs. Capacity Utilization PPT Difference (Unemp. Rate NAIRU) Q4 21Q3 21Q2 Data from 215Q1 to 216Q3 are in red. Dashed lines represent 95% CI of predicted values. 21Q1 PPT Difference Capacity Utilization: Manufacturing (Percent) Source: BLS, CBO, Federal Reserve Board Note: Data spans from 195Q1 to 216Q3.

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

31 11/14/216 Global Economic Outlook Small Business and Agricultural Advisory Council Matthew Higgins, November 216 The views expressed here are those of the author, and do not necessarily reflect those of the Federal Reserve Bank of New York or the Federal Reserve System. Roadmap Recent global economic performance Foreign advanced economies struggle to escape lowflation Capital outflows and pressures on China s exchange rate U.S. international trade by geography and product type 1

32 11/14/ Global GDP Growth Percent Q/Q China Market CY forecasts EMEs ex. China Advanced Sources: National sources. Dotted lines show market calendar year growth forecasts for Evolution of EME Market Growth Forecasts Percent CY/CY Sources: Blue Chip Economics, Consensus Economics. Figures are GDP weighted averages for 25 EMEs

33 11/14/216 Citigroup Economic Surprise Indexes Percent positive or negative* Advanced Economies Emerging Economies -4 16:1 16:3 16:5 16:7 16:9 16:11 *Weighted by series historical FX impact AE GDP Growth and Composite PMI Percent SAAR Correlation =.85 Oct Sources: Markit Economics, national authorities. GDP Growth Composite PMI

34 11/14/216 EME GDP Growth and Composite PMI Percent SAAR Correlation =.89 Oct. GDP Growth Composite PMI Sources: Markit Economics, national sources Euro area real GDP and European Commission Forecast Trillions of 21 euros Real GDP EC Potential Estimate Linear Trend, EC forecasts Sources: Eurostat, EC CIRCA database. 4

35 11/14/ Japanese Real GDP and Bank of Japan Projection Trillions of 25 yen Real GDP BoJ Potential Estimate Linear Trend, BoJ projections Sources: Bank of Japan. Calendar year GDP forecast inferred from central tendency of fiscal year growth projections of BoJ board members. BoJ staff potential growth forecast for 216 carried forward to 217. G 3: Core Consumer Price Inflation 2.5 Percent change from year ago U.S. Euro Area Japan Sources: BEA, Eurostat, BoJ. U.S. inflation measured using the PCE index

36 11/14/216 Central Bank Credit as a Share of GDP 1 Percent Japan Euro Area 2 United States Sources: BoJ, ECB, Federal Reserve. AE Core Inflation Performance with Negative Policy Rates Country Date Adopted Initial Core Inflation Current Core Inflation Japan January Sweden February Switzerland December Denmark September Euro Area June Sources: National sources, OECD. Policy rates are as follows: Japan, marginal current account balances; Sweden, repo rate; Switzerland, 3 mo. LIBOR target; Denmark, CD rate; Euro Area, deposit rate. 6

37 11/14/216 China: Reserve Sales and Capital Flows $U.S. billions Non FDI Outflows (implied) Reserve Sales CAC Surplus Source: SAFE, staff calculations China: Market exchange rate & reference value Rmb / $U.S. Actual Rmb/$ market closing rate Rate that would keep CFETS reference index at 8/13/15 value 5. Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Sources: Bloomberg, SAFE, staff calculations 7

38 11/14/216 U.S. Merchandise Trade Flows ( $U.S. bn. ) Country or Region Exports Imports Balance World 1,446 2, Canada Mexico Euro area Asia ex. China, Japan South America China OPEC Japan Europe ex. EMU, UK United Kingdom Miscellaneous Source: U.S. Census Bureau. Figures are for the 12 months through September216, and at customs values. U.S. Merchandise Trade by End-Use ( $U.S. bn. ) Country or Region Exports Imports Balance Total 1,449 2, Capital Goods Industrial Supplies Petrol. & Gas Products Consumer Goods Motor Vehicles & Parts Food, Feeds and Bev Miscellaneous Source: U.S. Census Bureau. Figures are for the 12 months through Sep. 216, at customs value. Consumer goods are ex. food and autos. 8

39 11/14/216 U.S. Corporate Profits by Source $U.S. billions, annual rate 2 15 Domestic plus foreign profits Q2: $682 billion 1 5 Domestic profits (net) Source: BEA. Domestic profits are net of payments to foreign equity holders. Reference Charts 9

40 11/14/216 3 U.S. Merchandise Exports by Destination $U.S. billions Source: U.S. Census Bureau. Figures are for the 12 months through September U.S. Merchandise Imports by Source $U.S. billions Source: U.S. Census Bureau. Figures are for the 12 months through September

41 11/14/216 16, Holdings of U.S. Treasury Securities $U.S. billions 14, 12, 1, 8, 6, 4, 2, Foreign private Foreign official Federal Reserve U.S. private 27:Q4 216:Q2 $2,243 $4,38 $2,462 $5,189 Sources: U.S. Treasury, Federal Reserve Board. 11

42 Regional Economic Outlook Presentation to the Advisory Council on Small Business and Agriculture Jason Bram, Research Officer November 15, 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.

43 Overview of Regional Conditions New York City s economy continues to lead the region in growth, led by the outer boroughs. While NYC s key finance sector has been sluggish, tech (which tends to pay fairly well) has been booming. New Jersey s economy continues to grow modestly. Job trends in much of upstate NY look much stronger than current data suggest. Upstate housing markets strengthening, especially in metro Buffalo. Puerto Rico s economy remains depressed. FEDERAL RESERVE BANK OF NEW YORK 2

44 State Coincident Indexes Three-Month Change Ending September 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 3

45 Regional Economic Activity Index of Coincident Economic Indicators (CEI) 14 Index (Dec27=1) Sep 11 New York City 1 New York State 9 New Jersey Shading indicates NBER recession Source: Federal Reserve Bank of New York 4

46 Current Economic Conditions FRBNY Business Surveys, Current Conditions 6 Diffusion Index 4 2 Empire State Manufacturing Survey Oct -2 Business Leaders Survey Shading indicates NBER recession Source: Federal Reserve Bank of New York 5

47 Recent Private Sector Job Trends Percent Change from September 215 to September 216 Down Flat to up 1.5% Up 1.5% to 2% Up more than 2% Source: Bureau of Labor Statistics and Moody's Economy.com 6

48 Longer-Term Private Sector Job Trends Percent Change From Previous Peak to September 216 Down more than 2% Within 2% Up 2% to 5% Up more than 5% Source: Bureau of Labor Statistics and Moody's Economy.com 7

49 Private-Sector Employment Seasonally Adjusted Index 12 Index (Dec27=1) Sep Oct 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 8

50 Private-Sector Employment Seasonally Adjusted Index 12 Index (Dec27=1) Oct 14 1 Albany Sep 96 Utica Glens Falls 92 United States Shading indicates NBER recession Source: Bureau of Labor Statistics and Moody's Economy.com 9

51 Private-Sector Employment Seasonally Adjusted Index 12 Index (Dec27=1) Oct 14 1 Rochester Buffalo Sep 96 Syracuse 92 United States Shading indicates NBER recession Source: Bureau of Labor Statistics and Moody's Economy.com 1

52 Albany Employment Preliminary vs Expected Revision 465 Thousands 46 Expected Revision 455 Preliminary Source: U.S. Bureau of Labor Statistics, Moody s Economy.com, and FRBNY Staff Calculations. 11

53 Buffalo Employment Preliminary vs Expected Revision 57 Thousands 565 Expected Revision Preliminary Source: U.S. Bureau of Labor Statistics, Moody s Economy.com, and FRBNY Staff Calculations. 12

54 Rochester Employment Preliminary vs Expected Revision 54 Thousands Expected Revision Preliminary Source: U.S. Bureau of Labor Statistics, Moody s Economy.com, and FRBNY Staff Calculations. 13

55 Private-Sector Employment Seasonally Adjusted Index 12 Index (Dec27=1) Sep New York City Orange-Rockland-Westchester Long Island Oct 1 96 Fairfield 92 United States Shading indicates NBER recession Source: Bureau of Labor Statistics and Moody's Economy.com 14

56 NYC Securities Employment Seasonally Adjusted Levels 27 Thousands Shading indicates time between securities peak and trough Thousands 4, , Total Employment Minus Securities (right axis) Sep 3,75 3,5 15 3, , 9 Securities Employment (left axis) 2,75 6 2, Source: Bureau of Labor Statistics, Moody's Economy.com, and FRBNY calculations 15

57 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). 16

58 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. 17

59 Home Prices CoreLogic Home Price Index, Seasonally Adjusted 12 Index (Mar26=1) 11 Upstate NY 1 NYC Metro Sep 9 New York State 8 Downstate NY 7 United States Shading indicates NBER recession Source: CoreLogic Home Price Index (including distressed sales) 18

60 Home Prices CoreLogic Home Price Index, Seasonally Adjusted 12 Index (Mar26=1) 11 1 NYC Metro 9 Westchester Sep 8 Rockland Fairfield 7 United States Shading indicates NBER recession Source: CoreLogic Home Price Index (including distressed sales) 19

61 Home Prices CoreLogic Home Price Index, Seasonally Adjusted 12 Index (Mar26=1) Hudson Sep 8 Bergen Essex 7 United States Union Passaic Shading indicates NBER recession Source: CoreLogic Home Price Index (including distressed sales) HPI_5 13NOV216 2

62 Home Prices CoreLogic Home Price Index, Seasonally Adjusted 13 Index (Mar26=1) Buffalo Upstate NY Rochester Albany 9 Sep United States Shading indicates NBER recession Source: CoreLogic Home Price Index (including distressed sales) 21

63 Home Prices CoreLogic Home Price Index, Seasonally Adjusted 16 Index (Mar26=1) Brooklyn 14 Manhattan 12 Queens 1 Nassau County Sep 8 Suffolk County United States Shading indicates NBER recession Source: CoreLogic Home Price Index (including distressed sales) 22

64 Office Vacancy Rates Overall Vacancy Rates 25 Percent 2 Central NJ 15 Northern NJ NYC Downtown 1 Q3 5 NYC Midtown Shading indicates NBER recessions Source: Cushman & Wakefield 23

65 Office Vacancy Rates Overall Vacancy Rates 25 Percent 2 Fairfield County 15 Westchester County Q3 1 Long Island 5 Shading indicates NBER recessions Source: Cushman & Wakefield 24