Markets, He Wrote. By: Anirban Basu Sage Policy Group, Inc. On Behalf of Maryland Construction and Materials Conference.

Transcription

1 Markets, He Wrote On Behalf of Maryland Construction and Materials Conference By: Anirban Basu Sage Policy Group, Inc. June 23 rd, 2017

2 Macro P.I. (Just How Hairy is the Global Situation?) Photo: Flixter.com

3 Estimated Growth in Output by Select Global Areas 2017 Projected Advanced Economies Euro Area France Germany Italy Spain Japan (2) United Kingdom Canada Australia United States Emerging Market & Developing Economies Sub-Saharan Africa Emerging & Developing Europe Russia Emerging & Developing Asia China India (3) Middle East, North Africa, Afghanistan, & Pakistan Latin America & the Caribbean Mexico Brazil 2017 Proj. Global Output Growth: 3.5% 2.0% 1.7% 1.4% 1.6% 0.8% 2.6% 1.2% 2.0% 1.9% 3.1% 2.3% 4.5% 2.6% 3.0% 1.4% 2.6% 1.1% 1.7% 0.2% 6.4% 6.7% 7.2% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% Annual % Change Source: International Monetary Fund: World Economic Outlook Database, April 2017; China: IMF. June 2017, IMF Staff Completes 2017 Article IV Mission to China" Notes: 1. Real effective exchange rates are assumed to remain constant at the levels prevailing during February 1 March 1, Economies are listed on the basis of economic size. The aggregated quarterly data are seasonally adjusted. 2. Japan s historical national accounts figures reflect a comprehensive revision by the national authorities, released in December The main revisions are the switch from the System of National Accounts 1993 to the System of National Accounts 2008 and the updating of the benchmark year from 2005 to For India, data and forecasts are presented on a fiscal year basis and GDP from 2011 onward is based on GDP at market prices with FY2011/12 as a base year.

4 International Population Dynamics, 16 Largest Nations Population(Millions) Nation Net Change % Change Nigeria % Ethiopia % Egypt % Pakistan % Philippines % India 1, , % Mexico % Bangladesh % Indonesia % United States % Vietnam % Brazil % China 1, , % Germany % Russian Federation % Japan % World 7.3 billion 9.7 billion 2.4 billion 32.3% Source: United Nations, Department of Economic and Social Affairs, Population Division (2015). World Population Prospects: The 2015 Revision. *For statistical purposes, the data for China do not include Hong Kong and Macao, Special Administrative Regions (SAR) of China, and Taiwan Province of China.

5 Niamey Vice (Fertility Rates by Country, 2014) Rank* Source: World Bank, World Development Indicators Top 15 Bottom 15 Country Fertility Rate Rank* Country Fertility Rate 1 Niger Germany Somalia Italy Mali Malta Chad Hungary Angola Slovak Republic Congo, Dem. Rep Greece Burundi Poland Uganda Spain Gambia, The Bosnia and Herzegovina Nigeria Moldova Burkina Faso Singapore Mozambique Macao SAR, China Zambia Hong Kong SAR, China Tanzania Portugal Malawi Korea, Rep *Rank among 200 countries for which data are available for the most recent year (2014) **Total fertility rate represents the number of children that would be born to a woman if she were to live to the end of her childbearing years and bear children in accordance with age-specific fertility rates of the specified year.

6 Global Debt to Exacerbate Slow Growth? According to the IMF, global debt reached an all-time high in 2015; At $152 trillion, global gross debt of the nonfinancial sector now represents 225% of global GDP; About 2/3of this debt is in the private sector; Current low nominal-growth environment is making adjustment difficult, setting the stage for a vicious feedback loop in which lower growth hampers deleveraging and the debt overhang exacerbates the slowdown. 2 Sources: 1. International Monetary Fund. October World Economic Outlook: Subdued Demand: Symptoms and Remedies. 2. International Monetary Fund (IMF). October Fiscal Monitor: Debt Use It Wisely. Note: The nonfinancial sector comprises the general government, nonfinancial firms, and households. Gross debt represents the unconsolidated liabilities of the three.

7 NYMEX Crude Oil Future Prices in U.S. Dollars May 2001 through May 2017 $140 $120 May 2017: $48.54/Barrel $100 $80 $60 $40 $20 $0 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 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 $/Barrel Source: U.S. Energy Information Administration *Month of May = average of daily prices from 5/1-5/31

8 Metal Price Indices May 2007 through May Precious Metals Base Metals Iron Ore May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May =100 Source: The World Bank US$ Nominal Base metals include aluminum, copper, lead, nickel, tin and zinc. Precious metals include gold, platinum, and silver.

9 Baltic Dry Index June 2009 through June ,000 4,000 3,000 2,000 1,000 June 15 th Jan. 4, 1985: 1,000 Jun-09 Oct-09 Feb-10 Jun-10 Oct-10 Feb-11 Jun-11 Oct-11 Feb-12 Jun-12 Oct-12 Feb-13 Jun-13 Oct-13 Feb-14 Jun-14 Oct-14 Feb-15 Jun-15 Oct-15 Feb-16 Jun-16 Oct-16 Feb-17 Jun-17 Source: Quandl.com The Baltic Dry Index (BDI) is a measure of the price of shipping major raw materials such as metals, grains, and fossil fuels by sea. The BDI is a composite of 3 sub-indices, each covering a different carrier size: Capesize, Panamax, and Supramax.

10 USA CSI (Commercial Situation Investigation) Photo: AMCNetworks.com

11 Gross Domestic Product 1990Q1 through 2017Q1* 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% 2017Q1: +1.2% 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 2011Q1 2011Q4 2012Q3 2013Q2 2014Q1 2014Q4 2015Q3 2016Q2 2017Q1 % Change from Preceding Period (SAAR) Source: Bureau of Economic Analysis *2 nd Estimate

12 Percent Change from Preceding Period (SAAR) Contributions to GDP Growth by Component 2016Q2 2017Q1* SAAR (%) Q2 2016Q3 2016Q4 2017Q GDP -3.0 Personal Consumption Government Spending Net Exports Gross Investment Source: Bureau of Economic Analysis *2 nd Estimate 2017Q1: +1.2%

13 Net Change in U.S. Jobs, BLS May 2002 through May May 2017: +138K 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 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Thousands Source: U.S. Bureau of Labor Statistics

14 National Nonfarm Employment by Industry Sector May 2016 v. May 2017 Professional and Business Services Education and Health Services Leisure and Hospitality Source: U.S. Bureau of Labor Statistics Construction Financial Activities Trade, Transportation, and Utilities Government Other Services Manufacturing Mining and Logging Information Thousands, SA All told 2,266K jobs gained

15 65.0 U.S. Employment to Population Ratio May 2000 May May 2017: 60.0% May-00 Nov-00 May-01 Nov-01 May-02 Nov-02 May-03 Nov-03 May-04 Nov-04 May-05 Nov-05 May-06 Nov-06 May-07 Nov-07 May-08 Nov-08 May-09 Nov-09 May-10 Nov-10 May-11 Nov-11 May-12 Nov-12 May-13 Nov-13 May-14 Nov-14 May-15 Nov-15 May-16 Nov-16 May-17 Source: U.S. Bureau of Labor Statistics Note: Civilian employment-population ratio, population 16 years and over, seasonally adjusted (SA).

16 Maryland Nonfarm Employment by Industry Sector Groups (SA) May 2016 v. May 2017 Absolute Change Professional and Business Services 16,700 Government Education and Health Services 8,400 8,100 Other Services 4,100 Mining, Logging, and Construction 3,600 Trade, Transportation, and Utilities 3,200 Information Leisure and Hospitality Financial Activities Manufacturing -2, , MD Total: +43.1K; +1.6% US Total (SA): +2,266K; +1.6% -5, ,000 10,000 15,000 20,000 Source: U.S. Bureau of Labor Statistics *According to the Local Area Unemployment Statistics (LAUS) series MD added 68,031 jobs between May 2016 and May 2017.

17 Baltimore-Columbia-Towson MSA Nonfarm Employment by Industry Sector Groups (NSA) May 2016 v. May 2017 Absolute Change Education and Health Services Professional and Business Services 5,900 8,400 Government 1,000 Leisure and Hospitality 800 Other Services 700 Information Mining, Logging, and Construction Manufacturing , Baltimore MSA Total: +7.9K; +0.6% MD Total (SA): +43.1K; +1.6% Financial Activities Trade, Transportation, and Utilities -2,800-4,200 US Total (SA): +2,266K; +1.6% -6,000-3, ,000 6,000 9,000 Source: U.S. Bureau of Labor Statistics

18 Washington, DC-Arlington-Alexandria MSA Nonfarm Employment by Industry Sector Groups (NSA) May 2016 v. May 2017 Absolute Change Professional and Business Services 15,600 Leisure and Hospitality 13,300 Education and Health Services 8,600 Government 6,300 Trade, Transportation, and Utilities 4,300 Mining, Logging, and Construction Other Services Financial Activities Manufacturing Information , ,200 DC MSA Total: +48.3K; +1.5% US Total (SA): +2,266K; +1.6% -4,000 1,000 6,000 11,000 16,000 Source: U.S. Bureau of Labor Statistics

19 Employment Growth, U.S. States (SA) May 2016 v. May 2017 Percent Change RANK STATE % RANK STATE % RANK STATE % 1 UTAH MASSACHUSETTS VIRGINIA FLORIDA MONTANA IOWA NEVADA NEW YORK DELAWARE COLORADO NORTH CAROLINA NEW MEXICO GEORGIA SOUTH CAROLINA PENNSYLVANIA IDAHO CALIFORNIA OHIO OREGON RHODE ISLAND CONNECTICUT WASHINGTON DISTRICT OF COLUMBIA ILLINOIS TEXAS INDIANA MAINE TENNESSEE KENTUCKY LOUISIANA ALABAMA NEW HAMPSHIRE VERMONT ARIZONA WISCONSIN MISSISSIPPI ARKANSAS HAWAII OKLAHOMA MICHIGAN SOUTH DAKOTA KANSAS MINNESOTA NEBRASKA ALASKA MISSOURI NEW JERSEY WEST VIRGINIA MARYLAND NORTH DAKOTA WYOMING -1.4 Source: U.S. Bureau of Labor Statistics U.S. Year-over-year Percent Change: +1.6%

20 Employment Growth, 24 Largest Metros (NSA) May 2016 v. May 2017 Percent Change Rank MSA % Rank MSA % 1 Orlando-Kissimmee-Sanford, FL MSA San Francisco-Oakland-Hayward, CA MSA Dallas-Fort Worth-Arlington, TX MSA Portland-Vancouver-Hillsboro, OR-WA MSA Tampa-St. Petersburg-Clearwater, FL MSA Atlanta-Sandy Springs-Roswell, GA MSA Charlotte-Concord-Gastonia, NC-SC MSA Riverside-San Bernardino-Ontario, CA MSA Miami-Fort Lauderdale-West Palm Beach, FL MSA Boston-Cambridge-Nashua, MA-NH Metro NECTA New York-Newark-Jersey City, NY-NJ-PA MSA Philadelphia-Camden-Wilmington, PA-NJ- DE-MD MSA Washington-Arlington-Alexandria, DC- VA-MD-WV MSA Houston-The Woodlands-Sugar Land, TX MSA 8 Denver-Aurora-Lakewood, CO MSA San Diego-Carlsbad, CA MSA Seattle-Tacoma-Bellevue, WA MSA Los Angeles-Long Beach-Anaheim, CA MSA Phoenix-Mesa-Scottsdale, AZ MSA St. Louis, MO-IL MSA Detroit-Warren-Dearborn, MI MSA Chicago-Naperville-Elgin, IL-IN-WI MSA Minneapolis-St. Paul-Bloomington, MN-WI MSA Source: U.S. Bureau of Labor Statistics, Current Employment Statistics (CES) Survey Baltimore-Columbia-Towson, MD MSA 0.6

21 Unemployment Rates, 24 Largest Metros (NSA) April 2017 Rank MSA UR Rank MSA UR 1 Denver-Aurora-Lakewood, CO MSA Los Angeles-Long Beach-Anaheim, CA MSA San Francisco-Oakland-Hayward, CA MSA Minneapolis-St. Paul-Bloomington, MN-WI MSA Boston-Cambridge-Nashua, MA-NH Metro NECTA New York-Newark-Jersey City, NY-NJ-PA MSA Phoenix-Mesa-Scottsdale, AZ MSA Charlotte-Concord-Gastonia, NC-SC MSA Portland-Vancouver-Hillsboro, OR-WA MSA Detroit-Warren-Dearborn, MI MSA Seattle-Tacoma-Bellevue, WA MSA Baltimore-Columbia-Towson, MD MSA Washington-Arlington-Alexandria, DC- VA-MD-WV MSA 8 Orlando-Kissimmee-Sanford, FL MSA Dallas-Fort Worth-Arlington, TX MSA Chicago-Naperville-Elgin, IL-IN-WI MSA 4.2 Miami-Fort Lauderdale-West Palm Beach, FL MSA Philadelphia-Camden-Wilmington, PA-NJ- DE-MD MSA 9 San Diego-Carlsbad, CA MSA Atlanta-Sandy Springs-Roswell, GA MSA St. Louis, MO-IL MSA (1) Riverside-San Bernardino-Ontario, CA MSA Tampa-St. Petersburg-Clearwater, FL MSA Houston-The Woodlands-Sugar Land, TX MSA Source: U.S. Bureau of Labor Statistics U.S. Unemployment Rate: April: 4.4% May: 4.3% 1. Area boundaries do not reflect official OMB definitions.

22 21 Jump Street (And Other Addresses of Interest) Photo: TheMoveDatabase.org

23 15-Year & 30-Year Fixed Mortgage Rates June 1995 through June 2017* 10% 9% 8% 15-yr 30-yr 7% 6% 5% 4% 3.90% 3% 2% 3.17% 1% Jun-95 Dec-95 Jun-96 Dec-96 Jun-97 Dec-97 Jun-98 Dec-98 Jun-99 Dec-99 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Rate Source: Freddie Mac *Week ending 6/22/2017

24 U.S. Homeownership (NSA) 1980Q1-2017Q1 70% 68% 2017Q1: 63.6% 66% 64% 62% 60% 58% 1980Q1 1981Q1 1982Q1 1983Q1 1984Q1 1985Q1 1986Q1 1987Q1 1988Q1 1989Q1 1990Q1 1991Q1 1992Q1 1993Q1 1994Q1 1995Q1 1996Q1 1997Q1 1998Q1 1999Q1 2000Q1 2001Q1 2002Q1 2003Q1 2004Q1 2005Q1 2006Q1 2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 2014Q1 2015Q1 2016Q1 2017Q1 Source: U.S. Census Bureau *NSA: not seasonally adjusted

25 U.S. Private New Multifamily Construction April 1993 through April 2017 $70 $60 $50 $40 $30 $20 $10 $0 Apr-15 Apr-16 Apr-17 Apr-93 Apr-94 Apr-95 Apr-96 Apr-97 Apr-98 Apr-99 Apr-00 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 $ Billions (SAAR) Source: U.S. Census Bureau

26 12-Month % Change S&P/Case-Shiller Home Price Indices for Select Metros March 2017, 12-Month Percentage Change 9% 8.4% 8.6% 7.7% 8% 7% 6% 5.1% 5.1% 5.4% 5.5% 5.9% 6.4% 7.0% 6.0% 5% 4.1% 4.2% 4% 3% 2% 1% 0% Source: Standard & Poor s

27 U.S. Single-Family Housing Starts May 1999 through May ,000 1,800 1,600 1,400 1,200 1, May 2017: 794K May- Nov-99 May- Nov-00 May-01 Nov-01 May- Nov-02 May-03 Nov-03 May- Nov-04 May-05 Nov-05 May- Nov-06 May- Nov-07 May- Nov-08 May- Nov-09 May-10 Nov-10 May-11 Nov-11 May-12 Nov-12 May-13 Nov-13 May-14 Nov-14 May-15 Nov-15 May-16 Nov-16 May-17 Thousands, SAAR Source: U.S. Census Bureau

28 National Nonresidential Construction Spending by Subsector April 2016 v. April 2017 Office Commercial Communication Lodging Public safety Educational Amusement and recreation Highway and street Health care Transportation Power Water supply Manufacturing Conservation and development Religious Sewage and waste disposal Source: U.S. Census Bureau -22.3% -23.6% -13.7% -8.1% -8.5% -0.8% -2.6% 5.9% 3.1% 2.4% 2.2% 0.1% 0.0% 12.4% 12.4% 11.6% Total Nonresidential Construction YOY: +$5.51B; +0.8% -30% -20% -10% 0% 10% 20% 12-month % Change

29 National Nonresidential Construction Spending by Subsector April 2014 v. April 2017 Lodging Office Amusement and recreation Commercial Manufacturing Communication Educational Highway and street Health care Transportation Religious Conservation and development Public safety Sewage and waste disposal Water supply Power Source: U.S. Census Bureau -10.9% -15.1% -17.6% -23.5% 19.0% 12.6% 5.7% 4.4% 3.2% 2.6% 0.6% 37.7% 36.9% 31.1% 55.0% Total Nonresidential Construction: +$67.41B; +10.7% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70% 80% 12-month % Change 77.3%

30 What s the Hold Up? Numero Uno Due to the absence of a full-year Fiscal Year 2017 appropriations measure that honors FAST Act funding levels, State DOTs face challenges implementing construction projects. According to Mike Patterson (Chair of Committee on Agency Administration at AASHTO and Executive Director of Oklahoma DOT) state DOTs face two implementation challenges: Continuing resolutions delay projects: States can t make good on planned investments for any given fiscal year if a full year s worth of obligation authority is not provided on October 1 st. Continuing resolutions that provide only a portion of obligation authority mean that even if states are ready to proceed with projects, they can only commit federal dollars to a small portion of those projects. Missing the construction window due to piecemeal availability of federal obligation authority especially in cold-weather states can mean that some projects are delayed until the following year. -Mike Patterson Source: Testimony of the Honorable Mike Patterson, Executive Director, Oklahoma Department of Transportation; Chair of Committee on Agency Administration, American Association of State Highway and Transportation Officials. April 5, 2017.

31 What s the Hold Up? Part Deux Continuing resolutions have frozen some funds: Continuing resolutions have placed a freeze on obligation authority at the FY2016 level. Because of this, the Federal Highway Administration (FHWA) is unable to provide amounts anticipated under the FAST Act. For FY2016, FHWA has only been able to $42.2B out of the $43.2B of obligation authority expected under the FAST Act (at an annualized rate). This translates to states around the nation receiving over $1 billion less in federal highway funding, with corresponding reductions in funding at the state and local level that could have been put to important use throughout the country. Mike Patterson Operating under a continuing resolution has prevented transit and passenger rail agencies from accessing $199 million authorized by the FAST Act for positive train control (PTC) for FY2017. Source: Testimony of the Honorable Mike Patterson, Executive Director, Oklahoma Department of Transportation; Chair of Committee on Agency Administration, American Association of State Highway and Transportation Officials. April 5, 2017.

32 Investment Gap by Infrastructure Category, Surface Transporation Source: American Society of Civil Engineers, 2017 Infrastructure Report Card. $1,101.0 Schools $380.0 Electricity $177.0 Water/Wastewater Infr. $105.0 Public Parks & Recreation $102.3 Levees $70.0 Airports $42.0 Dams $39.4 Rail $29.4 Inland Waterways & Marine Ports $15.0 Hazardous & Solid Waste $3.0 $0 $500 $1,000 $1,500 $Billions (constant 2015 dollars) *Constant 2015 dollars

33 Commercial/Multifamily Offshore Investment Sales Volumes Reach New Heights in 2015 $90 Billions of $US $80 $70 $60 $50 $40 $30 $20 $10 $0 $76.2 $45.0 $35.0 $30.1 $30.9 $26.8 $21.3 $19.0 $19.6 $12.5 $14.0 $8.5 $ Source: Jones Lang LaSalle; Real Capital Analytics Foreign Investment Increases Percent in 2015 to $76.2b Note: Among transactions larger than $5.0 million

34 Top Markets for Foreign Office Investment, 2015 New York Washington, DC Boston Seattle Bellevue Chicago Miami Atlanta Los Angeles San Francisco Dallas/Fort Worth Silicon Valley Houston Annual Foreign Office Investment Volume $2,323 $1,935 $1,184 $995 $709 $602 $515 $394 $347 $249 $172 $11,237 $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 Millions of $US Source: Jones Lang LaSalle; Real Capital Analytics

35 Foreign Office Investment Activity, as of 2016Q3 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Foreign Participation as a % of Total Office Volume 14.9% YTD Foreign Office Investment by Destination Market (as a % of Total, 2016YTD) New York San Francisco Boston Washington, DC Dallas-Fort Worth Los Angeles Seattle-Bellevue Miami Northern New Jersey Chicago Atlanta Austin Philadelphia San Diego 8.4% 7.1% 6.8% 5.6% 4.8% 4.8% 2.8% 2.1% 1.9% 1.6% 1.4% 1.1% 1.1% 45.5% 0% 10% 20% 30% 40% 50% Source: Jones Lang LaSalle; Real Capital Analytics Note: Among transactions larger than $5.0 million; includes all office markets which received > 1.0% of offshore capital. Primary markets continue to capture the lion s share of inbound capital, receiving 78.2% of this capital YTD.

36 Down to The Wire Photo: RecapGuide.com

37 Sales Growth by Type of Business May 2016 v. May 2017* Building Material & Garden Supplies Dealers Internet, etc. Retailers Gasoline Stations Furniture & Home Furn. Stores Motor Vehicle & Parts Dealers Miscellaneous Store Retailers Food & Beverage Stores Food Services & Drinking Places General Merchandise Stores Clothing & Clothing Accessories Stores Health & Personal Care Stores Electronics & Appliance Stores Sporting Goods, Hobby, Book & Music Stores -4.7% -1.8% 1.3% 1.0% 0.4% 2.4% 2.3% 4.4% 3.7% 3.4% 6.2% 10.8% 10.2% -10% -5% 0% 5% 10% 15% 12-month % change Source: U.S. Census Bureau *May 2017 advanced estimate Total Retail Sales: +3.8% YOY

38 U.S. Gross Private Domestic Investment (SAAR) % Change from Previous Quarter, 2000Q1 2017Q1* Q1: +4.8% Q1 2000Q3 2001Q1 2001Q3 2002Q1 2002Q3 2003Q1 2003Q3 2004Q1 2004Q3 2005Q1 2005Q3 2006Q1 2006Q3 2007Q1 2007Q3 2008Q1 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3 2011Q1 2011Q3 2012Q1 2012Q3 2013Q1 2013Q3 2014Q1 2014Q3 2015Q1 2015Q3 2016Q1 2016Q3 2017Q1 Source: Bureau of Economic Analysis *2 nd Estimate

39 Conference Board Leading Economic Indicators Index August 2007 through May % 1.0% One-month Percent Change 0.5% 0.0% -0.5% -1.0% May 2017: where 2010: % Source: Conference Board

40 The Closer Global economy remains weak, with demographics representing a significant explanatory factor; With only low and uncertain returns available elsewhere, global money has continued to pour into America, including into commercial real estate helping boost asset values in the process; Maryland s economy continues to perform reasonably well, with recovery in metropolitan areas now being complemented by better performance in rural ones; Um, we are the swamp; Tax cuts, or the belief that they are on the way, should help see us through the near-term; Momentum should see us through 2017, but tighter monetary policy combined with a heavy dose of political intrigue could render 2018 far different. By this time in 2019, the economy could be in a far different place and likely will be there is one major alternative scenario, however.... Photo: Google *Kyra Sedgwick as Brenda Leigh Johnson

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