US Economic Outlook Ahmad Ijaz Center for Business and Economic Research Culverhouse College of Commerce The University of Alabama Composite Can and Tube Institute Annual Meeting Point Clear, Alabama May 19, 2017
Overview: U.S. Economy The current economic recovery (now into its 8 th year) has been the slowest recovery in postwar history. Compared to its peak in 4th quarter 2007, GDP is only about 12 percent higher while the number of employed is only 3.5 million higher. Advance estimate of inflation adjusted GDP growth in the first quarter of 2017 was only 0.7 percent the weakest in three years, with consumer spending and inventory accumulation slowing sharply. Growth in second half is expected to be around 3.4 percent, led primarily by consumer spending. For the year, the rate of growth is estimated to be around 2.2 percent, followed by approximately 2.7 percent in 2018. The economy grew by 1.6 percent in 2016. Consumer spending will remain the main source of growth, rising by 2.5 percent in 2017. After dropping by 0.5 percent, nonresidential business spending will increase by 4.5 percent in both 2017 and 2018.. However, weak wage growth in some sectors of the economy and relatively high debt levels ($12.7 trillion) will continue to keep consumers cautious, despite the job growth seen in recent months, historically employment growth is still relatively sluggish, and most of the jobs being added are either temporary (about 30 to 40 percent), part-time and/or in low wage sectors of the economy. After a 1.2 percent drop in 2016, industrial production index will rise 1.9 percent in 2017 and 2.9 percent in 2018. Industrial production in paper and related products will rise by 0.7 percent in 2017, following a 2.6 percent drop in 2016. Payroll employment in paper and related products industry will rise 0.4 percent, at about the same pace as 2016.
Post-recession Average Real GDP Growth Time period Average growth 1976-1980 2.59% 1983-1989 3.75% 1992-1998 3.17% 2002-2007 2.39% 2010-2016 1.72% Source: U.S. Bureau of Economic Analysis
Post-recession Average Real GDP Growth 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% '76-'80 '83-'89 '92-'98 '02-'07 '10-'16 Source: U.S. Bureau of Economic Analysis
Post-recession Average Employment Growth Time period Average growth 1976-1980 2.48% 1983-1989 2.40% 1992-1998 2.21% 2002-2007 0.99% 2010-2016 1.51% Source: U.S. Bureau of Labor Statistics
Post-recession Average Employment Growth 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% '76-'80 '83-'89 '92-'98 '02-'07 '10-'16 Source: U.S. Bureau of Labor Statistics
Labor Force Participation Rate 69.0 67.0 United States 65.0 63.0 61.0 59.0 57.0 55.0 Source: Bureau of Labor Statistics
Labor Productivity in the U.S. 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 Source: Bureau of Labor Statistics and Bureau of Economic Analysis Data
GDP Growth 4.0% 3.5% 3.0% 2.5% 10 States with highest GDP growth in 2016 1.0% 0.0% -1.0% -2.0% 10 States with lowest GDP growth in 2016 2.0% -3.0% 1.5% -4.0% 1.0% -5.0% 0.5% -6.0% 0.0% -7.0% North Dakota Wyoming Oklahoma West Virginia Louisiana New Mexico Montana Kansas Delaware Texas Source: Bureau of Economic Analysis
Shares of U.S. Gross Domestic Product and Nonfarm Employment by Industry (2016) 100.00 90.00 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 6.06 12.82 11.69 3.86 12.01 19.77 8.50 3.95 21.34 Share of GDP 10.97 13.95 8.56 10.82 15.40 5.74 15.67 4.65 14.24 Share of Non-farm Employment Retail trade Professional and business services Manufacturing Leisure and hospitality Government Finance activities Education and health services Construction All Other Source: Estimates based on Bureau of Labor Statistics and Bureau of Economic Analysis Data
U.S. Economy (GDP, Consumer Spending and Investments) 20 Inflation Adjusted Chained 2009 Dollars (Annual Percent Change) 15 10 5 0-5 -10-15 -20-25 GDP CONS. SPENDING NON-RESIDENTIAL INVESTMENTS RESIDENTIAL INVESTMENTS -30 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Bureau of Economic Analysis and IHS Global Insight.
Gross Domestic Product: Expansion remains on Track (Inflation Adjusted Annual Percent Change) 1/1/90 1/1/91 1/1/92 1/1/93 1/1/94 1/1/95 1/1/96 1/1/97 1/1/98 1/1/99 1/1/00 1/1/01 1/1/02 1/1/03 1/1/04 1/1/05 1/1/06 1/1/07 1/1/08 1/1/09 1/1/10 1/1/11 1/1/12 1/1/13 1/1/14 1/1/15 1/1/16 1/1/17 1/1/18 1/1/19 1/1/20 1/1/21 1/1/22 1/1/23 1/1/24 1/1/25 6 5 4 3 2 1 0-1 -2-3 -4 Source: U.S. Department of Commerce and IHS Global Insight.
Consumer Spending, Total and Nondurables (Annual Percent Change, 2009 Chained Dollars) 1/1/90 1/1/91 1/1/92 1/1/93 1/1/94 1/1/95 1/1/96 1/1/97 1/1/98 1/1/99 1/1/00 1/1/01 1/1/02 1/1/03 1/1/04 1/1/05 1/1/06 1/1/07 1/1/08 1/1/09 1/1/10 1/1/11 1/1/12 1/1/13 1/1/14 1/1/15 1/1/16 1/1/17 1/1/18 1/1/19 1/1/20 1/1/21 1/1/22 1/1/23 1/1/24 1/1/25 6 5 4 3 2 1 0-1 -2-3 Total Nondurable Goods Source: U.S. Department of Commerce and IHS Global Insight.
Consumer Sentiment Index (supported by improving household finances) 1/1/90 1/1/91 1/1/92 1/1/93 1/1/94 1/1/95 1/1/96 1/1/97 1/1/98 1/1/99 1/1/00 1/1/01 1/1/02 1/1/03 1/1/04 1/1/05 1/1/06 1/1/07 1/1/08 1/1/09 1/1/10 1/1/11 1/1/12 1/1/13 1/1/14 1/1/15 1/1/16 1/1/17 1/1/18 1/1/19 1/1/20 1/1/21 1/1/22 1/1/23 1/1/24 1/1/25 120 100 80 60 40 Source: University of Michigan and IHS Global Insight
Factors Affecting Consumer Spending Positive Employment growth Wage acceleration Rising asset Values Income tax cuts in 2018 Expansion of e-commerce sales Positive Negative High consumer and student debt burdens Payroll cycle economics Asset and income inequality (significant increase in part-time and temporary jobs)
Nonfarm Employment, Nondurable Goods and Paper Product (Annual Percent Change) 1/1/91 1/1/92 1/1/93 1/1/94 1/1/95 1/1/96 1/1/97 1/1/98 1/1/99 1/1/00 1/1/01 1/1/02 1/1/03 1/1/04 1/1/05 1/1/06 1/1/07 1/1/08 1/1/09 1/1/10 1/1/11 1/1/12 1/1/13 1/1/14 1/1/15 1/1/16 1/1/17 1/1/18 1/1/19 1/1/20 1/1/21 1/1/22 1/1/23 1/1/24 1/1/25 2 0-2 -4-6 -8-10 Nondurable Manufacturing Paper Products Source: U.S. Department of Commerce and IHS Global Insight.
Change in Inventories, Total and Manufacturing (Billions of Chained 2009 Dollars) 1/1/90 1/1/91 1/1/92 1/1/93 1/1/94 1/1/95 1/1/96 1/1/97 1/1/98 1/1/99 1/1/00 1/1/01 1/1/02 1/1/03 1/1/04 1/1/05 1/1/06 1/1/07 1/1/08 1/1/09 1/1/10 1/1/11 1/1/12 1/1/13 1/1/14 1/1/15 1/1/16 1/1/17 1/1/18 1/1/19 1/1/20 1/1/21 1/1/22 1/1/23 1/1/24 1/1/25 100 50 0-50 -100-150 -200 Total Business Total Manufacturing Source: U.S. Department of Commerce and IHS Global Insight.
Industrial Production Index (Annual Percent Change) 1/1/90 1/1/91 1/1/92 1/1/93 1/1/94 1/1/95 1/1/96 1/1/97 1/1/98 1/1/99 1/1/00 1/1/01 1/1/02 1/1/03 1/1/04 1/1/05 1/1/06 1/1/07 1/1/08 1/1/09 1/1/10 1/1/11 1/1/12 1/1/13 1/1/14 1/1/15 1/1/16 1/1/17 1/1/18 1/1/19 1/1/20 1/1/21 1/1/22 1/1/23 1/1/24 1/1/25 20 15 10 5 0-5 -10-15 -20 Paper and Paper Products Bags, Coated and Treated Paper Converted Paper Products Residual Paper Products Source: U.S. Department of Commerce and IHS Global Insight.
Nonresidential and Residential Business Investments (Annual Percent Change, Chained 2009 Dollars) 1/1/90 1/1/91 1/1/92 1/1/93 1/1/94 1/1/95 1/1/96 1/1/97 1/1/98 1/1/99 1/1/00 1/1/01 1/1/02 1/1/03 1/1/04 1/1/05 1/1/06 1/1/07 1/1/08 1/1/09 1/1/10 1/1/11 1/1/12 1/1/13 1/1/14 1/1/15 1/1/16 1/1/17 1/1/18 1/1/19 1/1/20 1/1/21 1/1/22 1/1/23 1/1/24 1/1/25 20 15 10 5 0-5 -10-15 -20-25 -30 Nonresidential Residential Source: U.S. Department of Commerce and IHS Global Insight.
U.S. Recessions: Total Non-farm Employment 104 102 100 98 96 94 Jan-80 Jul-81 Jul-90 Mar-01 Dec-07 92 90 0 10 20 30 40 50 60 70 80 90 Months Source: Estimates based on Bureau of Labor Statistics Data
U.S. Economic Forecast (Percent change unless otherwise noted) 2016 2017 2018 2019 2020 Real GDP 1.6 2.2 2.7 2.4 2.2 Consumption 2.7 2.5 3.2 2.8 3.2 Residential Investment 3.5 11.7 4.7 2.7 3.1 Commercial, Healthcare Structures 12.9 10.1 15.4 6.1 5.1 Nonresidential Fixed Investment 6.0 2.1-0.2 4.6 4.5 Federal Government -2.5 0.0 0.7 0.3-0.8 State & Local Government 0.2 2.9 0.9 0.8 1.4 Exports 4.3 0.1-0.3 3.1 3.1 Imports 4.4 4.6 1.2 4.9 4.9 Payroll Employment 1.9 2.1 1.7 1.2 1.2 Unemployment Rate 6.2 5.3 4.9 4.7 4.7 CPI Inflation 1.6 0.1 1.2 2.5 2.5 Light Vehicle Sales (Millions) 16.44 17.39 17.47 17.78 17.78
Paperboard Manufacturing Snapshot 2002 2007 Number of establishments 2,669 2,409 Value of shipments ($ Millions) 43,494 50,935 Annual payroll ($ Millions) 7,091 7,385 Total employment 184,884 165,978 Value of shipments per establishment ($1,000) 16,296 21,144 Value of shipments per employee ($1,000) 235 307 Value of shipments per $ of payroll ($) 6.13 6.9 Payroll per employee ($) 38,355 44,493 Employees per establishment 69.27 68.9 Value of shipments per capita ($) 151 169 Population per establishment 107,765 125,044
Value of Shipments: United States Source: U.S. Census Bureau
Employees Per Establishments: United States Source: U.S. Census Bureau
Number of Establishments: United States 2,400 2,350 2,345 2,300 2,250 2,200 2,241 2,205 2,150 2,131 2,117 2,100 2,088 2,050 2,000 1,950 2008 2009 2010 2011 2012 2013 Source: U.S. Census Bureau
Number of Employees: United States 165,000 162,515 160,000 155,000 150,000 147,593 145,000 140,000 142,868 141,159 137,468 138,684 135,000 130,000 125,000 120,000 2008 2009 2010 2011 2012 2013 Source: U.S. Census Bureau
U.S. Recessions- Paperboard Container Manufacturing Employment 105.0 100.0 95.0 90.0 Jul-90 85.0 Mar-01 Dec-07 80.0 75.0 70.0 0 20 40 60 80 100 120 Months Source: Estimates based on Bureau of Labor Statistics Data
Payroll per Employee: United States (Dollars) 54,000 52,634 52,000 51,525 50,000 49,293 48,000 46,995 48,128 46,000 44,000 45,136 42,000 40,000 2008 2009 2010 2011 2012 2013 Source: U.S. Census Bureau
Average Weekly Earnings, 2016 Paperboard containers $990 Converted paper products $1,041 Paper and paper products $1,112 Manufacturing $1,058 All private sector industries $882 $0 $200 $400 $600 $800 $1,000 $1,200 Source: Bureau of Labor Statistics, CES
Average Weekly Earnings by Industry, 2016 Year Paper and paper Converted products paper products Paperboard containers Manufacturing All private sector industries 2007 $884 $804 $786 $861 $720 2008 $903 $823 $815 $882 $739 2009 $894 $807 $799 $898 $750 2010 $952 $859 $844 $937 $770 2011 $995 $884 $876 $959 $791 2012 $1,010 $911 $894 $974 $810 2013 $1,025 $942 $932 $994 $825 2014 $1,052 $956 $925 $1,016 $845 2015 $1,080 $983 $943 $1,030 $864 2016 $1,112 $1,041 $990 $1,058 $882 2007-2016 25.8% 29.5% 25.9% 22.8% 22.5% $228 $237 $204 $197 $162 Source: Bureau of Labor Statistics, CES
Average Weekly Earnings by Industry, 2016 $1,200 $1,100 $1,000 $900 $800 $700 $600 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Paper and paper products Converted paper products Paperboard containers Manufacturing All private sector industries Source: Bureau of Labor Statistics, CES
Employment by Industry (Thousands) Industries Year Paper and Paper products Pulp, paper, and paperboard mills Converted paper products Paperboard containers Corrugated and solid fiber boxes Folding boxes and miscellaneous paperboard containers Paper bags and coated and treated paper Stationery and other converted paper products Manufacturing All private sector industries 2007 458 132 326 172 110 62 73 81 13,878 115,778 2008 445 126 318 167 106 60 71 80 13,403 114,737 2009 407 117 290 151 94 56 65 75 11,848 108,747 2010 395 112 282 147 93 54 62 73 11,529 107,864 2011 387 109 278 145 92 53 63 70 11,727 109,848 2012 380 108 272 142 90 52 61 68 11,927 112,251 2013 378 107 271 144 90 53 61 66 12,020 114,531 2014 373 104 269 143 91 52 60 65 12,185 117,062 2015 373 101 271 147 93 54 59 65 12,335 119,789 2016 371 100 271 148 93 55 60 63 12,348 122,077 2007-2016 -19.1% -24.3% -17.0% -14.0% -15.3% -11.9% -18.3% -22.0% -11.0% 5.4% -87-32 -55-24 -17-7 -13-18 -1,530 6,300 Source: Bureau of Labor Statistics, CES
Change in Employment (Percent) 4.00 2.00 0.00-2.00-4.00-6.00-8.00-10.00-12.00-14.00 2008 2009 2010 2011 2012 2013 2014 2015 2016 Paperboard containers Stationery and other converted paper products All private sector industries Paper bags and coated and treated paper Manufacturing Source: Bureau of Labor Statistics, CES
U.S. Selected Industry GDP (Millions of Chained 2009 Dollars) Industry 1997 2000 2005 2010 2015 2016 All industry total 11,118,778 12,616,533 14,203,241 14,628,165 16,094,516 16,342,925 Private industries 9,423,885 10,826,183 12,311,123 12,650,146 14,144,240 14,381,838 Manufacturing 1,365,083 1,603,277 1,776,685 1,818,190 1,912,044 1,909,249 Nondurable goods manufacturing 788,393 807,051 850,561 843,845 814,222 811,187 Paper products manufacturing 80,020 72,551 64,885 53,403 51,381 (NA) Source: Bureau of Economic Analysis
Annual Percent Change in GDP 10.00% 5.00% 0.00% -5.00% -10.00% -15.00% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 All industry total Manufacturing Nondurable goods manufacturing Paper products manufacturing Source: Bureau of Economic Analysis
Paper Industry Share of Total GDP (Percent) 0.80% 0.70% 0.60% 0.50% 0.40% 0.30% 0.20% 0.10% 0.00% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Bureau Economic Analysis
Paper Industry Forecast (Industrial Production) (Percent change unless otherwise noted) 2016 2017 2018 2019 2020 Paper and Paper Products -2.4-1.2 0.0 0.7 0.7 Pulp and Paper Mills -3.3-2.1-0.5 0.1 0.3 Converted Paper Products -1.5-0.4 0.5 0.9 0.9 Bags, Coated and Treated Paper -6.3-2.7 0.4 0.9 1.0 Other Paper Products -0.4 0.9 1.3 1.7 1.5 Source: IHS Global Insight
Economy will continue to grow at around 2 to 2.5 percent rate for the next two to three years Thank you Center for Business and Economic Research Culverhouse College of Commerce The University of Alabama 205-348-6191 http://cber.cba.ua.edu