Presented by Harry M. Davis, Ph.D [email protected] NCBA Professor of Banking and Economist...
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Transcript of Presented by Harry M. Davis, Ph.D [email protected] NCBA Professor of Banking and Economist...
“Should We Be Happy About The U.S. Economy?” N.C. Affordable Housing Conference
Raleigh Convention CenterRaleigh, North Carolina
Presented by
Harry M. Davis, [email protected]
NCBA Professor of Banking and EconomistAppalachian State University
October 29, 2015
The U.S. Economy
Recovery is almost 6.5 years old
GDP annualized growth of .6% in the first quarter and 3.9% in the second quarter
This recovery is the slowest in the post WWII period
States has been adding much less to GDP than in past
The U.S. Economy
The FED has over estimated the rate of economic each quarter since the “Great Recession”
The rate of productivity growth is the slowest for a recovery in 60 years
Consumers
Consumer spending is growing about 2.5% a year
Real per Capita after-tax income and real average weekly earnings were flat in 2012 and 2013
Real median household income was $57,342 in 2008, while in July 2015 the figure was $55,132
U.S. Economy - Positive
Stock markets are still near record levels - earning continue to surprise on the up side
Corporate profits driven somewhat by lower energy prices
Housing
Existing home sales have been above 5 million (annualized) for the last 5 months and almost reached 6 million in July
Residential construction is at the highest rate since 2008. Multi-family continue to be above average as a % of total construction but that percentage is dropping
Household formations and millennials
Existing home prices up about 5% y/y
U.S. Employment - PositiveUnemployment rate for September was 5.1% - the
lowest in over 7 years
Created only 136,000 new jobs in August followed 142,000 in September
Created an average of 260,000 new jobs per month in 2014
The labor participation rate fell to 62.4% a greater than 38 year low in September - 350,000 individuals left the labor force
Employment
Up until 1999, baby boomers reached adulthood and entered the workforce along with a surge in women working
The labor force grew faster than the adult population – fueled economic growth and per capita income
The labor participation rate (LPR) peaked in 1999
Employment
Bureau of Labor Statistics estimates 5.8 million jobs unfilled due to lack of qualified workers
Areas include: software engineers, nurses and technicians, welders and machinists, general engineers
Education system and business community need to interact much more
NC Employment Situation
August unemployment rate of 5.9%
Grew 110,200 nonfarm jobs in last 12 months
Since the “Great Recession” nearly 60% of all new jobs were created in the Charlotte and Raleigh metro areas
N.C. per capita income as % of U.S.
Age Does Matter in the U.S.
In 1959 people 65 and older had the highest rate of poverty (35%)
Today that group has the lowest rate at 9.5%
The poorest Americans today are the youngest – those 35 and under
Spending in all categories except healthcare peaks at age 45
The FEDIn a box
All Central Bankers are looking for one thing which is not around – a 2% rate of inflation
FED should forget about raising rates until the 10-year bond rate rises above 2.4% and stays there for more than 30 days
Energy
Pump prices lowest in 10 years
Each adult auto owner has received a $800-$1,000 tax free gift from lower gas prices
North America – the center of the energy universe
What To Do?!
Regulation Czar – moratorium on new regulations
Build Infrastructure – regulations
Immigration reform
Simplify and flatten the tax code for businesses and individuals
The Outlook
GDP will grow about 2.75% for the year
We are at full employment forgetting the labor participation rate and the number under employed
Income and salary growth will remain tepid - even so, consumer spending growth will increase to 2.75%
U.S. is the pick of the litter - as the growth in numerous countries is slowing
The Outlook Housing will continue to be a bright spot -
with a slight shift in construction to single family homes
The FED will raise rates very little - not even in 2016
NC’s unemployment rate will drop close to 5% in the next 12 months
The state will create about 100,000 next year, down from the level for 2014 and 2015