Back to the Future Part II

Transcription

1 Back to the Future Part II On Behalf of Mid-Atlantic Society of Healthcare Materials Management By: Anirban Basu Sage Policy Group, Inc. January 24, 2014

2 Raging Bull (1980)

3 Annual % Change Historic and Projected World Output Growth 2004 through 2014* 6.0% 5.0% 5.1% 4.7% 5.2% 5.3% 5.2% 4.0% 3.0% 2.7% 3.9% 3.2% 2.9% 3.6% 2.0% 1.0% 0.0% -1.0% -2.0% -0.4% Source: International Monetary Fund * data are projections

4 Real GDP Growth, 20 Fastest and Slowest Growing Countries Estimated 2013, Annual Percent Change (for available nations) Rank Country Region % Rank Country Region % 1 South Sudan Africa Belgium Europe Sierra Leone Africa Denmark Europe Turkmenistan Central Asia Samoa Asia Paraguay South America Swaziland Africa Mongolia Asia Czech Republic Europe Lao P.D.R. Southeast Asia Croatia Eastern Europe Liberia Africa Finland Europe Timor-Leste Southeast Asia Barbados Caribbean Côte d'ivoire Africa Spain Europe Ghana Africa Netherlands Europe China Asia Equatorial Guinea Africa Panama Central America Islamic Republic of Iran Middle East Rwanda Africa Portugal Europe Kyrgyz Republic Central Asia Italy Europe Uzbekistan Central Asia Slovenia Eastern Europe Cambodia Southeast Asia San Marino Europe Ethiopia Africa Greece Europe Mozambique Africa Libya Middle East Tanzania Africa Cyprus Europe Myanmar Southeast Asia Central African Republic Africa Source: International Monetary Fund * data are projections

5 Estimated Growth in Output by Select Global Areas 2013 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 -1.8% -1.3% -0.4% 0.2% 0.5% 1.2% 2.0% 1.4% 1.6% 1.6% 2.3% 1.5% 3.8% 2.1% 2.7% 2.5% 1.2% 4.5% 5.0% 6.3% 7.6% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% Annual % Change

6 Debt by Selected Country 2012 Japan* Italy United States France United Kingdom Spain Canada Germany Brazil India* Argentina Mexico South Africa China Indonesia Russia Saudi Arabia Source: International Monetary Fund General Government Gross Debt in Percent of GDP *IMF Staff Projections

7 Top 12 Stock Exchanges 2013 Growth* Rank Exchange Index % Change 4 Tokyo SE Nikkei % 2 Nasdaq NASDAQ Composite 38.3% 1 NYSE Group DJI A 26.5% 6 Frankfurt SE DAX 25.5% 8 Bolsa De Madrid Madrid General 21.4% 12 Swiss Exchange Swiss Market 20.2% 5 Euronext CAC % 10 BorsaItaliana FTSE MIB 16.6% 3 London SE FTSE % 9 TSX Group S&P TSX Composite 9.6% 11 Hong Kong Exchanges Hang Seng Index 2.9% 7 Shanghai SE Shanghai Composite -6.8% Source: Yahoo! Finance *Change from the 2012 close to the 2013 close.

8 S&P Select Sector Performance 12-Month Percent Change as of December 31 st, 2013 Consumer Discretionary Health Care 38.7% 41.0% Financials 33.2% Industrials 37.6% Materials Consumer Staples Energy Information Technology 22.7% 22.7% 22.3% 26.2% Utilities Telecommunication Services 8.8% 6.5% 0% 10% 20% 30% 40% 50% 12-month percent change Source: Standard & Poor s

9 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Federal Reserve Balance Sheet v. S&P 500 Index May 2008 December 2013 FRB Credit Reserve $Trillions 4.3 S&P S&P 500 index depicted in orange Source: Federal Reserve Bank; Yahoo Finance

10 Third Quarter Earnings for Select Corporations Earnings per Share Symbol Q Q Estimated Q Reported Surprise Symbol Q Q Estimated Q Reported Surprise FCX $0.68 $0.62 $0.79 $0.17 UTX $1.37 $1.54 $1.55 $0.01 VFC $3.52 $3.78 $3.91 $0.13 XRX $0.25 $0.25 $0.26 $0.01 BTU $0.51 -$0.04 $0.05 $0.09 GE $0.36 $0.35 $0.36 $0.01 MSFT $0.60 $0.54 $0.62 $0.08 COH $0.77 $0.76 $0.77 $0.01 COF $2.01 $1.80 $1.86 $0.06 UPS $1.06 $1.15 $1.16 $0.01 DD $0.32 $0.41 $0.45 $0.04 MCD $1.43 $1.51 $1.52 $0.01 VZ $0.64 $0.74 $0.77 $0.03 HON $1.20 $1.24 $1.24 $0.00 MMM $1.65 $1.75 $1.78 $0.03 DOW $0.42 $0.54 $0.50 -$0.04 TXN $0.52 $0.53 $0.56 $0.03 CMG $2.27 $2.78 $2.66 -$0.12 AMD -$0.20 $0.02 $0.04 $0.02 CAT $2.54 $1.67 $1.45 -$0.22 YHOO $0.35 $0.33 $0.34 $0.01 STI $1.98 $0.69 $0.33 -$0.36 Source: Yahoo! Finance

11 Recession Watch as of October 2013 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 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 Jul-13 Dec-13 Index (2007 = 100) Industrial Production January 2001 through December (Base year: 2007) 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 2011Q1 2011Q4 2012Q3 2013Q2 Percent Change from Preceding Period (SAAR) Gross Domestic Product 1990Q1 through 2013Q3 8% 6% 2013Q3: 4.1% 4% 2% 0% -2% -4% -6% -8% -10% Source: Bureau of Economic Analysis

14 SAAR (%) Contributions to GDP Growth by Component Q Q Q3-12 Q4-12 Q1-13 Q2-13 Q Personal Consumption Government Spending Net Exports Gross Investment Source: Bureau of Economic Analysis

15 SAAR (%) Contributions to GDP Growth by Component Q Q Q3-12 Q4-12 Q1-13 Q2-13 Q Gross Investment Fixed Investment Private Inventory -2.0 Source: Bureau of Economic Analysis

16 Ordinary People (1980)

17 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Thousands Net Change in U.S. Jobs, BLS January 2002 through December December 2013: +74K Source: Bureau of Labor Statistics

18 National Nonfarm Employment by Industry Sector December 2012 v. December 2013 Professional and Business Services 637 Trade, Transportation, and Utilities 517 Leisure and Hospitality 390 Education and Health Services 327 Construction 122 Financial Activities 84 Manufacturing 77 Mining and Logging 31 Other Services Information All told 2,186 K Jobs gained Government Thousands, SA Source: Bureau of Labor Statistics

19 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 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 Cumulative Job Growth Since December 2007: Full-time v. Part-time December 2007 December ,000 4,000 2, ,000-4,000-6,000-8,000-10,000-12,000 Full-time Part-time Source: Bureau of Labor Statistics, Current Population Survey Full-time: million Part-time: million

20 Consequences of the Affordable Care Act (ACA) Starting January 1, 2015 employers with 50 or more employees will be required to offer health insurance to each full-time employee. Such employers who do not offer coverage and have at least one full-time employee will be assessed a fee of $2,000 per full-time employee. A study by Aon Hewitt, a benefits consultancy, stated that average health care costs are projected to increase 6.7% to $11,176 per employee in Of the total premium, employees are projected to pay 22.4% of the total, or $2,499. The worker premium will increase about 10% from $2,303 in Source: Forbes.com

21 Consequences of the Affordable Care Act (ACA) The impact on hospitals: The ACA allows the government to withhold Medicare payments from hospitals if too many patients return within 30 days of discharge for certain ailments (readmissions). The ACA could potentially flood hospitals with new, highuse patients, which could tax already overburdened physicians and hospital staff. According to a study conducted by the Society of Actuaries, hospital inpatient care, physicians, dental, other professional, prescription drugs, medical equipment, and hospital outpatient care will all experience increases in system wide spending due to the ACA (Study modeled on Wisconsin). Source: Forbes.com, Congressional Budget Office, Sector and Sovereign

22 Labor Shortages in Healthcare Occupations Demand for health services will continue to expand as the number of Americans 65 and older is projected to reach 73 million in 2030, up from 40 million in The health care and social assistance sector is projected to add the most new jobs between (annual growth rate of 2.6%, adding 5m jobs). This accounts for nearly 1/3 of the total projected increase in jobs. The growth reflects, in part, the demand for healthcare workers to address the needs of an aging population. As Baby Boomers age, workers aged 55+ are expected to make up over one-quarter of the labor force by Thus, the workforce will experience a significant increase in retirements. Nursing homes and operators of home-care services are likely to experience particularly severe skills shortages. Source: Bureau of Labor Statistics, Wall Street Journal

23 Employment Growth, U.S. States (SA) November 2012 v. November 2013 Percent Change RANK STATE % RANK STATE % RANK STATE % 1 NORTH DAKOTA CALIFORNIA CONNECTICUT FLORIDA SOUTH DAKOTA ILLINOIS TEXAS KANSAS MONTANA GEORGIA MICHIGAN OKLAHOMA IDAHO MINNESOTA IOWA OREGON NEW YORK HAWAII UTAH WISCONSIN MAINE INDIANA NORTH CAROLINA WYOMING COLORADO TENNESSEE VIRGINIA DELAWARE WASHINGTON NEW HAMPSHIRE ARIZONA MARYLAND PENNSYLVANIA MISSOURI RHODE ISLAND OHIO NEVADA WEST VIRGINIA KENTUCKY NEW JERSEY ARKANSAS ALABAMA SOUTH CAROLINA LOUISIANA NEW MEXICO MASSACHUSETTS NEBRASKA DISTRICT OF COLUMBIA MISSISSIPPI VERMONT ALASKA -1.0 Source: Bureau of Labor Statistics U.S. Year-over-year Percent Change: 1.7%

24 Unemployment Rates, U.S. States (SA) November 2013 RANK STATE % RANK STATE % RANK STATE % 1 NORTH DAKOTA WEST VIRGINIA NEW YORK SOUTH DAKOTA ALABAMA NORTH CAROLINA NEBRASKA LOUISIANA OHIO UTAH WISCONSIN ARKANSAS HAWAII FLORIDA CONNECTICUT IOWA MAINE GEORGIA VERMONT MARYLAND ARIZONA WYOMING NEW MEXICO NEW JERSEY MINNESOTA ALASKA TENNESSEE KANSAS COLORADO KENTUCKY NEW HAMPSHIRE DELAWARE MISSISSIPPI MONTANA WASHINGTON CALIFORNIA OKLAHOMA MASSACHUSETTS DISTRICT OF COLUMBIA VIRGINIA SOUTH CAROLINA ILLINOIS IDAHO INDIANA MICHIGAN MISSOURI OREGON NEVADA TEXAS PENNSYLVANIA RHODE ISLAND 9.0 Source: Bureau of Labor Statistics U.S. Unemployment Rate: 7.0%

25 Unemployment Rates, 20 Largest Metros (NSA) November 2013 Rank MSA UR Rank MSA UR 1 Minneapolis-St. Paul-Bloomington, MN-WI Metropolitan Statistical Area Miami-Fort Lauderdale-Pompano Beach, FL Metropolitan Statistical Area Washington-Arlington-Alexandria, DC-VA-MD- WV Metropolitan Statistical Area Dallas-Fort Worth-Arlington, TX Metropolitan Statistical Area Houston-Sugar Land-Baytown, TX Metropolitan Statistical Area Seattle-Tacoma-Bellevue, WA Metropolitan Statistical Area Boston-Cambridge-Quincy, MA-NH Metropolitan NECTA San Francisco-Oakland-Fremont, CA Metropolitan Statistical Area Phoenix-Mesa-Glendale, AZ Metropolitan Statistical Area Tampa-St. Petersburg-Clearwater, FL Metropolitan Statistical Area Baltimore-Towson, MD Metropolitan Statistical Area St. Louis, MO-IL Metropolitan Statistical Area 6.5 San Diego-Carlsbad-San Marcos, CA Metropolitan Statistical Area 6.8 New York-Northern New Jersey-Long Island, NY-NJ-PA Metropolitan Statistical Area 6.9 Philadelphia-Camden-Wilmington, PA- NJ-DE-MD Metropolitan Statistical Area 7.0 Atlanta-Sandy Springs-Marietta, GA Metropolitan Statistical Area 7.0 Chicago-Joliet-Naperville, IL-IN-WI Metropolitan Statistical Area 8.1 Detroit-Warren-Livonia, MI Metropolitan Statistical Area 8.3 Los Angeles-Long Beach-Santa Ana, CA Metropolitan Statistical Area 8.5 Riverside-San Bernardino-Ontario, CA Metropolitan Statistical Area 9.4 Source: Bureau of Labor Statistics

26 Field of Dreams (1989)

27 Feb-95 Nov- Aug- May- Feb-98 Nov- Aug- May- Feb-01 Nov-01 Aug-02 May- Feb-04 Nov- Aug-05 May- Feb-07 Nov- Aug- May- Feb-10 Nov-10 Aug-11 May-12 Feb-13 Nov-13 Rate 15-Year & 30-Year Fixed Mortgage Rates February 1995 through January % 9% 8% 7% 15-yr 30-yr 6% 5% 4% 3% 2% 4.41% 3.45% 1% Source: Freddie Mac

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

29 Jan-99 Jun- Nov- Apr- Sep- Feb-01 Jul-01 Dec- May Oct- Mar- Aug- Jan-04 Jun-04 Nov- Apr- Sep- Feb- Jul-06 Dec- May Oct- Mar- Aug- Jan-09 Jun- Nov- Apr-10 Sep-10 Feb-11 Jul-11 Dec-11 May Oct-12 Mar- Aug-13 Thousands, SAAR U.S. Housing Starts January 1999 through November ,500 2,000 1 Unit 5 units or more 1,500 1, Source: Census Bureau

30 12-Month % Change S&P/Case-Shiller Home Price Indices for Select Metros October 2013, 12-Month Percentage Change 30% 25% 22.1% 24.6% 27.1% 20% 15% 10% 5% 4.9% 7.4% 8.6% 9.5% 9.7% 10.9% 13.6% 15.8% 17.3% 19.0% 0% Source: Standard & Poor s

31 The Shining (1980)

32 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 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Conference Board Consumer Confidence Index 2005 December Dec Source: Conference Board

33 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 Year to Year % change U.S. Retail and Food Service Sales January 2001 through December % 10.0% December 2013: +4.1% 5.0% 0.0% -5.0% -10.0% -15.0% Source: Census Bureau

34 Sales Growth by Type of Business December 2012 v. December 2013* Internet, etc. Retailers Motor Vehicle & Parts Dealers Clothing & Clothing Accessories Stores Sporting Goods, Hobby, Book & Music Stores Health & Personal Care Stores Food Services & Drinking Places Furniture & Home Furn. Stores Miscellaneous Store Retailers Building Material & Garden Supplies Dealers Food & Beverage Stores General Merchandise Stores Gasoline Stations Electronics & Appliance Stores -1.4% 2.4% 2.1% 2.0% 1.5% 0.6% 5.9% 5.2% 4.8% 4.7% 4.6% 4.5% 9.9% -6.0% -3.0% 0.0% 3.0% 6.0% 9.0% 12.0% 12-month % change Source: Census Bureau *December 2013 advanced estimate

35 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Vehicle Sales (millions) National Vehicle Sales December 2004 through December 2013 (SAAR) Source: Autodata Corp. GM Ford Chrysler Honda Toyota Nissan Others

36 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 One-month Percent Change Conference Board Leading Economic Indicators Index August 2007 through November % 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% November 2013 = 98.3 where 2004=100 Source: Conference Board

37 Coming to America (1988) Economy gained momentum over the course of last year; Tailwinds included booming stock market, lower gasoline prices, stabilizing global economy, and consumer expenditures on interest rate sensitive durable goods like housing and autos; The current year is associated with greater certainty regarding federal budgeting and monetary policy that helps; The world is not perfect - black swan threats remain: (1) Iran (2) Israel/Iran (3) Europe (4) contagion (5) cyber (6) EMP; Healthcare reform could slow full-time hiring over the course of the year; and Healthcare could provide the motivation for Congress to pass comprehensive or nearly comprehensive immigration reform.

38 Thank You Follow us on You can always reach me at Please look for updates of information at Also, if you need us in a hurry, we are at ( SAGE) Please contact us when you require economic research & policy analysis.