Paul Traub
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Transcript of Paul Traub
Paul TraubFederal Reserve Bank of ChicagoMay 17, 2013
Economic UpdateCrain’s Executive Orientation
2Federal Reserve Bank of Chicago
Overview
May17, 2013
• The U.S. Economy
• Private Domestic Investment
• The U.S. Consumer
• Michigan Economy
3Federal Reserve Bank of Chicago
Billions Chained $2005, % Change Q/Q at SAAR
'00 '00 '01 '01 '02 '02 '03 '03 '04 '04 '05 '05 '06 '06 '07 '07 '08 '08 '09 '09 '10 '10 '11 '11 '12 '12 '1311,000
11,500
12,000
12,500
13,000
13,500
14,000
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0$ Billions
Q4 ‘07$13,326
Q1 ‘13$13,750
Q2 ‘09$12,701
Declined $625B (Peak to Trough, -4.7%)
May17, 2013
Q1 ‘132.5%
U.S. Real GDP
Q4 ‘08-8.9%
Percent
Source: BEA
4Federal Reserve Bank of ChicagoMay17, 2013
GDP Consumption Investment Trade Government-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
2.53.2
12.2
4.2
-4.1
U.S. Real GDP and ComponentsPercent Change from Preceding Period - Q4 ’12, SAAR
Nonresidential 2.1Residential 12.6
Percent
Source: Author’s calculations using data from the BEA
Exports 2.9Imports 5.4
5Federal Reserve Bank of ChicagoMay17, 2013
GDP Consumption Investment Exports Imports Government-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
18.4 20.2
27.3 27.1
38.4
12.8
3.2 4.6
-6.2
14.1
3.0
-0.9
Average '60 - '01 2007 Recession
Recession ComparisonsPercent Change 21 Quarters After the Start of the Recession
Percent
Source: Author’s calculations using data from the BEA
6Federal Reserve Bank of ChicagoMay17, 2013
Apr '12 Jan '13 Feb Mar Apr May1.0
1.5
2.0
2.5
3.0
3.5
2.3
2.01.9 1.9
2.12.0
2.6 2.62.8
2.7 2.7 2.7
2013 20142012
Percent Change Yr / Yr
U.S. Real GDP
Percent Consensus of the Blue Chip by Month
7Federal Reserve Bank of ChicagoMay17, 2013
2010 2011 2012 2013 20140.01.02.03.04.05.06.07.08.0
3.2
1.61.2 1.2
2.2
7.5
6.4
5.1 5.35.7
5.3
4.03.2 3.3
4.0
Advanced Economies Emerging and Developing EconomiesWorld
Global OutlookIMF Forecast for Growth (April ‘13), Percent Change Yr/Yr
Percent
Difference from January 2013 Outlook2013 -0.1 -0.2 -0.22014 0.0 -0.1 0.0
8Federal Reserve Bank of ChicagoMay17, 2013
Closing the Output Gap
'00 '00 '01 '02 '03 '03 '04 '05 '06 '06 '07 '08 '09 '09 '10 '11 '12 '12 '13 '14 '15 '1510,500
11,500
12,500
13,500
14,500
15,500
Potential Actual 2% Growth3% Growth 4% Growth 5% Growth
$ BillionsQ1 ‘16
Q1 ‘15Q3 ‘20
Actual / Projected Growth Rate Scenarios
Congressional Budget Office Projection
Output Gap -5.6%
Federal Reserve Bank of Chicago 9
Private Domestic Investment
May17, 2013
10Federal Reserve Bank of Chicago
Billions Chained $2005, % Change Q/Q at SAAR
'00 '00 '01 '01 '02 '02 '03 '03 '04 '04 '05 '05 '06 '06 '07 '07 '08 '08 '09 '09 '10 '10 '11 '11 '12 '12 '131,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
-60.0
-40.0
-20.0
0.0
20.0
40.0
60.0
80.0$ Billions
Q1 ‘06$2,266
Q1 ‘13$1,992
Q3 ‘09$1,395Declined $871B (Peak to Trough, -38.5%)
May17, 2013
Q1 ‘1312.2%
Total Gross Private Domestic Investment
Percent
Source: BEA
11Federal Reserve Bank of Chicago
Billions Chained $2005, % Change Q/Q at SAAR
'00 '00 '01 '01 '02 '02 '03 '03 '04 '04 '05 '05 '06 '06 '07 '07 '08 '08 '09 '09 '10 '10 '11 '11 '12 '12 '131,000
1,100
1,200
1,300
1,400
1,500
1,600
-40.0
-20.0
0.0
20.0
40.0
60.0
80.0$ Billions Q4 ‘07
$1,592Q1 ‘13$1,530
Q4 ‘09$1,216
Declined $376B (Peak to Trough, -23.6%)
May17, 2013
Q1 ‘132.1%
Nonresidential Private Domestic Investment
Percent
Source: BEA
12Federal Reserve Bank of Chicago
Index, 2000 = 100
'00 '00 '01 '01 '02 '02 '03 '03 '04 '04 '05 '05 '06 '06 '07 '07 '08 '08 '09 '09 '10 '10 '11 '11 '12 '12 '1340
50
60
70
80
90
100
110
120
130
140
Structures Equipment and software
IndexQ1 ‘13132.3
May17, 2013
Q1 ‘1382.7
Nonresidential Private Domestic Investment
Source: BEA
13Federal Reserve Bank of Chicago
Billions Chained $2005, % Change Q/Q at SAAR
'00 '00 '01 '01 '02 '02 '03 '03 '04 '04 '05 '05 '06 '06 '07 '07 '08 '08 '09 '09 '10 '10 '11 '11 '12 '12 '13200
300
400
500
600
700
800
-40.0
-20.0
0.0
20.0
40.0
60.0
80.0$ Billions Q4 ‘05
$1,592
Q1 ‘13$397.8
Q3 ‘10$322.2
Declined $461B (Peak to Trough, -58.9%)
May17, 2013
Q1 ‘1312.6%
Residential Private Domestic Investment
Percent
Source: BEA
Home Prices
14Federal Reserve Bank of ChicagoMay17, 2013
'01 '01 '02 '02 '03 '03 '04 '04 '05 '05 '06 '06 '07 '07 '08 '08 '09 '09 '10 '10 '11 '11 '12 '12 '13 '130.0
50.0
100.0
150.0
200.0
250.0
-30.0
-15.0
0.0
15.0
30.0
45.0
% Change Y/Y Case-Shiller
Case-Shiller 20-City Home Price Index, January 2000 = 100
9.4%
Index
Feb ’13149.8
% Change Y/Y
15Federal Reserve Bank of ChicagoMay17, 2013
'00 '00 '01 '01 '02 '02 '03 '03 '04 '04 '05 '05 '06 '06 '07 '07 '08 '08 '09 '09 '10 '10 '11 '11 '12 '12 '13 '130.0
40.0
80.0
120.0
160.0
200.0
Case Shiller 30 Yr - 0% Down 15 Yr - 0% Down30 Yr - 20% Down2 15 Yr - 20% Down Mortgage
Note: S&P Case-Shiller 20 City Home Price Index, 30 Year Mortgage at 8.1%, 15 year Mortgage at7.7 %.
Index
Home Price and Homeowner EquityUnited States - Index, January 2000 = 100
30 Year Mortgage Balance
15 Year Mortgages Balance
16Federal Reserve Bank of ChicagoMay17, 2013
Cash-Out RefinanceTotal Cash-out and 2nd Mortgages/HELOC Consolidation, Billions of Dollars
Source: Freddie Mac
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '120.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
Home Equity 2nd Mortgage/HELOC Consolidation
2000 – 2007, $1.7 Trillion / 71% of 20 Year Total
$Billions
17Federal Reserve Bank of ChicagoMay17, 2013
'07 '08 '09 '10 '11 '12 '1320.0
40.0
60.0
80.0
100.0
120.0
Case Shiller 30 Yr - 0% Down 15 Yr - 0% Down30 Yr - 20% Down2 15 Yr - 20% Down Mortgage
Note: S&P Case-Shiller 20 City Home Price Index, 30 Year Mortgage at 6.3%, 15 year Mortgage at 6.0%.
Home Price and Homeowner EquityUnited States - Index, January 2007 = 100
30 Year Mortgage Balance
15 Year Mortgages Balance
18Federal Reserve Bank of ChicagoMay17, 2013
Own versus RentCPI – Primary Residence, Index 2007 = 100, Jan ‘07 – Mar ‘13
'07 '07 '07 '07 '08 '08 '08 '08 '09 '09 '09 '09 '10 '10 '10 '10 '11 '11 '11 '11 '12 '12 '12 '12 '13 '1390.0
95.0
100.0
105.0
110.0
115.0
Rent of primary residenceOwners' equivalent rent of primary residence
Index
Source: Bureau of Labor Statistics
U.S. Housing Starts and Building Permits
19Federal Reserve Bank of ChicagoMay17, 2013
'00'00'01'01'02'02'03'03'04'04'05'05'06'06'07'07'08'08'09'09'10'10'11'11'12'12'130
500
1,000
1,500
2,000
2,500
Starts Permits
Thousands of Units, SAAR
1,036
907
Thousands
Mar ‘13
Source: U.S. Census Bureau
Federal Reserve Bank of Chicago 20
U.S. Consumer
May17, 2013
Real Disposable Personal Income & Savings Rate
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
Income Savings Rate
21Federal Reserve Bank of Chicago
Percent
Percent Change Year/Year, Percent of DPI
May17, 2013
Mar ’132.7%
1.1%
Source: BEA
May ‘09-4.9%
'62 '63 '65 '67 '69 '71 '73 '74 '76 '78 '80 '82 '84 '85 '87 '89 '91 '93 '95 '96 '98 '00 '02 '04 '06 '07 '09 '11 '1310.0
13.0
16.0
19.0
22.0
25.0
28.0
Total Consumer Credit
22Federal Reserve Bank of Chicago
Percent
May17, 2013
Revolving and Non-revolving Credit as % of DPI
Feb ’1323.2%
'80 '81 '82 '83 '85 '86 '87 '88 '90 '91 '92 '93 '95 '96 '97 '98 '00 '01 '02 '03 '05 '06 '07 '08 '10 '11 '128.0
10.0
12.0
14.0
16.0
18.0
20.0
Debt Service Ratio Financial Obligation Ratio
Debt Service & Financial Obligation Ratios
23Federal Reserve Bank of Chicago
15.5%
Percent
10.4%
May17, 2013
Percent of Disposable Personal Income
Q4 ‘12
Inflation – CPI Price Index
24Federal Reserve Bank of ChicagoMay17, 2013
'00'00'01'01'02'02'03'03'04'04'05'05'06'06'07'07'08'08'09'09'10'10'11'11'12'12'13'13-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Percent Change Yr / Yr
CPI - CoreMar ‘13
1.9%
CPI – All ItemsMar ‘13
1.5%
Percent
25Federal Reserve Bank of Chicago
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '1362.0
63.0
64.0
65.0
66.0
67.0
68.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Participation Rate U.S.
Percent
Apr ‘13
May17, 2013
U.S. Unemployment & Participation Rates
63.3
Percent – Seasonally Adjusted
Source: BLS
7.5%
26Federal Reserve Bank of ChicagoMay17, 2013
Education & Health Services
Leisure & Hospitality
Professional & Business Services
Mining & Logging
Federal Government
Other Services
State Government
Information
Financial Activities
Local Government
Trade, Transportation & Utilities
Construction
Manufacturing
(2,000.0) (1,500.0) (1,000.0) (500.0) 0.0 500.0 1,000.0 1,500.0 2,000.0
2,011.0
534.0
391.0
118.0
31.0
(51.0)
(95.0)
(335.0)
(408.0)
(480.0)
(877.0)
(1,686.0)
(1,735.0)
U.S. Nonfarm Payroll Employment by SectorEmployment Change Jan ‘08 – April ‘13, Thousands of Jobs
Source: U.S. Department of Labor
Total -2,582, -1.9%
27Federal Reserve Bank of ChicagoMay17, 2013
Households Net Worth
'80'81'82'83'85'86'87'88'90'91'92'93'95'96'97'98'00'01'02'03'05'06'07'08'10'11'120.0
10,000.0
20,000.0
30,000.0
40,000.0
50,000.0
60,000.0
70,000.0
80,000.0
Home Equity Financial and Other
-$1.3
Trillions of Dollars, Q1 ‘80 to Q4 ‘12
Total DeclineQ3 ‘07 – Q1 ‘09 -$16.0
Q3 ‘07$67.4
Source: Federal Reserve Z.1 Statistical Release ,Table B100, Households and Nonprofit Organizations
Q4 ‘12$66.1
Consumer Sentiment
28Federal Reserve Bank of ChicagoMay17, 2013
University of MichiganIndex
'82 '87 '92 '97 '02 '07 '1220
40
60
80
100
120
140
Apr ’1376.4
January ‘00112.0
Source: Thomson Reuters / University of Michigan
Federal Reserve Bank of Chicago 29
Michigan Economy
May17, 2013
30Federal Reserve Bank of ChicagoMay17, 2013
1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2013 YTD
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
10,000,000
11,000,000
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
16.1
30.532.0
8.5
21.222.8
13.4
4.4
0.4
6.9
-0.6
0.1
21.0
15.0 16.2
7.3
14.5
18.5
13.311.5
9.8
13.2
9.7
2.2
MI - % Chg. (Right) U.S. _ % Chg. MI Population (Left)
Thousands Percent
1910 to 2010 by Decade, Percent Change
Michigan Population
Source: U.S. Census Bureau
31Federal Reserve Bank of ChicagoMay17, 2013
Source: U.S. Census Bureau / Haver Analytics
'50 '53 '56 '59 '62 '65 '68 '71 '74 '77 '80 '83 '86 '89 '92 '95 '98 '01 '04 '07 '105,000.0
10,000.0
15,000.0
20,000.0
25,000.0
30,000.0
35,000.0
40,000.0
Michigan U.S.
Real Per Capita IncomeThousands of $2005
$Thousands2012$36.9
$32.4
20092009
20092009
20102010
20102010
20112011
20112011
20122012
20122012
2013-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
Manufacturing Construction Services Consumer Index
32Federal Reserve Bank of Chicago
Index
Sectoral Contribution
Mar ‘130.27
May17, 2013
Midwest Economic Index
Source: FRB of Chicago
20092009
20092009
20102010
20102010
20112011
20112011
20122012
20122012
2013-1.0
-0.8
-0.6
-0.4
-0.2
0.0
0.2
0.4
Mfg. Const. Svcs. Consumer Index
33Federal Reserve Bank of Chicago
Index
Michigan’s Contribution
Mar ‘130.10
May17, 2013
Midwest Economic Index
Source: FRB of Chicago
20092009
20092009
20092009
20102010
20102010
20102010
20112011
20112011
20112011
20122012
20122012
20122012
20132013
-0.4
-0.3
-0.2
-0.1
0.0
0.1
0.2
0.3
0.4
0.5
Mfg. Const. Svcs. Consumer Index
34Federal Reserve Bank of Chicago
Index
Michigan’s Contribution
Mar ‘130.13
May17, 2013
Relative Midwest Economic Index
Source: FRB of Chicago
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12125,000.0
175,000.0
225,000.0
275,000.0
325,000.0
375,000.0
425,000.0
-12.0
-8.0
-4.0
0.0
4.0
8.0
12.0
4.9
2.3
% Chg. Yr/Yr GSP GSP Fcst
35Federal Reserve Bank of Chicago
2005$
Billions of 2005$, Percent Change Year / Year
2012$341
May17, 2013
1.2
Percent
Source: Haver Analytics / FRB of Chicago
Michigan Real Gross State Product
2003$379
20092009
20092009
20102010
20102010
20112011
20112011
20122012
20122012
20132013
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
-40.0
-20.0
0.0
20.0
40.0
60.0
80.0
100.0
36Federal Reserve Bank of Chicago
2000$
Mar ‘132.95
May17, 2013
Michigan Exports of Manufactures Goods
Source: Haver Analytics
Billions of 2000$, Percent Change Year / Year
Percent
-8.7
37Federal Reserve Bank of ChicagoMay17, 2013
'07 '07 '07 '08 '08 '08 '09 '09 '09 '10 '10 '10 '11 '11 '11 '12 '12 '12 '13 '13 '130.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
Michigan Unemployment Rate
Mar ’13
8.5
Unemployment rate & Household Employment – S.A.
Source: BLS
Percent
Jan Feb Mar-20.0
-10.0
0.0
10.0
20.0
30.0
40.0
Private Government Cumulative Total YTD
38Federal Reserve Bank of Chicago
(000)’s
28.5
May17, 2013
Michigan Nonfarm Payroll – 2013
Source: BLS / Haver Analytics
Establishment Survey - SA
-5.1-1.5
25.0
35.1
14.4
-4.3
3.9
21.1
39Federal Reserve Bank of ChicagoMay17, 2013
Education & Health Services
State Government
Professional & Business Services
Mining & Logging
Federal Government
Other Services
Financial Activities
Information
Leisure & Hospitality
Construction
Trade, Transportation & Utilities
Manufacturing
Local Government
(100.0) (80.0) (60.0) (40.0) (20.0) 0.0 20.0 40.0
34.3
12.0
10.0
0.2
(2.2)
(6.5)
(8.0)
(9.9)
(14.4)
(36.6)
(49.8)
(53.7)
(54.2)
Michigan Nonfarm Payroll Employment by SectorEmployment Change Jan ‘08 – Mar ‘13, Thousands of Jobs
Source: U.S. Department of Labor and Haver Analytics
Total -178.8, -4.2%
40Federal Reserve Bank of ChicagoMay17, 2013
'00'00'01'01'02'02'03'03'04'04'05'05'06'06'07'07'08'08'09'09'10'10'11'11'12'12'130.0
4.0
8.0
12.0
16.0
20.0
24.0
28.0
Detroit Grand Rapids Ann Arbor U.S.
Unemployment Rate
Mar ‘1317.5
8.3
5.4
Unemployment Rate for Select Cities – N.S.A.
Source: BLS
Percent
'05 '05 '06 '06 '07 '07 '08 '08 '09 '09 '10 '10 '11 '11 '12 '1240.050.060.070.080.090.0
100.0110.0120.0130.0140.0
Michigan Detroit
41Federal Reserve Bank of Chicago
Index
Q4 ‘1294.9
79.9
May17, 2013
FHFA Home Prices
Source: Haver Analytics
Index, 2000 = 100
42Federal Reserve Bank of ChicagoMay17, 2013
Home Price and Homeowner EquityMichigan and Detroit - Index, Q1 2000 = 100
'00 '00 '01 '02 '03 '03 '04 '05 '06 '06 '07 '08 '09 '09 '10 '11 '12 '12 '130.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
Michigan Detroit 30 Yr - 0% Down30 Yr - 20% Down 15 Yr - 0% Down2 15 Yr - 20% Down Mortgage
Note: FHFA Home Price Index, 30 Year Mortgage at 8.1%, 15 year Mortgage at 7.7%.
Index
30 Year Mortgage Balance
15 Year Mortgages Balance
43Federal Reserve Bank of ChicagoMay17, 2013
'07 '07 '07 '07 '08 '08 '08 '08 '09 '09 '09 '09 '10 '10 '10 '10 '11 '11 '11 '11 '12 '12 '12 '12 '13 '13 '13 '1340.0
50.0
60.0
70.0
80.0
90.0
100.0
110.0
120.0
Michigan Detroit 30 Yr - 0% Down30 Yr - 20% Down 15 Yr - 0% Down2 15 Yr - 20% Down Mortgage
30 Year Mortgage Balance
15 Year Mortgages Balance
Index
Note: FHFA Home Price Index, 30 Year Mortgage at 6.3%, 15 year Mortgage at 6.0%.
Home Price and Homeowner EquityMichigan and Detroit - Index, Q1 2007 = 100
'00 '00 '01 '01 '02 '02 '03 '03 '04 '04 '05 '05 '06 '06 '07 '07 '08 '08 '09 '09 '10 '10 '11 '11 '12 '12 '130.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
United States Michigan
44Federal Reserve Bank of Chicago
Index
Mar ‘1365.8
25.7
May17, 2013
Housing Starts
Source: U.S. Census / Haver Analytics
Index, 2000 = 100
45Federal Reserve Bank of ChicagoMay17, 2013
'06'06'06'06'07'07'07'07'08'08'08'08'09'09'09'09'10'10'10'10'11'11'11'11'12'12'12'12'13'13'13'13'14'14'14'146.0
8.0
10.0
12.0
14.0
16.0
18.0
Aug ’0914.6
Apr ‘1314.9
Apr ’099.2
SAAR and Annual Sales
Millions
U.S. Light Vehicle Sales
Cash for Clunkers
Source: Ward’s Automotive and BEA
16.516.1
13.2
10.4
11.6
12.7
14.415.4
15.9
May Blue Chip Consensus
46Federal Reserve Bank of ChicagoMay17, 2013
“Detroit 3” N.A. Auto CapacityCalendar Year 2005 - 2012
'05 '06 '07 '08 '09 '10 '11 '12 '130.0
2,500,000.0
5,000,000.0
7,500,000.0
10,000,000.0
12,500,000.0
15,000,000.0
40.0
45.0
50.0
55.0
60.0
65.0
70.0
Chrysler Ford G.M. N.A. Share
PercentMillions
Source: Ward’s Automotive
Detroit 3 Chrysler, Ford and General Motors
13.5M, 67.8%
8.9M, 53.9%
47Federal Reserve Bank of ChicagoMay17, 2013
“Detroit 3” L.V. Market ShareCalendar Year 2005 – April, 2013
'05 '06 '07 '08 '09 '10 '11 '12 '13 Apr. YTD
0.0
10.0
20.0
30.0
40.0
50.0
60.0 56.853.6
51.047.4
44.1 45.0 46.944.6 46.0
Percent
Source: Ward’s Automotive
Detroit 3: Chrysler, Ford and General Motors
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