ON THE ECONOMIC, BUSINESS AND POLITICAL CLIMATE · 2019 ITA FALL CONFERENCE Des Moines, IA...
Transcript of ON THE ECONOMIC, BUSINESS AND POLITICAL CLIMATE · 2019 ITA FALL CONFERENCE Des Moines, IA...
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
ON THE ECONOMIC, BUSINESS AND POLITICAL CLIMATE
Roger Tutterow, Ph.D.Coles College of BusinessKennesaw State [email protected]
Iowa Trust Association2019 Fall ConferenceOctober 3, 2019Des Moines, IA
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Expansion Getting Tired?(Source: National Bureau Economic Research
Trough Peak MonthsOctober 1945 (IV) November 1948(IV) 37October 1949 (IV) July 1953(II) 45May 1954 (II) August 1957(III) 39April 1958 (II) April 1960(II) 24
February 1961 (I) December 1969(IV) 106November 1970 (IV) November 1973(IV) 36
March 1975 (I) January 1980(I) 58July 1980 (III) July 1981(III) 12
November 1982 (IV) July 1990(III) 92March 1991(I) March 2001(I) 120
November 2001 (IV) December 2007 (IV) 73June 2009 (II) ??? 124
Average Expansion, Post WWII 58.4
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
GDP = Consumption Gross Investment Net Exports Government
2017: Q3 3.2% 1.61% 1.25% 0.35% -0.02%2017: Q4 3.5% 3.12% 0.80% -0.80% 0.42%2018: Q1 2.5% 1.15% 1.07% 0.00% 0.33%2018: Q2 3.5% 2.7% -0.30% 0.67% 0.44%2018: Q3 2.9% 2.34% 2.27% -2.05% 0.36%2018: Q4 1.1% 0.97% 0.53% -0.35% -0.07%2019: Q1 3.1% 0.78% 1.09% 0.73% 0.5%2019: Q2 2.0% 3.03% -1.16% -0.68% 0.82%
Contributions To GDP Growth(Source: Bureau of Economic Analysis)
Gross Investment = Nonresidential Residential Inventory
2017: Q3 1.25% 0.32% -0.08% 1.00%2017: Q4 0.80% 1.08% 0.37% -0.64%2018: Q1 1.07% 1.15% -0.21% 0.13%2018: Q2 -0.30% 1.04% -0.15% -1.20%2018: Q3 2.27% 0.29% -0.16% 2.14%2018: Q4 0.53% 0.64% -0.18% 0.07%2019: Q1 1.09% 0.60% -0.04% 0.53%2019: Q2 -1.16% -0.14% -0.11% -0.91%
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
ISM’s “PMI”(Source: Institute of Supply Management)
25
30
35
40
45
50
55
60
65Ja
n-00
Nov
-00
Sep-
01Ju
l-02
May
-03
Mar
-04
Jan-
05N
ov-0
5Se
p-06
Jul-0
7M
ay-0
8M
ar-0
9Ja
n-10
Nov
-10
Sep-
11Ju
l-12
May
-13
Mar
-14
Jan-
15N
ov-1
5Se
p-16
Jul-1
7M
ay-1
8M
ar-1
9
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Industrial Production(Source: Federal Reserve BOG)
-30%-25%-20%-15%-10%
-5%0%5%
10%15%20%
Jan-
97Ja
n-98
Jan-
99Ja
n-00
Jan-
01Ja
n-02
Jan-
03Ja
n-04
Jan-
05Ja
n-06
Jan-
07Ja
n-08
Jan-
09Ja
n-10
Jan-
11Ja
n-12
Jan-
13Ja
n-14
Jan-
15Ja
n-16
Jan-
17Ja
n-18
Jan-
19
IPManDurableNon-Durable
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Foreign Exchange: Dollar & Major Currencies
(Source: Board of Governors of the Federal Reserve System)
60
70
80
90
100
110
120Ja
n-02
Nov
-02
Sep-
03Ju
l-04
May
-05
Mar
-06
Jan-
07N
ov-0
7Se
p-08
Jul-0
9M
ay-1
0M
ar-1
1Ja
n-12
Nov
-12
Sep-
13Ju
l-14
May
-15
Mar
-16
Jan-
17N
ov-1
7Se
p-18
Jul-1
9
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Basis of Tariffs • Section 232: certain circumstances allows the
president to impose tariffs based on the recommendation from the Secretary of Commerce if "an article is being imported into the United States in such quantities or under such circumstances as to threaten or impair the national security.
• Section 301: designed to eliminate unfair foreign trade practices that adversely affect U.S. trade and investment in both goods and services.
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Consumer Sentiment(source: University of Michigan, Survey Research Center)
556065707580859095
100105110115
Jan-
98Ju
l-98
Jan-
99Ju
l-99
Jan-
00Ju
l-00
Jan-
01Ju
l-01
Jan-
02Ju
l-02
Jan-
03Ju
l-03
Jan-
04Ju
l-04
Jan-
05Ju
l-05
Jan-
06Ju
l-06
Jan-
07Ju
l-07
Jan-
08Ju
l-08
Jan-
09Ju
l-09
Jan-
10Ju
l-10
Jan-
11Ju
l-11
Jan-
12Ju
l-12
Jan-
13Ju
l-13
Jan-
14Ju
l-14
Jan-
15Ju
l-15
Jan-
16Ju
l-16
Jan-
17Ju
l-17
Jan-
18Ju
l-18
Jan-
19Ju
l-19
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Retail Sales(source: U.S. Bureau of the Census, annual rate of growth)
-12%
-9%
-6%
-3%
0%
3%
6%
9%
12%Ja
n-96
Jan-
97Ja
n-98
Jan-
99Ja
n-00
Jan-
01Ja
n-02
Jan-
03Ja
n-04
Jan-
05Ja
n-06
Jan-
07Ja
n-08
Jan-
09Ja
n-10
Jan-
11Ja
n-12
Jan-
13Ja
n-14
Jan-
15Ja
n-16
Jan-
17Ja
n-18
Jan-
19
RS TotalRS ex-auto
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Auto & Light Truck Sales(Source: Department of Commerce, in millions)
4
5
6
7
8
9
10
11
12
13
14Ja
n-00
Jul-0
0
Jan-
01
Jul-0
1
Jan-
02
Jul-0
2
Jan-
03
Jul-0
3
Jan-
04
Jul-0
4
Jan-
05
Jul-0
5
Jan-
06
Jul-0
6
Jan-
07
Jul-0
7
Jan-
08
Jul-0
8
Jan-
09
Jul-0
9
Jan-
10
Jul-1
0
Jan-
11
Jul-1
1
Jan-
12
Jul-1
2
Jan-
13
Jul-1
3
Jan-
14
Jul-1
4
Jan-
15
Jul-1
5
Jan-
16
Jul-1
6
Jan-
17
Jul-1
7
Jan-
18
Jul-1
8
Autos
Light Trucks
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Corporate Profits (with CCA & Inventory adjustment)
(source: U.S. Bureau of the Census, annual rate of growth)
-40%
-20%
0%
20%
40%
60%
80%Ja
n-06
Aug-
06M
ar-0
7O
ct-0
7M
ay-0
8D
ec-0
8Ju
l-09
Feb-
10Se
p-10
Apr-1
1N
ov-1
1Ju
n-12
Jan-
13Au
g-13
Mar
-14
Oct
-14
May
-15
Dec
-15
Jul-1
6Fe
b-17
Sep-
17Ap
r-18
Nov
-18
L6ML12M
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Leading Economic Indicators(source: Conference Board, % change in last 6 months)
-15%
-12%
-9%
-6%
-3%
0%
3%
6%
9%Ju
l-04
Jan-
05Ju
l-05
Jan-
06Ju
l-06
Jan-
07Ju
l-07
Jan-
08Ju
l-08
Jan-
09Ju
l-09
Jan-
10Ju
l-10
Jan-
11Ju
l-11
Jan-
12Ju
l-12
Jan-
13Ju
l-13
Jan-
14Ju
l-14
Jan-
15Ju
l-15
Jan-
16Ju
l-16
Jan-
17Ju
l-17
Jan-
18Ju
l-18
Jan-
19Ju
l-19
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Change in Payroll Employment (Source: Bureau of Labor Statistics)
-1000
-800
-600
-400
-200
0
200
400
600
800Ja
n-00
Jan-
01Ja
n-02
Jan-
03Ja
n-04
Jan-
05Ja
n-06
Jan-
07Ja
n-08
Jan-
09Ja
n-10
Jan-
11Ja
n-12
Jan-
13Ja
n-14
Jan-
15Ja
n-16
Jan-
17Ja
n-18
Jan-
19
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
State Employment (Net Change)(source: Bureau of Labor Statistics)
-6%
-3%
0%
3%
6%
9%
12%
15%
18%
21%U
tah
Texa
s
Nor
th D
akot
a
Col
orad
o
Was
hing
ton
Idah
o
Dis
trict
of C
ol
Flor
ida
Cal
iforn
ia
Sout
h C
arol
ina
Ore
gon
New
Yor
k
Mas
sach
uset
ts
Tenn
esse
e
Geo
rgia
Nev
ada
Sout
h D
akot
a
Nor
th C
arol
ina
Ariz
ona
Mon
tana
Min
neso
ta
Virg
inia
Neb
rask
a
New
Ham
pshi
re
Indi
ana
Okl
ahom
a
Arka
nsas
Del
awar
e
Kent
ucky
Mar
ylan
d
Haw
aii
Mic
higa
n
Iow
a
Alas
ka
Penn
sylv
ania
Mis
sour
i
Wis
cons
in
Illin
ois
Verm
ont
Ohi
o
New
Jer
sey
Rho
de Is
land
Kans
as
Alab
ama
Loui
sian
a
Mai
ne
Wes
t Virg
inia
New
Mex
ico
Mis
siss
ippi
Con
nect
icut
Wyo
min
g
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Employment: Iowa & Neighbors
-7%-6%-5%-4%-3%-2%-1%0%1%2%3%4%Ja
n-05
Aug-
05M
ar-0
6O
ct-0
6M
ay-0
7D
ec-0
7Ju
l-08
Feb-
09Se
p-09
Apr-1
0N
ov-1
0Ju
n-11
Jan-
12Au
g-12
Mar
-13
Oct
-13
May
-14
Dec
-14
Jul-1
5Fe
b-16
Sep-
16Ap
r-17
Nov
-17
Jun-
18Ja
n-19
IL
IA
MN
MO
NE
SD
WI
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Employment: Iowa
-10%
-5%
0%
5%
10%
15%
20%
25%
IOW
A
Ames
Ced
ar R
apid
s
Des
Moi
nes
Dub
uque
Iow
a C
ity
Om
aha-
Cou
ncil
Bluf
f
Siou
x C
ity
Qua
d C
ities
Wat
erlo
o-C
edar
Fal
ls
Recess
Recover
Net
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
US Employment Shift by Sector(Source: Bureau of Labor Statistics)
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%To
tal
Min
ing
Con
st
Man
uf
T T
& U
til
Info Fin
Prof
& B
iz S
er
Educ
& H
C
Leis
& H
osp
Oth
er S
erv
Gov
t
L12M
L5Yr
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Labor Force Participation
62%
63%
64%
65%
66%
67%
68%Ja
n-95
Nov
-95
Sep-
96Ju
l-97
May
-98
Mar
-99
Jan-
00N
ov-0
0Se
p-01
Jul-0
2M
ay-0
3M
ar-0
4Ja
n-05
Nov
-05
Sep-
06Ju
l-07
May
-08
Mar
-09
Jan-
10N
ov-1
0Se
p-11
Jul-1
2M
ay-1
3M
ar-1
4Ja
n-15
Nov
-15
Sep-
16Ju
l-17
May
-18
Mar
-19
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Labor Force Participation
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
16 to 19 20 to 24 25 to 34 35 to 44 45 to 54 55 to 64 65 to 74 75 +
1996200620162026
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Prices: Still talk of Deflation/Inflation?
(source: Bureau of Labor Statistics)
• CPI was up 0.1% in August – after being up 0.3% and 0.1% in July and June.
• Core CPI up 0.3% in August – after rising by 0.3%, 0.3% and 0.1% in previous three months.
• Overall CPI up 1.7% over last 12 months. Core up 2.4% over same period.
• Energy component down by 4.4% over the last 12 months.
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Crude Oil: West Texas Intermediate(Source: US Energy Information Administration)
20
40
60
80
100
120
140Ja
n-04
Sep-
04M
ay-0
5Ja
n-06
Sep-
06M
ay-0
7Ja
n-08
Sep-
08M
ay-0
9Ja
n-10
Sep-
10M
ay-1
1Ja
n-12
Sep-
12M
ay-1
3Ja
n-14
Sep-
14M
ay-1
5Ja
n-16
Sep-
16M
ay-1
7Ja
n-18
Sep-
18
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Construction Cost w/o Energy(Source: BLS PPI & ABC)
-15%
-10%
-5%
0%
5%
10%In
puts
to C
onst
ruct
ion
Inpu
ts to
Non
res
Con
stru
ct
Plum
b Fi
xtur
es a
nd F
ittin
gs
Fabr
ic S
truct
Met
al P
rodu
cts
Iron
and
Stee
l
Stee
l Mills
Pro
duct
s
Non
ferro
us W
ire a
nd C
able
Softw
ood
Lum
ber
Con
cret
e Pr
oduc
ts
Prep
ared
Asp
halt
M/M
Y/Y
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Federal Funds Rate9 Short Rate Hikes Later
(Source: Board of Governors of Federal Reserve System)
0%
5%
10%
15%
20%
25%
Jan-
80O
ct-8
1Ju
l-83
Apr-8
5Ja
n-87
Oct
-88
Jul-9
0Ap
r-92
Jan-
94O
ct-9
5Ju
l-97
Apr-9
9Ja
n-01
Oct
-02
Jul-0
4Ap
r-06
Jan-
08O
ct-0
9Ju
l-11
Apr-1
3Ja
n-15
Oct
-16
Jul-1
8
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Real Federal Funds Rate:FFR less 6 month core PCE
(Source: Board of Governors of Federal Reserve System)
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
Jan-
90M
ay-9
1Se
p-92
Jan-
94M
ay-9
5Se
p-96
Jan-
98M
ay-9
9Se
p-00
Jan-
02M
ay-0
3Se
p-04
Jan-
06M
ay-0
7Se
p-08
Jan-
10M
ay-1
1Se
p-12
Jan-
14M
ay-1
5Se
p-16
Jan-
18
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Market’s FFR Outlook(Source: CME Group)
0%
20%
40%
60%
80%
100%
120%
Current 10/30/2019 12/11/2019 1/29/2020 3/18/2020 4/29/2020
50-75bps
75-100bps
100-125bps
125-150bps
150-175bps
175-200bps
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Market’s FFR Outlook:December 2018
(Source: CME Group)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
12/19/2018 1/30/2019 3/20/2019 5/1/2019 6/19/2019 7/31/2019 9/18/2019 10/30/2019 12/11/2019
200-225 bps
225-250 bps
250-275 bps
275 - 300 bps
300-325 bps
325-350 bps
350-375 bps
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Comments on LIBOR/SOFR
• LIBOR fading away?• SOFE is secured, based on actual
transactions.• Transitions on exiting contract will be
challenging.• Derivatives have longest exposure
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
10-Year Treasury Bonds(Source: Board of Governors of Federal Reserve System)
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%Ja
n-80
Oct
-81
Jul-8
3Ap
r-85
Jan-
87O
ct-8
8Ju
l-90
Apr-9
2Ja
n-94
Oct
-95
Jul-9
7Ap
r-99
Jan-
01O
ct-0
2Ju
l-04
Apr-0
6Ja
n-08
Oct
-09
Jul-1
1Ap
r-13
Jan-
15O
ct-1
6Ju
l-18
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
“PIIGS Revisited”(Source: European Central Bank)
0%
2%
4%
6%
8%
10%
12%
14%
Portugal Ireland Italy Greece Spain
Jun-15Nov-15Feb-16Oct-16Jun-17Sep-17Apr-18Aug-18Nov-18Apr-19
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Large Scale Asset Purchases(source: Federal Reserve System)
• QE1 (March 2009)– $1.25 T in MBS– $200B in Agencies– $300M in Treasuries
• QE2 (November 2010)– $600B in Treasuries
• Operation Twist– Swapped $667B in longs for shorts
• QE3 (September 2012)– $85B/month agency MBS & Treasuries– Taper begins December 2012
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Fed: Securities Held Outright
0
500000
1000000
1500000
2000000
2500000
3000000
3500000
4000000
4500000Ja
n-04
Sep-
04
May
-05
Jan-
06
Sep-
06
May
-07
Jan-
08
Sep-
08
May
-09
Jan-
10
Sep-
10
May
-11
Jan-
12
Sep-
12
May
-13
Jan-
14
Sep-
14
May
-15
Jan-
16
Sep-
16
May
-17
Jan-
18
Sep-
18
May
-19
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
2-10 Treasury Spread (bps)
-300
-200
-100
0
100
200
300
400
Jun-76N
ov-77Apr-79Sep-80Feb-82Jul-83D
ec-84M
ay-86O
ct-87M
ar-89Aug-90Jan-92Jun-93N
ov-94Apr-96Sep-97Feb-99Jul-00D
ec-01M
ay-03O
ct-04M
ar-06Aug-07Jan-09Jun-10N
ov-11Apr-13Sep-14Feb-16Jul-17D
ec-18
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Corp to Treasury Spread (bps)
0
100
200
300
400
500
600
700
Jan-98O
ct-98Jul-99Apr-00Jan-01O
ct-01Jul-02Apr-03Jan-04O
ct-04Jul-05Apr-06Jan-07O
ct-07Jul-08Apr-09Jan-10O
ct-10Jul-11Apr-12Jan-13O
ct-13Jul-14Apr-15Jan-16O
ct-16Jul-17Apr-18Jan-19
AAA-10yTBaa-10yT
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Flat (or “inverted) Yield Curves . . .
• Signals recession is coming?• Signals short rate too high?• Risk-Return less favorable? Not paid
for accepting duration• Eliminates “rolling down the curve”
offset to Interest Rate Risk• Flat and low means – reduced capital
gains opportunities?• Caution on negative convexitity
instruments.
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
CAPE vs 10 Year T-Bond(source: http://www.econ.yale.edu/~shiller/)
0
2
4
6
8
10
12
14
16
18
0
5
10
15
20
25
30
35
40
45
50Ja
n-60
Jan-
62Ja
n-64
Jan-
66Ja
n-68
Jan-
70Ja
n-72
Jan-
74Ja
n-76
Jan-
78Ja
n-80
Jan-
82Ja
n-84
Jan-
86Ja
n-88
Jan-
90Ja
n-92
Jan-
94Ja
n-96
Jan-
98Ja
n-00
Jan-
02Ja
n-04
Jan-
06Ja
n-08
Jan-
10Ja
n-12
Jan-
14Ja
n-16
Jan-
18
CAPE
10 Yr
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
CRE Loan Standards: Net Tightening(Source: Federal Reserve System, Senior Officers Lending Survey)
-20
-10
0
10
20
30
40
5020
13 Q
4
2014
Q1
2014
Q2
2014
Q3
2014
Q4
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
2016
Q3
2016
Q4
2017
Q1
2017
Q2
2017
Q3
2017
Q4
2018
Q1
2018
Q2
2018
Q3
2018
Q4
2019
Q1
2019
Q2
ADCNon-ResMultifam
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Total Debt Balance and Composition(source: Federal Reserve Bank of New York Credit Panel/Equifax)
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
MBA Mortgage Activity: Purchase & Refinance
(Source: Mortgage Bankers Association)
0
100
200
300
400
500
600
700
800
90019
97 -
Q1
1997
- Q
319
98 -
Q1
1998
- Q
319
99 -
Q1
1999
- Q
320
00 -
Q1
2000
- Q
320
01 -
Q1
2001
- Q
320
02 -
Q1
2002
- Q
320
03 -
Q1
2003
- Q
320
04 -
Q1
2004
- Q
320
05 -
Q1
2005
- Q
320
06 -
Q1
2006
- Q
320
07 -
Q1
2007
- Q
320
08 -
Q1
2008
- Q
320
09 -
Q1
2009
- Q
320
10 -
Q1
2010
- Q
320
11 -
Q1
2011
- Q
320
12 -
Q1
2012
- Q
320
13 -
Q1
2013
- Q
320
14 -
Q1
2014
- Q
320
15 -
Q1
2015
- Q
320
16 -
Q1
2016
- Q
320
17 -
Q1
2017
- Q
320
18 -
Q1
2018
- Q
320
19 -
Q1
Purch
Refi
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Quarterly Transition: 30-60 Days Late Mortgages(source: Federal Reserve Bank of New York Credit Panel/Equifax)
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
90+ Days Delinquent by Loan Type(source: Federal Reserve Bank of New York Credit Panel/Equifax)
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Charge Off Rates at Banks(source: Board of Governors of the Federal Reserve System)
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%Ja
n-91
May
-92
Sep-
93Ja
n-95
May
-96
Sep-
97Ja
n-99
May
-00
Sep-
01Ja
n-03
May
-04
Sep-
05Ja
n-07
May
-08
Sep-
09Ja
n-11
May
-12
Sep-
13Ja
n-15
May
-16
Sep-
17
Biz
CRE
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Construction Spending(Source: U.S. Bureau of Census)
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%Ja
n-03
Sep-
03M
ay-0
4Ja
n-05
Sep-
05M
ay-0
6Ja
n-07
Sep-
07M
ay-0
8Ja
n-09
Sep-
09M
ay-1
0Ja
n-11
Sep-
11M
ay-1
2Ja
n-13
Sep-
13M
ay-1
4Ja
n-15
Sep-
15M
ay-1
6Ja
n-17
Sep-
17M
ay-1
8Ja
n-19
Residential
Non-Residential
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Non-Residential Construction(Source: U.S. Bureau of Census)
-20%
-10%
0%
10%
20%
30%
40%
L
odgi
ng
O
ffice
C
omm
erci
al
H
ealth
car
e
E
duca
tiona
l
R
elig
ious
P
ublic
saf
ety
A
mus
e &
Rec
T
rans
porta
tion
C
omm
unic
atio
n
P
ower
H
ighw
ay a
nd s
treet
S
ewag
e &
was
te d
isp
W
ater
sup
ply
C
onse
rv a
nd d
evel
op
M
anuf
actu
ring
2012 2013
2014 2015
2016 2017
2018 2019
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
US Housing Permits: SF and Total(source: U.S. Bureau of Census)
200
500
800
1100
1400
1700
2000
2300Ja
n-98
Nov
-98
Sep-
99Ju
l-00
May
-01
Mar
-02
Jan-
03N
ov-0
3Se
p-04
Jul-0
5M
ay-0
6M
ar-0
7Ja
n-08
Nov
-08
Sep-
09Ju
l-10
May
-11
Mar
-12
Jan-
13N
ov-1
3Se
p-14
Jul-1
5M
ay-1
6M
ar-1
7Ja
n-18
TotalSF
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
US Housing Permits: Multi-family(Source: U.S. Bureau of Census)
0
100
200
300
400
500
600Ja
n-98
Sep-
98M
ay-9
9Ja
n-00
Sep-
00M
ay-0
1Ja
n-02
Sep-
02M
ay-0
3Ja
n-04
Sep-
04M
ay-0
5Ja
n-06
Sep-
06M
ay-0
7Ja
n-08
Sep-
08M
ay-0
9Ja
n-10
Sep-
10M
ay-1
1Ja
n-12
Sep-
12M
ay-1
3Ja
n-14
Sep-
14M
ay-1
5Ja
n-16
Sep-
16M
ay-1
7Ja
n-18
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Iowa Housing Permits: SF and Total(source: U.S. Bureau of Census)
2000
4000
6000
8000
10000
12000
14000
16000
18000Ja
n-98
Dec
-98
Nov
-99
Oct
-00
Sep-
01A
ug-0
2Ju
l-03
Jun-
04M
ay-0
5A
pr-0
6M
ar-0
7Fe
b-08
Jan-
09D
ec-0
9N
ov-1
0O
ct-1
1Se
p-12
Aug
-13
Jul-1
4Ju
n-15
May
-16
Apr
-17
Mar
-18
TotalSF
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Iowa Housing Permits: Multi-family(Source: U.S. Bureau of Census)
0
1000
2000
3000
4000
5000
6000Ja
n-98
Sep-
98M
ay-9
9Ja
n-00
Sep-
00M
ay-0
1Ja
n-02
Sep-
02M
ay-0
3Ja
n-04
Sep-
04M
ay-0
5Ja
n-06
Sep-
06M
ay-0
7Ja
n-08
Sep-
08M
ay-0
9Ja
n-10
Sep-
10M
ay-1
1Ja
n-12
Sep-
12M
ay-1
3Ja
n-14
Sep-
14M
ay-1
5Ja
n-16
Sep-
16M
ay-1
7Ja
n-18
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Home Prices & CPI(Source: S&P Case-Shiller & Bureau of Labor Statistics)
50
70
90
110
130
150
170
190
210Ja
n-00
Aug
-00
Mar
-01
Oct
-01
May
-02
Dec
-02
Jul-0
3Fe
b-04
Sep-
04A
pr-0
5N
ov-0
5Ju
n-06
Jan-
07A
ug-0
7M
ar-0
8O
ct-0
8M
ay-0
9D
ec-0
9Ju
l-10
Feb-
11Se
p-11
Apr
-12
Nov
-12
Jun-
13Ja
n-14
Aug
-14
Mar
-15
Oct
-15
May
-16
Dec
-16
CPICase-Shiller
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
House Prices: Net
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%C
olor
ado
Dis
trict
of C
olTe
xas
Nor
th D
akot
aSo
uth
Dak
ota
Tenn
esse
eW
ashi
ngto
nU
tah
Neb
rask
aId
aho
Ore
gon
Indi
ana
Okl
ahom
aKe
ntuc
kyKa
nsas
Sout
h C
arol
ina
Mon
tana
Iow
aN
orth
Car
olin
aG
eorg
iaH
awai
iM
isso
uri
Ohi
oW
isco
nsin
Min
neso
taLo
uisi
ana
Mic
higa
nW
est V
irgin
iaM
assa
chus
etts
Mai
neAl
aska
Penn
sylv
ania
Arka
nsas
New
Yor
kAl
abam
aW
yom
ing
Verm
ont
Virg
inia
New
Ham
pshi
reM
issi
ssip
piN
ew M
exic
oAr
izon
iaFl
orid
aR
hode
Isla
ndC
alifo
rnia
Nev
ada
Illin
ois
New
Jer
sey
Del
awar
eM
aryl
and
Con
nect
icut
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
CS/S&P Home Price Index(Source: S&P Case Shiller)
-80%
-60%
-40%
-20%
0%
20%
40%
60%D
enve
r
Dal
las
Seat
tle
Port
land
Bos
ton
Cha
rlotte
San
Fran
cisc
o
Nat
iona
l-US
Atla
nta
Los
Ang
eles
Com
posi
te-2
0
San
Die
go
Min
neap
olis
Cle
vela
nd
Det
roit
New
Yor
k
Was
hing
ton
Tam
pa
Mia
mi
Chi
cago
Phoe
nix
Las
Vega
s
Bust Net
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Home Prices: Iowa & Neighbors
-15%
-10%
-5%
0%
5%
10%
15%19
88 Q
119
89 Q
119
90 Q
119
91 Q
119
92 Q
119
93 Q
119
94 Q
119
95 Q
119
96 Q
119
97 Q
119
98 Q
119
99 Q
120
00 Q
120
01 Q
120
02 Q
120
03 Q
120
04 Q
120
05 Q
120
06 Q
120
07 Q
120
08 Q
120
09 Q
120
10 Q
120
11 Q
120
12 Q
120
13 Q
120
14 Q
120
15 Q
120
16 Q
120
17 Q
120
18 Q
1
IA
IL
MN
MO
NE
SD
WI
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Home Prices: Iowa
-10%
0%
10%
20%
30%
40%
50%
IOW
A
Ames
Ced
ar R
apid
s
Des
Moi
nes
Dub
uque
Iow
a C
ity
Om
aha-
Cou
ncil
Bluf
f
Qua
d C
ities
Siou
x C
ity
Wat
erlo
o-C
edar
Fal
ls
RecessRecoveryNet
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Household RE Equity(Source: Board of Governors of Federal Reserve System)
2000
4000
6000
8000
10000
12000
14000
16000
18000
Jan-
00N
ov-0
0Se
p-01
Jul-0
2M
ay-0
3M
ar-0
4Ja
n-05
Nov
-05
Sep-
06Ju
l-07
May
-08
Mar
-09
Jan-
10N
ov-1
0Se
p-11
Jul-1
2M
ay-1
3M
ar-1
4Ja
n-15
Nov
-15
Sep-
16Ju
l-17
May
-18
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
The Demographics: Boom & Bust(Source: CDC, US Bureau of Census)
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
2018 Migration(source: NAMS Report)
2019 ITA FALL CONFERENCE Des Moines, IA – October 3, 2019
Currents Issues in Fiscal Affairs• Federal:
– Shutdown – longest, done for now– 2017’s Biggest Play: Tax Reform – but 2.0 unlikely w/o SALT– Still in Play:, Keystone, Dodd-Frank, EPA, NLRB– Next in Play: Infrastructure – Always in Play: SCOTUS, ACA challenges– Ongoing Play: Revising Trade
» Bilateral vs Multilateral, Lumber deals and tariffs
• States:– Tax Reform Initiatives in other States slow, but SALT consideration weigh
in– Recent gains in manufacturing facilities due to “reshoring”– SE states domination biz location ranking, but not exclusive.
• Local:– RE valuation rising = tax revenues, fiscal distress moderating