The Economist Who Loved Me

Transcription

1 The Economist Who Loved Me On Behalf of Maryland Government Finance Officers Association Winter Conference By: Anirban Basu Sage Policy Group, Inc. January 29 th, 2016

2 The World is Not (Growing) Enough *1999: Pierce Brosnan; Sophie Marceau

3 Estimated Growth in Output by Select Global Areas 2016 Projected* Advanced economies Euro area France Germany Italy Spain Japan United Kingdom Canada United States Emerging market & developing economies (2) Sub-Saharan Africa Emerging & developing Europe Russia Emerging & developing Asia China India (1) Middle East, North Africa, Afghanistan, & Pakistan Latin America & the Caribbean Mexico Brazil -3.5% Source: International Monetary Fund, World Economic Outlook Update, January % -0.3% 1.7% 2.1% 1.3% 1.7% 1.3% 2.7% 1.0% 2.2% 1.7% 2.6% 4.3% 4.0% 3.1% 2.6% 3.6% 6.3% 6.3% 7.5% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% Annual % Change Notes: 1. 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. 2. Countries included in the calculation of quarterly estimates and projections account for approximately 80 percent of the GDP of emerging market and developing economies at purchasing power parities. 3. Countries included in the calculation of quarterly estimates and projections account for approximately 90 percent of world GDP at purchasing power parities.

4 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 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 $/Barrel NYMEX Crude Oil Future Prices in U.S. Dollars January 2001 through December 2015 $140 $120 December 2015: $37.33 /Barrel $100 $80 $60 $40 $20 $0 Source: U.S. Energy Information Administration

5 mb/d, growth year over year World Oil Demand Growth 2007Q1 through 2016Q1* Other Non-OECD OECD China Q1 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 2014Q1 2015Q1 2016Q1* Source: The World Bank; International Energy Agency *2016Q1 is an estimate

6 Jan-07 Jun-07 Nov-07 Apr-08 Sep-08 Feb-09 Jul-09 Dec-09 May-10 Oct-10 Mar-11 Aug-11 Jan-12 Jun-12 Nov-12 Apr-13 Sep-13 Feb-14 Jul-14 Dec-14 May-15 Oct =100 Moneypenny Metal Price Indices January 2007 through December Precious Metals Iron Ore Base Metals 30 Source: The World Bank US$ Nominal Base metals include aluminum, copper, lead, nickel, tin and zinc. Precious metals include gold, platinum, and silver.

7 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Baltic Dry Index March 2009 through January ,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Jan. 4, 1985: 1,000 Jan. 26 th 345 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.

8 Skyfall - BRAZIL Consumer price index increased 10.7 percent in 2015, despite ongoing economic contraction; Highest inflation rate in more than a decade; Increases in key categories: Food (12.3%) Transportation prices (10.2%) Housing related costs (18.3%) Source: Currency Exchange, Wall Street Journal *2012: Daniel Craig, Berenice Marlohe Brazil s real down 33 percent compared to the U.S. dollar by end of Standard & Poor s and Fitch Ratings downgraded sovereign debt to junk status Boletin Focus, a weekly survey of 100 private financial analysts, predicts Brazil s economy will contract by another 3 percent this year.

9 A View to a Kill- RUSSIA Collapse in oil prices and economic sanctions (and counter sanctions) related to Ukraine have hurt Russian economic growth; Economy contracted about 4 percent in 2015; World Bank: Russia will remain in recession in 2016; Russia s ruble down 20 percent compared to U.S. dollar by end of 2015; Continued decline in investment expected; Budget expenditures will drop 3 to 5 percent in Source: Currency Exchange, CNBC *1985: Roger Moore, Tanya Roberts

10 I Expect You to Grow - CHINA Growth at slowest pace in 2 decades; World Bank predicts 6.7% economic growth for 2016 (down from 7.0% in June); George Soros: China has a major adjustment problem on its hands; Source: Currency Exchange, CNN Money *(1964) Goldfinger, misquote from Auric Goldfinger, Sean Connery, Honor Blackman Stock values fell 12 percent during first week of 2016 trading; Government attempts to stabilize economy only made investors even more wary; Circuit breaker system shuts down trading when losses hit a certain level; Too restrictive and causes panic selling once breakers are turned off.

11 Quantum of Solace *2008: Daniel Craig; Olga Kurylenko

12 1990Q3 1991Q3 1992Q3 1993Q3 1994Q3 1995Q3 1996Q3 1997Q3 1998Q3 1999Q3 2000Q3 2001Q3 2002Q3 2003Q3 2004Q3 2005Q3 2006Q3 2007Q3 2008Q3 2009Q3 2010Q3 2011Q3 2012Q3 2013Q3 2014Q3 2015Q3 Percent Change from Preceding Period (SAAR) Gross Domestic Product 1990Q3 through 2015Q4* 8% 6% 2015Q4: +0.7% 4% 2% 0% -2% -4% -6% -8% -10% Source: Bureau of Economic Analysis *Advance (1 st ) estimate

13 Percent Change from Preceding Period (SAAR) Contributions to GDP Growth by Component 2015Q1 2015Q4* SAAR (%) Q1-15 Q2-15 Q3-15 Q GDP Source: Bureau of Economic Analysis -3.0 Personal Consumption Government Spending Net Exports Gross Investment *Advance (1 st ) estimate 2015Q4: +0.7%

14 Jan-02 Jun-02 Nov-02 Apr-03 Sep-03 Feb-04 Jul-04 Dec-04 May-05 Oct-05 Mar-06 Aug-06 Jan-07 Jun-07 Nov-07 Apr-08 Sep-08 Feb-09 Jul-09 Dec-09 May-10 Oct-10 Mar-11 Aug-11 Jan-12 Jun-12 Nov-12 Apr-13 Sep-13 Feb-14 Jul-14 Dec-14 May-15 Oct-15 Thousands Net Change in U.S. Jobs, BLS January 2002 through December December 2015: +292K ,000 Source: U.S. Bureau of Labor Statistics

15 National Nonfarm Employment by Industry Sector December 2014 v. December 2015 Education and Health Services Professional and Business Services Trade, Transportation, and Utilities Leisure and Hospitality Construction Financial Activities Government Other Services Information Manufacturing Mining and Logging All told 2,650K Jobs gained Thousands, SA Source: U.S. Bureau of Labor Statistics

16 Maryland Nonfarm Employment by Industry Sector Groups (SA) December 2014 v. December 2015 Absolute Change Education and Health Services Professional and Business Services 11,200 13,000 Trade, Transportation, and Utilities Government Leisure and Hospitality Mining, Logging, and Construction 7,500 6,900 6,300 6,300 Financial Activities Manufacturing 1,300 2,300 MD Total: +54.9K; +2.1% Other Services Information US Total (SA): +2,650K; +1.9% -2,000 2,000 6,000 10,000 14,000 Source: U.S. Bureau of Labor Statistics *According to the Local Area Unemployment Statistics (LAUS) series MD added 78,257 jobs between December 2014 and December 2015.

17 Baltimore-Columbia-Towson MSA Nonfarm Employment by Industry Sector Groups (NSA) December 2014 v. December 2015 Absolute Change Education and Health Services 7,200 Professional and Business Services 5,300 Leisure and Hospitality 4,200 Government 4,000 Trade, Transportation, and Utilities 4,000 Mining, Logging, and Construction Manufacturing Financial Activities Information 500 1,300 2,000 3,300 Baltimore MSA Total: +31.0K; +2.3% MD Total (SA): +54.9K; +2.1% US Total (SA): +2,650K; +1.9% Other Services ,000-1,000 1,000 3,000 5,000 7,000 9,000 Source: U.S. Bureau of Labor Statistics

18 Washington, DC-Arlington-Alexandria MSA Nonfarm Employment by Industry Sector Groups (NSA) December 2014 v. December 2015 Absolute Change Professional and Business Services 26,200 Government Education and Health Services 13,100 11,900 Mining, Logging, and Construction 7,000 Leisure and Hospitality 4,800 Other Services 4,500 Financial Activities Trade, Transportation, and Utilities Manufacturing ,600 1,000 DC MSA Total: +68.5K; +2.2% US Total (SA): +2,650K; +1.9% Information -1,100-5, ,000 10,000 15,000 20,000 25,000 30,000 Source: U.S. Bureau of Labor Statistics

19 Employment Growth, U.S. States (SA) December 2014 v. December 2015 Percent Change RANK STATE % RANK STATE % RANK STATE % 1 IDAHO COLORADO ALABAMA SOUTH CAROLINA INDIANA MISSISSIPPI UTAH MICHIGAN MISSOURI CALIFORNIA RHODE ISLAND WISCONSIN FLORIDA DELAWARE VERMONT WASHINGTON NEW YORK PENNSYLVANIA OREGON ARKANSAS KANSAS ARIZONA IOWA MONTANA HAWAII NEW JERSEY NEW HAMPSHIRE TENNESSEE MINNESOTA NEW MEXICO GEORGIA OHIO ALASKA SOUTH DAKOTA VIRGINIA ILLINOIS KENTUCKY DISTRICT OF COLUMBIA OKLAHOMA MARYLAND MAINE LOUISIANA MASSACHUSETTS NEBRASKA WEST VIRGINIA NORTH CAROLINA TEXAS WYOMING NEVADA CONNECTICUT NORTH DAKOTA -4.0 Source: U.S. Bureau of Labor Statistics U.S. Year-over-year Percent Change: +1.9%

20 Recession Watch as of November 2015 Source: Moody s Economy

21 They are Called Junk Bonds for a Reason December: Third Avenue Investment removes its CEO David Barse; The move followed news that the firm prevented investors from withdrawing money from its high yield bond fund; Third Avenue also intends to shut down its $789 million Focused Credit Fund; Junk bond defaults have risen to their highest rates since October 2009; This has been caused mainly by falling energy prices; S&P warns that half of energy junk bonds are distressed. Source: CNBC

22 Unemployment Rates, U.S. States (SA) December 2015 RANK STATE % RANK STATE % RANK STATE % 1 NORTH DAKOTA WYOMING OREGON NEBRASKA INDIANA GEORGIA SOUTH DAKOTA MISSOURI SOUTH CAROLINA NEW HAMPSHIRE MASSACHUSETTS WASHINGTON HAWAII OHIO NORTH CAROLINA IOWA TEXAS TENNESSEE COLORADO ARKANSAS ARIZONA MINNESOTA NEW YORK CALIFORNIA UTAH PENNSYLVANIA ILLINOIS VERMONT DELAWARE LOUISIANA IDAHO FLORIDA ALABAMA KANSAS MARYLAND WEST VIRGINIA MAINE MICHIGAN MISSISSIPPI MONTANA NEW JERSEY NEVADA OKLAHOMA RHODE ISLAND ALASKA VIRGINIA CONNECTICUT DISTRICT OF COLUMBIA WISCONSIN KENTUCKY NEW MEXICO 6.7 Source: U.S. Bureau of Labor Statistics U.S. Unemployment Rate: 5.0%

23 Unemployment Rates, 20 Largest Metros (NSA) November 2015 Rank MSA UR Rank MSA UR 1 Minneapolis-St. Paul-Bloomington, MN-WI Metropolitan Statistical Area Houston-The Woodlands-Sugar Land, TX Metropolitan Statistical Area San Francisco-Oakland-Hayward, CA Metropolitan Statistical Area Seattle-Tacoma-Bellevue, WA Metropolitan Statistical Area Dallas-Fort Worth-Arlington, TX Metropolitan Statistical Area Boston-Cambridge-Nashua, MA-NH Metropolitan NECTA Washington-Arlington-Alexandria, DC-VA-MD- WV Metropolitan Statistical Area Philadelphia-Camden-Wilmington, PA-NJ-DE-MD Metropolitan Statistical Area St. Louis, MO-IL Metropolitan Statistical Area (1) Atlanta-Sandy Springs-Roswell, GA Metropolitan Statistical Area 5.0 Miami-Fort Lauderdale-West Palm Beach, FL Metropolitan Statistical Area 5.0 Phoenix-Mesa-Scottsdale, AZ Metropolitan Statistical Area 5.0 Detroit-Warren-Dearborn, MI Metropolitan Statistical Area 5.2 Baltimore-Columbia-Towson, MD Metropolitan Statistical Area Tampa-St. Petersburg-Clearwater, FL Metropolitan Statistical Area New York-Newark-Jersey City, NY-NJ-PA Metropolitan Statistical Area San Diego-Carlsbad, CA Metropolitan Statistical Area Los Angeles-Long Beach-Anaheim, CA Metropolitan Statistical Area 5.3 Chicago-Naperville-Elgin, IL-IN-WI Metropolitan Statistical Area 5.4 Riverside-San Bernardino-Ontario, CA Metropolitan Statistical Area 6.1 Source: U.S. Bureau of Labor Statistics 1. Area boundaries do not reflect official OMB definitions.

24 MD County Unemployment Rates November 2015 Rank Jurisdiction UR Rank Jurisdiction UR 1 Howard County Baltimore County Montgomery County Kent County Carroll County Washington County Anne Arundel County Caroline County Calvert County Cecil County Frederick County Garrett County Queen Anne's County Allegany County Harford County Wicomico County St. Mary's County Dorchester County Charles County Baltimore City Prince George's County Somerset County Talbot County Worcester County 12.4 Source: U.S. Bureau of Labor Statistics

25 License to Sell *License to Kill, 1989: Timothy Dalton; Carey Lowell

26 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Rate 15-Year & 30-Year Fixed Mortgage Rates January 1995 through January 2016* 10% 9% 8% 7% 15-yr 30-yr 6% 5% 4% 3% 2% 3.79% 3.07% 1% Source: Freddie Mac *Week ending 1/28/2016

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

28 Dec-99 Apr-00 Aug-00 Dec-00 Apr-01 Aug-01 Dec-01 Apr-02 Aug-02 Dec-02 Apr-03 Aug-03 Dec-03 Apr-04 Aug-04 Dec-04 Apr-05 Aug-05 Dec-05 Apr-06 Aug-06 Dec-06 Apr-07 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13 Apr-14 Aug-14 Dec-14 Apr-15 Aug-15 Dec-15 Thousands, SAAR U.S. Housing Starts December 1999 through December ,500 2,000 1 Unit 5 units or more 1,500 December 2015: 1 Unit: 768K 5 Units or more: 365K 1, Source: U.S. Census Bureau

29 Source: U.S. Census Bureau U.S. Homeownership 2015Q4: 63.7% 60% 62% 64% 66% 68% 70% 1980Q4 1981Q4 1982Q4 1983Q4 1984Q4 1985Q4 1986Q4 1987Q4 1988Q4 1989Q4 1990Q4 1991Q4 1992Q4 1993Q4 1994Q4 1995Q4 1996Q4 1997Q4 1998Q4 1999Q4 2000Q4 2001Q4 2002Q4 2003Q4 2004Q4 2005Q4 2006Q4 2007Q4 2008Q4 2009Q4 2010Q4 2011Q4 2012Q4 2013Q4 2014Q4 2015Q4

30 Nov-93 Nov-94 Nov-95 Nov-96 Nov-97 Nov-98 Nov-99 Nov-00 Nov-01 Nov-02 Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 $ Billions (SAAR) U.S. Private New Multifamily Construction November 1993 through November 2015 $70 $60 $50 $40 $30 $20 $10 $0 Source: U.S. Census Bureau

31 Dec-99 Apr-00 Aug-00 Dec-00 Apr-01 Aug-01 Dec-01 Apr-02 Aug-02 Dec-02 Apr-03 Aug-03 Dec-03 Apr-04 Aug-04 Dec-04 Apr-05 Aug-05 Dec-05 Apr-06 Aug-06 Dec-06 Apr-07 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13 Apr-14 Aug-14 Dec-14 Apr-15 Aug-15 Dec-15 Thousands, SAAR U.S. Housing Building Permits December 1999 through December ,500 2,000 1,500 1 Unit 5 units or more December 2015: 1 Unit: 740K 5 Units or more: 455K 1, Source: U.S. Census Bureau

32 12-Month % Change S&P/Case-Shiller Home Price Indices for Select Metros November 2015, 12-Month Percentage Change 12% 10.9% 11.0% 10% 8% 6% 4% 2% 2.0% 2.1% 3.7% 4.7% 5.2% 5.7% 5.8% 6.2% 6.3% 8.1% 9.4% 0% Source: Standard & Poor s

33 For Your Eyes Only *1981: Roger Moore; Carole Bouquet

34 Sales Growth by Type of Business December 2014 v. December 2015* Sporting Goods, Hobby, Book & Music Stores Internet, etc. Retailers Food Services & Drinking Places Motor Vehicle & Parts Dealers Furniture & Home Furn. Stores Building Material & Garden Supplies Dealers Health & Personal Care Stores Miscellaneous Store Retailers Food & Beverage Stores Clothing & Clothing Accessories Stores General Merchandise Stores Electronics & Appliance Stores Gasoline Stations -14.6% -3.8% 7.6% 7.1% 6.7% 6.1% 6.0% 4.2% 3.6% 1.9% 1.2% 0.6% 0.1% -20% -15% -10% -5% 0% 5% 10% 15% 20% 12-month % change Source: U.S. Census Bureau *December 2015 advanced estimate Total Retail Sales: +2.2% YOY

35 Aug-07 Nov-07 Feb-08 May-08 Aug-08 Nov-08 Feb-09 May-09 Aug-09 Nov-09 Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11 Nov-11 Feb-12 May-12 Aug-12 Nov-12 Feb-13 May-13 Aug-13 Nov-13 Feb-14 May-14 Aug-14 Nov-14 Feb-15 May-15 Aug-15 Nov-15 One-month Percent Change Conference Board Leading Economic Indicators Index August 2007 through December % 1.0% 0.5% 0.0% -0.5% -1.0% December 2015 = where 2010 = % Source: Conference Board

36 Dr. Know Not a Happy New Year so far. Everyone knows about China and N.Korea, but we have problems right here; Corporate profit margins are slipping and interest rates are on the rise does not sound like a great recipe for stock prices or for corporate investment; Only the consumer is really contributing significantly to growth, with state and local government spending playing a supporting role; But my goodness, last week s jobs report was terrific part of that is may have been due to seasonal factors, but it was still impressive; Maryland is in better shape we don t produce oil or natural gas, we don t export very much, and a new Speaker of the House should be able to avert near-term federal fiscal catastrophe; and We may be transitioning very quickly from the mid-cycle stage of the recovery to the late-stage 2017 outlook very murky. *1962: Sean Connery; Ursula Andress

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