I Will Survive. By: Anirban Basu Sage Policy Group, Inc. On Behalf of MACPA. April 29, 2011

Transcription

1 I Will Survive On Behalf of MACPA By: Anirban Basu Sage Policy Group, Inc. April 29, 2011

2 Joy to the World

3 Annual % Change Historic and Projected World Output Growth 2004 through 2012* 6.0% 5.0% 5.3% 4.4% 5.1% 5.2% 5.0% 4.4% 4.5% 4.0% 3.0% 2.0% 1.0% 0.0% 3.0% -1.0% -2.0% -0.6% Source: International Monetary Fund * data are projections

4 Estimated Growth in Output by Select Global Areas 2010 Advanced economies Euro area France Germany Italy Spain Japan United Kingdom Canada United States Emerging/developing countries Sub-Saharan Africa Central/eastern Europe Russia Developing Asia China India Middle East and North Africa Latin America and Caribbean Brazil Mexico -0.2% 1.0% 1.8% 1.6% 1.7% 3.0% 2.9% 2.8% 3.6% 4.3% 5.0% 4.2% 3.7% 3.9% 5.2% 5.9% 7.1% 7.5% 9.3% 10.3% 9.7% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% Annual % Change Source: International Monetary Fund

5 Estimated Growth in Output by Select Global Areas 2011 Projected Advanced economies Euro area France Germany Italy Spain Japan United Kingdom Canada United States Emerging/developing countries Sub-Saharan Africa Central/eastern Europe Russia Developing Asia China India Middle East and North Africa Latin America and Caribbean Brazil Mexico Source: International Monetary Fund 1.0% 0.6% 2.5% 1.5% 1.6% 2.2% 1.6% 2.0% 2.3% 3.0% 3.6% 4.5% 4.6% 4.3% 4.5% 4.2% 5.5% 6.5% 8.4% 8.4% 9.6% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% Annual % Change

6 Estimated Growth in Output by Select Global Areas 2011 Projected Advanced economies Euro area France Germany Italy Spain Japan United Kingdom Canada United States Emerging/developing countries Sub-Saharan Africa Central/eastern Europe Russia Developing Asia China India Middle East and North Africa Latin America and Caribbean Brazil Mexico 2.5% 1.7% 1.8% 2.0% 1.3% 1.5% 1.8% 2.3% 2.7% 2.7% 4.0% 4.4% 4.7% 4.1% 4.1% 4.8% 6.5% 5.8% 8.0% 8.4% 9.5% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% Annual % Change Source: International Monetary Fund

7 Top 12 Stock Exchanges 2008 Growth Rank Exchange Index 2008 % Change 3 London SE FTSE % 1 NYSE Group DJI A -33.8% 12 Swiss Exchange Swiss Market -34.2% 9 TSX Group S&P TSX Composite -35.4% 2 Nasdaq NASDAQ Composite -39.6% 8 Bolsa De Medrid Madrid General -40.0% 6 Frankfurt SE DAX -40.2% 4 Tokyo SE Nikkei % 5 Euronext CAC % 11 Hong Kong Exchanges Hang Seng Index -47.9% 10 Borsa Italiana MIBTel -48.5% 7 Shanghai SE Shanghai Composite -65.4% Source: Yahoo! Finance

8 Top 12 Stock Exchanges 2009 Growth Rank Exchange Index 2009 % Change 7 Shanghai SE Shanghai Composite 77.2% 11 Hong Kong Exchanges Hang Seng Index 51.4% 2 Nasdaq NASDAQ Composite 43.7% 9 TSX Group S&P TSX Composite 31.2% 6 Frankfurt SE DAX 29.9% 1 NYSE Group DJI A 26.8% 8 Bolsa De Medrid Madrid General 26.7% 3 London SE FTSE % 5 Euronext CAC % 10 Borsa Italiana FTSE MIB 19.5% 12 Swiss Exchange Swiss Market 18.4% 4 Tokyo SE Nikkei % Source: Yahoo! Finance

9 Top 12 Stock Exchanges 2010 Growth Rank Exchange Index 2010 % Change 2 Nasdaq NASDAQ Composite 16.9% 6 Frankfurt SE DAX 16.1% 9 TSX Group S&P TSX Composite 14.4% 1 NYSE Group DJI A 11.0% 3 London SE FTSE % 11 Hong Kong Exchanges Hang Seng Index 5.3% 12 Swiss Exchange Swiss Market -1.7% 4 Tokyo SE Nikkei % 5 Euronext CAC % 10 Borsa Italiana FTSE MIB -13.2% 7 Shanghai SE Shanghai Composite -14.3% 8 Bolsa De Medrid Madrid General -19.2% Source: Yahoo! Finance

10 9 to 5

11 Recession Watch as of May 2009 Source: Moody s Economy

12 Jan-01 Jun-01 Nov-01 Apr-02 Sep-02 Feb-03 Jul-03 Dec-03 May-04 Oct-04 Mar-05 Aug-05 Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar-10 Aug-10 Jan-11 Index (2007 = 100) 105 Industrial Production January 2001 through February Source: Federal Reserve The industrial production index measures the real output of the manufacturing, mining, and electric and gas utilities industries.

13 1990Q1 1990Q4 1991Q3 1992Q2 1993Q1 1993Q4 1994Q3 1995Q2 1996Q1 1996Q4 1997Q3 1998Q2 1999Q1 1999Q4 2000Q3 2001Q2 2002Q1 2002Q4 2003Q3 2004Q2 2005Q1 2005Q4 2006Q3 2007Q2 2008Q1 2008Q4 2009Q3 2010Q2 Percent Change from Preceding Period (SAAR) Gross Domestic Product 1990Q1 through 2010Q Q4: 3.1% -8.0 Source: Bureau of Economic Analysis

14 Recession Watch as of April 2010 Source: Moody s Economy

15 Recession Watch as of March 2011 Source: Moody s Economy

16 Thousands Net Change in U.S. Jobs, BLS January 2001 through March Between March 2010 and March 2011, the nation gained 1,300,000 jobs. 3/11: +216k -900 Jan-11 Sep-10 May-10 Jan-10 Sep-09 May-09 Jan-09 Sep-08 May-08 Jan-08 Sep-07 May-07 Jan-07 Sep-06 May-06 Jan-06 Sep-05 May-05 Jan-05 Sep-04 May-04 Jan-04 Sep-03 May-03 Jan-03 Sep-02 May-02 Jan-02 Sep-01 May-01 Jan-01 Source: Bureau of Labor Statistics

17 National Nonfarm Employment by Industry Sector Groups December 2007 v. March 2011 Education & Healthcare +1320, +7.1% Mining and Logging +18, 2.4% Other Services -75, -1.4% Government -211, -0.9% Information -343, -11.3% Leisure & Hospitality Financial Activities Professional and Business Services Trade, Transportation, and Utilities Construction -1934, -7.2% -1973, -26.4% -382, -2.8% -615, -7.5% -977, -5.4% All told 7,245K Jobs Lost Manufacturing -2073, -15.1% Source: Bureau of Labor Statistics Thousands, SA

18 National Nonfarm Employment by Industry Sector Groups March 2010 v. March 2011 Professional and Business Services Education & Healthcare Trade, Transportation, and Utilities Manufacturing Leisure & Hospitality Other Services Mining and Logging Financial Activities Construction Information Government All told 1,300K Jobs Gained Thousands, SA Source: Bureau of Labor Statistics

19 Maryland Nonfarm Employment by Industry Sector Groups (SA) February 2010 v. February 2011 Absolute Change Trade, Transportation, and Utilities Professional & Business Services 12,500 13,500 Educational & Health Services 9,000 Government Construction, Mining and Logging Leisure & Hospitality 2,900 4,200 5,600 Other Services Information -1, MD Total: +43.4K; +1.8% Financial Activities Manufacturing -2,000-2,000 US Total: +1276K; +1.0% -5, ,000 10,000 15,000 Source: Bureau of Labor Statistics

20 Baltimore-Towson MSA Nonfarm Employment by Industry Sector Groups (NSA) February 2010 v. February 2011 Absolute Change Professional & Business Services 8,700 Trade, Transportation, and Utilities Educational & Health Services 5,800 5,400 Construction, Mining and Logging Leisure & Hospitality Other Services Information Manufacturing Financial Activities Government ,600-1,800-2, ,600 1,300 Baltimore Total: +16.8K; +1.3% MD Total: +43.4K; +1.8% US Total: +1276K; +1.0% -7,000-5,000-3,000-1,000 1,000 3,000 5,000 7,000 9,000 11,000 Source: Bureau of Labor Statistics

21 Washington, DC-Arlington-Alexandria MSA Nonfarm Employment by Industry Sector Groups (NSA) February 2010 v. February 2011 Absolute Change Professional & Business Services 16,700 Trade, Transportation & Utilities 15,300 Educational & Health Services 14,300 Leisure & Hospitality 13,900 Government 12,800 Construction, Mining and Logging Financial Activities 500 5,300 DC MSA Total: +84.0K; +2.9% Manufacturing Other Services -1,200-1,400 US Total: +1276K; +1.0% Information -1,600-5, ,000 10,000 15,000 20,000 Source: Bureau of Labor Statistics

22 Unemployment Rates, Largest 20 Metros(NSA) January 2011 Rank MSA UR Rank MSA UR Washington-Arlington-Alexandria, Chicago-Joliet-Naperville, IL-IN- 1 DC-VA-MD-WV WI 9.5 Minneapolis-St. Paul-Bloomington, MN- 2 WI St. Louis, MO-IL 10.0 San Francisco-Oakland-Fremont, 3 Boston-Cambridge-Quincy, MA-NH CA Baltimore-Towson, MD San Diego-Carlsbad-San Marcos, CA Dallas-Fort Worth-Arlington, TX Atlanta-Sandy Springs-Marietta, GA Houston-Sugar Land-Baytown, TX Miami-Fort Lauderdale-Pompano Beach, FL 11.5 New York-Northern New Jersey-Long 7 Island, NY-NJ-PA Detroit-Warren-Livonia, MI 11.7 Philadelphia-Camden-Wilmington, PA- Los Angeles-Long Beach-Santa 7 NJ-DE-MD Ana, CA Seattle-Tacoma-Bellevue, WA Tampa-St. Petersburg-Clearwater, FL Phoenix-Mesa-Glendale, AZ Riverside-San Bernardino-Ontario, CA 14.2 Source: Bureau of Labor Statistics

23 Unemployment Rates, U.S. States (SA) February 2011 Rank State Rate Rank State Rate Rank State Rate 1 NORTH DAKOTA UTAH MISSOURI NEBRASKA ARKANSAS WEST VIRGINIA SOUTH DAKOTA LOUISIANA DISTRICT OF COLUMBIA NEW HAMPSHIRE PENNSYLVANIA 8 38 ARIZONA VERMONT MASSACHUSETTS TENNESSEE IOWA NEW YORK IDAHO WYOMING TEXAS NORTH CAROLINA HAWAII DELAWARE GEORGIA VIRGINIA NEW MEXICO MISSISSIPPI OKLAHOMA INDIANA OREGON MINNESOTA ILLINOIS SOUTH CAROLINA KANSAS CONNECTICUT 9 46 KENTUCKY MARYLAND WASHINGTON MICHIGAN MONTANA NEW JERSEY RHODE ISLAND WISCONSIN OHIO FLORIDA MAINE ALABAMA CALIFORNIA ALASKA COLORADO NEVADA 13.6 Source: Bureau of Labor Statistics U.S. Unemployment Rate: February 11 =8.9%

24 MD County Unemployment Rates January 2011 Rank Jurisdiction UR Rank Jurisdiction UR 1 Howard County Talbot County Montgomery County Garrett County Calvert County Kent County Charles County Wicomico County St. Mary s County Caroline County Frederick County Allegany County Anne Arundel County Cecil County Carroll County Washington County Prince George's County Baltimore City Queen Annes County Somerset County Harford County Dorchester County Baltimore County Worcester County 18.0 Source: Bureau of Labor Statistics

25 Baby Come Back

26 Rate 10% 15-Year & 30-Year Fixed Mortgage Rates January 1995 through February % 8% 15-yr 30-yr 7% 6% 5% 4% 3% Source: Freddie Mac

27 Thousands, SAAR U.S. New Home Sales January 1999 through February ,600 1,400 1,200 1, Source: Economy.com, Census Bureau

28 Jan-99 Aug-99 Mar-00 Oct-00 May-01 Dec-01 Jul-02 Feb-03 Sep-03 Apr-04 Nov-04 Jun-05 Jan-06 Aug-06 Mar-07 Oct-07 May-08 Dec-08 Jul-09 Feb-10 Sep-10 Thousands, SAAR 2,700 U.S. Housing Starts January 1999 through February ,200 1,700 1, Source: Economy.com

29 Mortgage Banker s Association Mortgage Applications Purchase Index January 2006 through March 18, Source: Economy.com

30 Net Percentage of Domestic Respondents 1995Q2 1995Q4 1996Q2 1996Q4 1997Q2 1997Q4 1998Q2 1998Q4 1999Q2 1999Q4 2000Q2 2000Q4 2001Q2 2001Q4 2002Q2 2002Q4 2003Q2 2003Q4 2004Q2 2004Q4 2005Q2 2005Q4 2006Q2 2006Q4 2007Q2 2007Q4 2008Q2 2008Q4 2009Q2 2009Q4 2010Q2 2010Q through 2006 = All Mortgage Loans 2007 through Present = Prime Mortgage Loans Supply and Demand for Residential Mortgage Loans 1995Q2 through 2011Q1* Tightening Standards for Loans Stronger Demand for Loans Source: Federal Reserve

31 1995Q2 1995Q4 1996Q2 1996Q4 1997Q2 1997Q4 1998Q2 1998Q4 1999Q2 1999Q4 2000Q2 2000Q4 2001Q2 2001Q4 2002Q2 2002Q4 2003Q2 2003Q4 2004Q2 2004Q4 2005Q2 2005Q4 2006Q2 2006Q4 2007Q2 2007Q4 2008Q2 2008Q4 2009Q2 2009Q4 2010Q2 2010Q4 Net Percentage of Domestic Respondents Supply and Demand for Commercial Real Estate Loans 1995Q2 through 2011Q Tightening Standards for Loans Stronger Demand for Loans Source: Federal Reserve

32 Take the Money and Run

33 1995Q2 1995Q4 1996Q2 1996Q4 1997Q2 1997Q4 1998Q2 1998Q4 1999Q2 1999Q4 2000Q2 2000Q4 2001Q2 2001Q4 2002Q2 2002Q4 2003Q2 2003Q4 2004Q2 2004Q4 2005Q2 2005Q4 2006Q2 2006Q4 2007Q2 2007Q4 2008Q2 2008Q4 2009Q2 2009Q4 2010Q2 2010Q4 Net Percentage of Domestic Respondents Supply and Demand for Loans to Households 1995Q2 through 2011Q Increased Willingness to Make Consumer Installment Loans Stronger Demand for Consumer Loans Source: Federal Reserve

34 Jan-01 Jun-01 Nov-01 Apr-02 Sep-02 Feb-03 Jul-03 Dec-03 May-04 Oct-04 Mar-05 Aug-05 Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar-10 Aug-10 Jan month Percent Change (SAAR) Consumer Credit January 2001 through January % 10% Revolving Credit Nonrevolving Credit 5% 0% -5% -10% Type of Consumer Credit Jan. 11 value ($millions) % change from Dec. 10 % change from Jan. 10 Total Consumer Credit 2,412, % -1.4% Revolving Credit 795, % -7.2% Nonrevolving Credit 1,616, % 1.7% -15% Source: Federal Reserve

35 Jan-01 May-01 Sep-01 Jan-02 May-02 Sep-02 Jan-03 May-03 Sep-03 Jan-04 May-04 Sep-04 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 Year to Year % change 15.0% U.S. Retail & Food Services Sales January 2001 through February % 5.0% 0.0% -5.0% -10.0% -15.0% Source: Census

36 U.S. Chain Store Sales Growth by Type of Store February 2010 v. February 2011 Luxury Dept. 10.1% Wholesale 7.7% Department 5.7% Apparel 3.2% Drug 2.4% Discount 2.1% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 12-month % change Source: Economy.com

37 Vehicle Sales (millions) Jan-04 National Vehicle Sales January 2004 through March 2011 (SAAR) May-04 Sep-04 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan Source: Autodata Corp. GM Ford Chrysler Honda Toyota Nissan

38 Value ($billions) U.S. Federal Budget Deficit * $400 $200 $0 Total On-budget -$200 -$400 -$600 -$800 -$1,000 -$1,200 -$1,400 -$1, Source: Congressional Budget Office * data are projections

39 Projected State Budget Shortfalls for FY 2012 As Percentage of FY 2011 Budget Rank State % Rank State % Rank State % 1 Nevada 45.2% 18 Mississippi 14.1% 35 Hawaii 8.2% 2 New Jersey 37.4% 19 Alabama 13.9% 36 Utah 8.2% 3 Texas 31.5% 20 Colorado 13.8% 37 Georgia 7.9% 4 California* 29.3% 21 Virginia* 13.1% 38 Delaware 6.3% 5 Oregon* 25.0% 22 Wisconsin 12.8% 39 Michigan 5.9% 6 Minnesota 23.6% 23 North Carolina 12.7% 40 Massachusetts 5.7% 7 Louisiana 20.7% 24 Arizona 11.5% 41 District of Columbia 5.2% 8 New York 18.7% 25 Rhode Island 11.3% 42 Idaho 3.9% 9 Connecticut 18.0% 26 Ohio* 11.0% 43 Iowa 3.5% 10 States Total 17.6% 27 South Dakota 10.9% 44 Indiana 2.0% 11 South Carolina 17.4% 28 Maryland 10.7% New Hampshire (DK) NA 12 Pennsylvania 16.4% 29 Oklahoma 9.4% Tennessee (DK) NA 13 Vermont 16.3% 30 Nebraska 9.2% 14 Washington 16.2% 31 Kentucky* 9.1% 15 Maine 16.1% 32 Missouri 9.1% 16 Florida 14.9% 33 Kansas 8.8% 17 Illinois 14.6% 34 New Mexico 8.3% Source: Center on Budget and Policy Priorities Note: Kentucky and Virginia have two-year budgets. They closed their FY2012 shortfalls when they enacted their budgets for the FY2011-FY2012 biennium. California s shortfall includes an $8.2 billion shortfall carried forward from FY2011. Oregon and Ohio s shortfalls are one half of the states total projected shortfalls for the biennium. Estimates of Ohio s two-year shortfall range from $6 to $8 billion. DK means that a state is projecting a shortfall but its size is unknown. Combined gaps of $112 billion for 2012.

40 State-Local Tax Burdens 2009 Rank State Rate Rank State Rate Rank State Rate 1 New Jersey 12.2% 18 Ohio 9.7% 35 Missouri 9.0% 2 New York 12.1% 19 Kansas 9.7% 36 Montana 8.7% 3 Connecticut 12.0% 20 Utah 9.7% 37 Mississippi 8.7% 4 Wisconsin 11.0% 21 Michigan 9.7% 38 Oklahoma 8.7% 5 Rhode Island 10.7% 22 Hawaii 9.6% 39 Arizona 8.7% 6 California 10.6% 23 Delaware 9.6% 40 Colorado 8.6% 7 Minnesota 10.3% 24 District of Columbia 9.6% 41 Alabama 8.5% 8 Vermont 10.2% 25 Iowa 9.5% 42 New Mexico 8.4% 9 Maine 10.1% 26 Indiana 9.5% 43 Louisiana 8.2% 10 Pennsylvania 10.1% 27 North Dakota 9.5% 44 South Carolina 8.1% 11 Massachusetts 10.0% 28 West Virginia 9.4% 45 New Hampshire 8.0% 12 Maryland 10.0% 29 Idaho 9.4% 46 Texas 7.9% 13 Illinois 10.0% 30 Washington 9.3% 47 Wyoming 7.8% 14 Arkansas 9.9% 31 Kentucky 9.3% 48 Tennessee 7.6% 15 Nebraska 9.8% 32 Florida 9.2% 49 South Dakota 7.6% 16 North Carolina 9.8% 33 Georgia 9.1% 50 Nevada 7.5% 17 Oregon 9.8% 34 Virginia 9.1% 51 Alaska 6.3% Source: The Tax Foundation U.S. Rate = 9.8% Rate = Total State and Local Per Capita Taxes Paid/Per Capita Income

41 Revenue ($millions) Sources of Local Government Finance For Maryland Jurisdictions FY2007 through FY2010 $14,000 $12,000 $3,168 $3,314 $3,091 $3,121 $10,000 $8,000 $6,000 $4,102 $4,273 $4,257 $3,787 $4,000 $2,000 $0 $5,703 $5,910 $6,342 $6,711 FY 2007 FY 2008 FY 2009 FY 2010 Property-Related Taxes County Income Tax Other County Revenue Source: Maryland county government web sites

42 State Reliance on Major Tax Sources* Ranked by Reliance on Property Taxes 2009 General sales and gross receipts Source: National Conference of State Legislatures Selective sales taxes Individual Corporation Other Property State income net income taxes taxes 1. Vermont 12.8% 21.3% 20.0% 3.5% 6.1% 36.4% 2. New Hampshire X 4.6% 39.0% 23.2% 14.7% 18.5% 3. Washington 61.2% X 18.7% X 9.2% 10.9% 4. Wyoming 35.8% X 4.7% X 49.1% 10.4% 5. Michigan 40.2% 25.6% 15.0% 2.8% 6.5% 9.9% 6. Arkansas 37.0% 30.0% 13.2% 4.6% 5.3% 9.8% 7. Montana X 34.4% 22.0% 6.8% 27.1% 9.8% 8. Arizona 50.4% 17.4% 15.2% 5.3% 4.2% 7.4% 9. Kentucky 29.3% 34.0% 18.5% 4.0% 9.0% 5.3% 10. Maryland 25.5% 42.8% 15.1% 5.0% 7.1% 4.6% United States 31.9% 34.4% 16.0% 5.6% 10.3% 1.8% *Tax share based on collection data supplied by the Bureau of the Census

43 Aug-07 Oct-07 Dec-07 Feb-08 Apr-08 Jun-08 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 One-month Percent Change Conference Board Leading Economic Indicators Index August 2007 through February % 1.0% 0.5% February 2011 = where 2004= % -0.5% -1.0% -1.5% Source: Conference Board 1 Average weekly hours, manufacturing 2 Average weekly initial claims for unemployment insurance 3 Manufacturers' new orders, consumer goods and materials 4 Index of supplier deliveries vendor performance 5 Manufacturers' new orders, nondefense capital goods 6 Building permits, new private housing units 7 Stock prices, 500 common stocks 8 Money supply, M2 9 Interest rate spread, 10-yr Treasury bonds -fed funds 10 Index of consumer expectations

44 Stairway to Heaven Stimulus, stimulus, stimulus; We ve seen the worst of it from a broader economic perspective; Too soon to tell if broad inflation domestically will be problematic; Election results will be good for economy because gridlock is desirable, at least to a certain extent; Global economy on the mend for now; Commodity price surges remain a threat; 2011: GDP 2.8%-3.3%; 1.6M jobs; US UE stays above 8.5%; 2012????

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