NEW ENGLAND ECONOMIC OUTLOOK...Leisure & Hospitality Professional & Business Services Construction...
Transcript of NEW ENGLAND ECONOMIC OUTLOOK...Leisure & Hospitality Professional & Business Services Construction...
NEW ENGLAND ECONOMIC OUTLOOK
Mary A. Burke
Senior Economist
Federal Reserve Bank of Boston
NCSL Atlantic States Fiscal Leaders
Meeting
Feb. 19, 2016
Disclaimer: The views expressed here are those of the speaker and do not necessarily represent the views
of the Federal Reserve Bank of Boston or the Federal Reserve System.
Disclaimer
Views presented here are my own
NOT the official views of the Federal Reserve Board or the Federal Reserve Bank of Boston
Economic Activity Levels At or Above Pre-Recession Peaks
Source: Federal Reserve Bank of Philadelphia, NBER, Haver Analytics
0.60
0.70
0.80
0.90
1.00
1.10
1.20
1.30
Dec-01 Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13 Dec-15
Ind
exed
to
Pre
-rec
essi
on
Pea
ks Recession
CT
ME
MA
NH
RI
VT
US
Payroll Employment Still Not Fully Recovered in CT, ME, RI
Source: Bureau of Labor Statistics, NBER, Haver Analytics
0.85
0.90
0.95
1.00
1.05
1.10
Dec-01 Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13 Dec-15
Ind
exed
to
Pre
-rec
essi
on
Pea
ks Recession
CT
ME
MA
NH
RI
VT
US
Employment Growth Rates Above Trend in Most States (past 12 months)
Source: Bureau of Labor Statistics, Haver Analytics
Annual Long-term Trend Last 12 months Since Peak
Percent Percent Number Percent Number
United States 1.4 1.9 2,735,000 3.4 4,705,000
New England 0.8 1.7 119,400 2.7 189,200
Connecticut 0.5 1.3 22,600 -0.7 -12,300
Maine 1.2 1.4 8,600 -1.2 -7,600
Massachusetts 0.8 2.1 73,800 5.9 194,700
New Hampshire 1.5 0.5 3,400 0.6 3,700
Rhode Island 0.6 1.8 8,400 -1.6 -8,000
Vermont 1.3 0.8 2,600 1.5 4,700
Industry Emp. Growth Rates Mostly Follow U.S.; Region Lags in Wholesale/Retail Trade
1.6
1.0
0.2
0.4
1.0
1.9
2.7
3.2
1.2
3.0
3.3
4.9
-0.3
0.0
0.4
0.4
1.7
1.8
1.9
2.2
2.2
2.6
3.4
5.1
-1 1 3 5 7
Retail Trade
Wholesale Trade
Manufacturing
Government
Information
Finance
Transportation, Warehousing, and Utilities
Education & Health
Other Services
Leisure & Hospitality
Professional & Business Services
Construction
Percent Change, December 2014 - December 2015
NE US
Source: Bureau of Labor Statistics, Haver Analytics
Unemployment Rates Down Significantly in All NE States Since Dec. 2014
Source: Bureau of Labor Statistics, NBER, Haver Analytics
0
2
4
6
8
10
12
Dec-01 Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13 Dec-15
Perc
enta
ge
Recession
US
NE
Dec-14 Dec-15
United States 5.6 5.0
New England 5.5 4.7
Connecticut 6.3 5.2
Maine 5.5 4.0
Massachusetts 5.3 4.7
New Hampshire 4.0 3.1
Rhode Island 6.8 5.1
Vermont 4.1 3.6
Labor Force Participation Rates Flat or Down Since Late 2013
60
62
64
66
68
70
72
74
05-Jan 06-Jan 07-Jan 08-Jan 09-Jan 10-Jan 11-Jan 12-Jan 13-Jan 14-Jan 15-Jan
Per
cen
t
Recession US CT ME MA NH RI VT
Source: Bureau of Labor Statistics/Haver Analytics
U6 Unemployment Down Sharply Since Mid-2014, But Still Elevated
5
7
9
11
13
15
17
19
21
05-Q1 06-Q1 07-Q1 08-Q1 09-Q1 10-Q1 11-Q1 12-Q1 13-Q1 14-Q1 15-Q1
Per
cen
t
Recession USCT MEMA NHRI VT
Source: Bureau of Labor Statistics/Haver Analytics
U6 Unemployment Well Above Pre-Recession Lows in Mid-Atlantic States
5
7
9
11
13
15
17
19
05-Q1 06-Q1 07-Q1 08-Q1 09-Q1 10-Q1 11-Q1 12-Q1 13-Q1 14-Q1 15-Q1
Per
cen
t
Recession US DE MD NY PA
Source: Bureau of Labor Statistics/Haver Analytics
CPI Inflation Down Sharply Since 2014
Source: Bureau of Labor Statistics, NBER, Haver Analytics
-4
-2
0
2
4
6
8
Nov-01 Nov-03 Nov-05 Nov-07 Nov-09 Nov-11 Nov-13 Nov-15
Perc
ent
Ch
ange
fro
mYe
ar E
arlie
r
Recession
Boston
US
House Price Increases Flat in New England Since 2013; Down in U.S.
Source: FHFA, NBER, S&P/Case-Shiller, Haver Analytics
-15
-10
-5
0
5
10
15
20
Q3-01 Q3-03 Q3-05 Q3-07 Q3-09 Q3-11 Q3-13 Q3-15
Perc
ent
Ch
ange
fro
m Y
ear
Earl
ier
RecessionNE FHFA-Purchase OnlyUS FHFA-Purchase OnlyUS S&P Case-Shiller
State Tax Collections Above Pre-Recession Peak in All NE States except NH
Source: Bureau of the Census/Haver Analytics; index based on nominal dollar values
40
50
60
70
80
90
100
110
120
130
140
05-Q1 07-Q1 09-Q1 11-Q1 13-Q1 15-Q1
Ind
exed
to
Pre
-20
09
Pea
k
CT ME MA NH RI VT
Real Personal Incomes Above Pre-2009 Peaks; Lagging in ME
85
90
95
100
105
110
115
05-Q1 06-Q1 07-Q1 08-Q1 09-Q1 10-Q1 11-Q1 12-Q1 13-Q1 14-Q1 15-Q1
Ind
exed
to
Pre
-20
09
Pea
k
Recession US
CT ME
MA NH
RI VT
Source: Bureau of Economic Analysis/Haver Analytics
Corporate Income Tax Collections Below Pre-2009 Peaks in New England and Mid-Atlantic
Source: Nelson A. Rockefeller Institute of Government/Haver Analytics; indexes based on nominal dollar values
20
30
40
50
60
70
80
90
100
110
120
05-Q1 07-Q1 09-Q1 11-Q1 13-Q1 15-Q1
Ind
exed
to
Pre
-20
09
Pea
k
New England - Total Middle Atlantic - Total
New England - Corporate Income Middle Atlantic - Corporate Income
Corporate Income Tax Share Same or Higher in New England
4
5
6
7
8
9
10
11
12
05-Q1 06-Q1 07-Q1 08-Q1 09-Q1 10-Q1 11-Q1 12-Q1 13-Q1 14-Q1 15-Q1
Per
cen
t
New England
Middle Atlantic
Source: Nelson A. Rockefeller Institute of Government/Haver Analytics
General Revenue Collections Little Changed 2014-2015
0
5
10
15
20
25
30
CT ME MA NH RI VT
Gen
eral
Rev
enu
e ($
Mill
ion
)
2014 Fiscal Year
2015 Fiscal Year
Source: Federal Reserve Bank of Boston/Haver Analytics
State Tax Revenue Growth To Slow in 2017 in CT, MD, NY, PA, VT
Personal Income Tax ($ in millions) Sales Tax ($ in millions)
State Forecast FY 2015 FY 2016 FY 2017 % chg., % chg., FY 2015 FY 2016 FY 2017 % chg., % chg.,
month forecast forecast forecast 2015-16 2016-17 forecast forecast forecast 2015-16 2016-17
Connecticut 15-Nov 9,148.70 9,645.00 10,004.10 5.4 3.7 4,216.30 4,121.10 4,084.70 -2.3 -0.9
Delaware 15-Sep 1,251.90 1,306.70 1,372.10 4.4 5 NA NA NA NA NA
Maine 15-May 1,500.30 1,548.80 1,640.40 3.2 5.9 1,194.00 1,127.50 1,180.60 -5.6 4.7
Maryland 15-Sep 8,346.10 8,745.30 9,173.30 4.8 4.9 4,350.70 4,543.10 4,710.10 4.4 3.7
New York 15-Aug 43,709.00 47,075.00 49,701.00 7.7 5.6 12,991.00 13,532.00 14,067.00 4.2 4
Pennsylvania 15-Dec 12,107.00 12,687.00 13,180.00 4.8 3.9 9,493.00 9,840.00 10,188.00 3.7 3.5
Rhode Island 15-Nov 1,227.60 1,214.90 1,265.40 -1 4.2 963.4 981 1,015.00 1.8 3.5
Vermont 15-Jul 705.9 763.8 797.8 8.2 4.5 364.6 382.2 394.3 4.8 3.2
New Hampshire NA NA NA NA NA NA NA NA NA NA NA
Massachusetts* NA NA NA NA 2.2 2.6 NA NA NA 5.6 5.9
Source: The Rockefeller Institute, “States Forecast Slow Tax Revenue Growth in 2017 and Over the Longer Term,” Lucy Dadayan and Donald J. Boyd. *Massachusetts revenue growth figures sourced from Mass. Taxpayers’ Foundation and include capital gains tax growth.
Consumer Confidence Lagging in Region Since 2014
Source: The Conference Board, NBER, Haver Analytics
0
20
40
60
80
100
120
Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Jan-16
Ind
exed
to
U.S
. Ave
rage
of
19
85
RecessionNEUS
New Englanders More Gloomy About Future in 2016 than 2015
Source: The Conference Board, Haver Analytics
0
20
40
60
80
100
120
140
US NE US NE US NE
Consumer Confidence Present Situation Future Expectations
Jan-15 Jan-16
NEEP Forecast: VT Will Lead in Employment Growth, ME Will Lag
Source: New England Economic Partnership; Fall 2015 Economic Outlook Conference Bulletin
Region’s Employment Growth to Peak in 2015-2016; Falls Farther Behind U.S. by 2018
Annualized percent changes in total employment
Source: New England Economic Partnership; Fall 2015 Economic Outlook Conference Bulletin
FOMC Predicts Further Improvements in GDP Growth, Unemployment in 2016
Source: FOMC Minutes, Dec. 15-16, 2015
Fed Funds Rate Predictions Vary Across FOMC members
Source: FOMC Minutes, Dec. 15-16, 2015
Has Recession Risk Increased Recently?
“Financial indicators, from the bear market in stocks to widening credit spreads, are signaling the likelihood of recession. Fundamental indicators, by contrast, are signaling the reverse. ”
Gene Epstein, Barron’s, Feb. 15
“Federal Reserve Chair Janet Yellen told Congress this week that the U.S. economy is in decent shape and would be even better if not for the blasted rest of the world. Financial markets beg to differ.”
Opinion, The Wall Street Journal Online, Feb. 11, 2015
Unemployment Rate Rise Preceded All Recessions Since 1948
Civilian unemployment rate, ages 16+, seasonally adjusted
Risks to the Outlook
Upside risks Domestic labor markets tightening Lower oil prices boost consumer spending
Downside risks Slower growth in China, emerging markets Stronger dollar hurts exports Domestic and global political uncertainty Aging workforce, aging infrastructure, structural deficits
FOMC December risk assessment Risks to growth and unemployment mostly balanced Inflation risk skewed down for almost half of members