US Macro Overview March 8, 8
Overview Growth in the US has firmed in recent quarters as the shocks that hit the economy in mid dollar appreciation and falling commodity prices have largely run their course. Fiscal stimulus will boost growth in 8 and 9. Several indicators suggest that the economy is at or near full employment, with clearer evidence that the rate of increase of wages/compensation has moved higher. Underlying inflation slowed in 7 and remains below the FOMC s objective of %, but recent indicators suggest that an upturn in inflation is underway.
Growth of Real GDP Four Quarter Percent Change 5 - - - - -5 8 Source: Bureau of Economic Analysis Four Quarter Percent Change 5 - - - - -5
Nominal Trade-Weighted Value of US$ and Rig Count Active Oil Rigs 8 Rig Count (left axis) Index 8 Broad Trade-Weighted Exchange Value of US $ (right axis) 8 5 7 Source: Federal Reserve Board and Baker Hughes
Manufacturing Indicators for Major Economies Index Level 59 58 57 5 55 5 5 5 5 5 9 8 7 Index Level 59 58 57 5 EU 55 5 5 5 5 5 China 9 8 7 5 7 8 Source: IHS Markit and Institute for Supply Management via Haver Analytics US
Citi Economic Surprise Index Index 5 Index 5 5 Global 5-5 -5 - U.S. - -5-5 Source: Bloomberg.
Goldman Financial Conditions Index Index 5 Tightening 99 97 Easing 95 9 Index 5 99 98 97 9 95 Source: Bloomberg. 5
Real PCE and the Personal Saving Rate Month % Change % 8 Personal Saving Rate 8 - - Real Personal Consumption Expenditures - - - - 8 8 Source: Bureau of Economic Analysis, Federal Reserve Board via Haver Analytics
Consumer Sentiment and Confidence Index, Q- = 9 8 University of Michigan: Consumer Sentiment (Left Axis) Index, 985 = 8 7 Conference Board: Consumer Confidence (Right Axis) 5 5 7 9 5 7 Source: University of Michigan, Conference Board. 7
Household Net Worth at Record High Percent (Net Worth over Disposable Income) 7 Percent 7 5 5 55 55 5 5 5 5 8 Source: Federal Reserve Board via Haver Analytics 8
Personal Saving Rate and Household Net Worth Personal Saving Rate (Percent) 8 98Q to 5Q Personal Saving Rate (Percent) Estimated 7Q (87.7,.) Estimated 7Q with % Decline (.8,.7) Q (5.7,.8) 8 7Q (7.,.) Q to present 5 5 55 5 7 Households Net Worth as a Percent of Disposable Income Source: Bureau of Economic 9 Analysis and Federal Reserve Board Note: Fitted line is from 98Q to 5Q.
Household Financial Obligation Ratio Ratio 9 8.5 8 7.5 7.5 5.5 5 Ratio 9 8.5 8 7.5 7.5 5.5 5.5 98 99 Source: Federal Reserve Board via Haver Analytics.5
Transition into Delinquency (9+) by Loan Type Percent of Balance Percent of Balance 8 Student Loan 8 Mortgage Credit Card Auto Loan :Q :Q 5:Q :Q 7:Q 8:Q 9:Q :Q :Q :Q :Q :Q 5:Q :Q 7:Q Source: New York Fed Consumer Credit Panel/Equifax HE Revolving Note: Quarter Moving Sum Student loan data are not reported prior to due to uneven reporting
Single Family Housing Market Index Level 8 8 Single Family House Price Index (Left Axis) Months 8 8 Source: CoreLogic, National Association of Realtors, via Haver Analytics Months Supply (Right Axis) 9 8 7 5
Housing Starts and Existing Homes Sales Per Capita Units..5.78 (average over 98-) Existing Home Sales Units..5...5.5. Housing Starts..5.9 (average over 98-) 98 978 988 998 8 8 Source: BLS, Census Bureau, NAR.5
Credit Score at Mortgage Origination Credit Score 8 Credit Score 8 75 Median 75 7 5 5 th Percentile 7 5 55 th Percentile 55 5 5 999 5 7 9 5 7 Source: FRBNY / Consumer Credit Panel
Business Fixed Investment Firming Four Quarter Percent Change 5 5-5 - -5-7 9 5 7 Source: Bureau of Economic Analysis Four Quarter Percent Change 5 - - - - -5 5
Nondefense Capital Goods excl. Aircraft Percent Change Year-to-Year Percent Change Year-to-Year Mfrs New Orders - - Mfrs Shipments - - - - - - 9 5 7 Source: Census Bureau/Haver.
Real Exports and Imports Quarter % Change Quarter % Change Exports - - - Imports - - - - 5 7 9 5 7 Source: Bureau of Economic Analysis via Haver Analytics - 7
Real Government Consumption and Gross Investment Quarter % Change Quarter % Change 8 - - - -8 Federal State and Local - - 8 8 Source: Bureau of Economic Analysis via Haver Analytics 8 - - - -8 8
Estimated Revenue Effects of The Tax Cuts and Jobs Act Fiscal Years 8- (Percent of GDP) Tax Reform for Individuals 8 9 House -. -. -.5 -.5 -.5 Senate -. -.8 -.7 -. -. Conference Agreement -. -.8 -.8 -.7 -.7 Business Tax Reform House -. -. -.5 -.5 -. Senate -. -. -.5 -. -. Conference Agreement -. -. -.5 -. -. Taxation of Foreign Income and Foreign Persons House..... Senate..... Conference Agreement..... Total (static) House -. -. -. -.8 -.7 Senate -. -. -. -. -.9 Conference Agreement -.7 -. -. -. -.8 Source: Joint Committee on Taxation; Congressional Budget Office 9
Real Nominal Effect of Bipartisan Budget Act of 8 on Discretionary Spending (Billions of Dollars, Fiscal Years) 7 8 9 Budget Control Act Caps Defense 58 55 55 5 BA 8 85 Nondefense 58 59 5 59 BA 8 Adjustments to Caps Defense 59 8 85 8 Nondefense 5 Total Defense 7 77 7 Percent Change... Nondefense 5 555 9 Percent Change..5. Defense 555 57 Percent Change..7.9 Nondefense 8 8 55 55 Percent Change -. 9..
Labor Market Indicators Percent Percent 8 8 Labor Force Participation Rate (Right Axis) Unemployment Rate (Left Axis) Employment to Population Ratio (Right Axis) 58 5 8 8 Source: Bureau of Labor Statistics via Haver Analytics
Growth of Average Hourly Earnings and ECI Annual % change Annual % change Average Hourly Earnings Employment Cost Index: Private Sector Wages & Salaries 7 9 5 7 Source: Bureau of Labor Statistics via Haver Analytics
Measure of Underlying PCE Price Inflation Month % Change Month % Change 5 5 FOMC Objective for Headline PCE Inflation - Core PCE Deflator - - - 8 8 Source: Bureau of Economic Analysis via Haver Analytics
Personal Consumption Expenditures Price Indices Percent Change Year-to-Year PCE: Services.5 Excl. Energy FOMC Objective For Headline PCE Inflation Percent Change Year-to-Year.5.5.5 Core PCE PCE: Goods less Food & Energy.5.5 -.5 -.5 - - 9 5 7 Source: BEA/Haver.
Import Price Index and the PCE Deflator for Core Goods % Change Year to Year % Change Year to Year 8 - PCE Deflator: Core Goods (Left Axis) - - Import Price Index: - Nonpetroleum Imports, - Month Lead - - (Right Axis) -8 99 995 998 7 9 Source: Bureau of Labor Statistics via Haver Analytics 5
Michigan Inflation Expectations 5 to Years Percent 75 th Percentile 5 Percent 5 Median 5 th Percentile 8 8 Source: University of Michigan
TIPS Based Inflation Expectations Percent Percent 5- Years Mar 7:. -5 Years Mar 7:.8-5 7 9 5 7 Source: Federal Reserve Board - Years Mar 7:. - 7 Note: Carry-adjusted