The views described here are my own, and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. The analysis presented herein is based on data released through May 11, 2017.

The Economic and Housing SituationsAndy Haughwout, Research & Statistics GroupPresentation to the Actuarial Club of Hartford and SpringfieldMay 16, 2017

NATIONAL ECONOMY

-10

-8

-6

-4

-2

0

2

4

6

8

10

-10

-8

-6

-4

-2

0

2

4

6

8

10

2000 2002 2004 2006 2008 2010 2012 2014 2016

GDP Growth% Change – Annual Rate

Source: Bureau of Economic Analysis via Haver Analytics

% Change – Annual Rate

11

12

13

14

15

16

17

18

19

20

11

12

13

14

15

16

17

18

19

20

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Potential GDP

GDP

2000Q1 to 2007Q4: 2.5% Growth Rate

2009Q2 to 2017Q1: 2.1% Growth Rate

Trillions of 2009 US$ Trillions of 2009 US$

Time Period PotentialGDP Growth

2000 - 2005 2.9%

2005 – 2010 1.7%

2010 – 2015 1.4%

2015 – 2020 1.7%

Source: Bureau of Economic Analysis, Congressional Budget Office via Haver Analytics Note: Shading shows NBER recessions.

58

60

62

64

66

2

4

6

8

10

12

2006 2008 2010 2012 2014 2016

Labor Market IndicatorsPercent Percent

Source: Bureau of Labor Statistics via Haver Analytics Note: Shading shows NBER recessions.

Unemployment Rate(Left Axis)

Labor Force Participation Rate

(Right Axis)

Employment to Population Ratio

(Right Axis)

-10

-8

-6

-4

-2

0

2

4

-10

-8

-6

-4

-2

0

2

4

2000 2002 2004 2006 2008 2010 2012 2014 2016

12 Month % Change

Payroll Employment and Aggregate Hours12 Month % Change

Source: Bureau of Labor Statisticsvia Haver Analytics Note: Shading shows NBER recessions.

Payroll Employment

Aggregate Hours

-2

-1

0

1

2

3

4

5

-2

-1

0

1

2

3

4

5

2000 2002 2004 2006 2008 2010 2012 2014 2016

12 Month % Change 12 Month % Change

Source: Bureau of Economic Analysis via Haver Analytics Note: Shading shows NBER recessions.

Total PCE

Core PCE

FOMC Objective

PCE Deflator

REGIONAL ECONOMY

Private-Sector Job TrendsPercent Change From Previous Peak to March 2017

AL

Down Flat Up to 3% Up 3% to 7% Up More Than 7%

Source: Bureau of Labor Statistics and Moody's Economy.com. PRIVEMPLOYMAP1 11MAY2017

AKFL

HI

PR

AZAR

CA CO

CT

NJ

DE

MD

GA

ID

IL IN

IA

KSKY

LA

ME

VT

NH

MA

RIMI

MN

MS

MO

MT

NENV

NM

NY

NC

ND

OH

OK

OR

PA

SC

SD

TN

TX

UT

VA

WA

WV

WI

WY

Private-Sector Job TrendsYear-Over-Year Percent Change as of March 2017

AL

Down Flat Up to 1.25% Up 1.25% to 2% Up More Than 2%

Source: Bureau of Labor Statistics and Moody's Economy.com. PRIVEMPLOYMAP2 11MAY2017

AKFL

HI

PR

AZAR

CA CO

CT

NJ

DE

MD

GA

ID

IL IN

IA

KSKY

LA

ME

VT

NH

MA

RIMI

MN

MS

MO

MT

NENV

NM

NY

NC

ND

OH

OK

OR

PA

SC

SD

TN

TX

UT

VA

WA

WV

WI

WY

Unemployment RatesSeasonally Adjusted, March 2017

At Least 1% Lower Than U.S. Within 1%, Plus or Minus, of U.S. At least 1% More Than U.S.

AL

Source: Bureau of Labor Statistics and Moody's Economy.com. UNEMPLOYMENTMAP1 11MAY2017

AKFL

HI

PR

AZAR

CA CO

CT

NJ

DE

MD

GA

ID

IL IN

IA

KSKY

LA

ME

VT

NH

MA

RIMI

MN

MS

MO

MT

NENV

NM

NY

NC

ND

OH

OK

OR

PA

SC

SD

TN

TX

UT

VA

WA

WV

WI

WY

60

70

80

90

100

110

2006 2007 2008 2009

Shading indicates NBER recession

2010 2011 2012 2013 2014 2015 2016 2017 2018

United States

NYC Metro

Fairfield

Westchester

Rockland

Home PricesCoreLogic Home Price Index, Seasonally Adjusted

Index (Mar2006=100)120

Source: CoreLogic Home Price Index (including distressed sales). HPI_3 11MAY2017

Mar

HOUSING MARKET

Housing Starts

0

400

800

1200

1600

2000

0

50

100

150

200

250

300

350

400

450

2000 2002 2004 2006 2008 2010 2012 2014 2016

Thousands, 3 MMA Thousands, 3 MMA

Source: Census Bureau via Haver Analytics Note: Shading shows NBER recessions.

Total Multifamily(Left Axis)

Single Family(Right Axis)

0

1000

2000

3000

4000

5000

6000

7000

0

200

400

600

800

1000

1200

1400

2000 2002 2004 2006 2008 2010 2012 2014 2016

New Single Family Sales(Left Axis)

Thousands Thousands

Source: Census and National Association of Realtors via Haver Analytics

Existing Single Family Sales

(Right Axis)

New and Existing Home Sales

Note: Shading shows NBER recessions.

Single Family Housing Market (through EOY 2016)

3

4

5

6

7

8

9

10

11

12

13

-20

-15

-10

-5

0

5

10

15

20

25

2000 2002 2004 2006 2008 2010 2012 2014 2016

12 Month % Change Months

Source: CoreLogic, National Association of Realtors via Haver Analytics Note: Shading shows NBER recessions.

Single Family House Price Index

(Left Axis)

Months’ Supply

(Right Axis)

“Normal” Range for Months’ Supply

HOUSEHOLD FINANCE AND

HOMEOWNERSHIP

0

3

6

9

12

15

0

3

6

9

12

15Mortgage HE Revolving Auto Loan Credit Card Student Loan Other

Trillions of Dollars

Total Debt Balance and its Composition Trillions of Dollars

Source: FRBNY Consumer Credit Panel/Equifax

2016Q4 Total: $12.58 Trillion

2016Q3 Total: $12.35 Trillion

(3%)

(10%)

(6%)

(9%)

(4%)

(67%)

Median

25th percentile

10th percentile

500

550

600

650

700

750

800

500

550

600

650

700

750

800

03:Q1 05:Q1 07:Q1 09:Q1 11:Q1 13:Q1 15:Q1

Credit Score at Origination: Mortgages*Score Score

Source: FRBNY Consumer Credit Panel/Equifax* Credit Score is Equifax Riskscore 3.0; mortgages include first-liens only.

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,00000 -

Q1

00 -

Q3

01 -

Q1

01 -

Q3

02 -

Q1

02 -

Q3

03 -

Q1

03 -

Q3

04 -

Q1

04 -

Q3

05 -

Q1

05 -

Q3

06 -

Q1

06 -

Q3

07 -

Q1

07 -

Q3

08 -

Q1

08 -

Q3

09 -

Q1

09 -

Q3

10 -

Q1

10 -

Q3

11 -

Q1

11 -

Q3

12 -

Q1

12 -

Q3

13 -

Q1

13 -

Q3

14 -

Q1

14 -

Q3

15 -

Q1

15 -

Q3

16 -

Q1

16 -

Q3

Owners Equity ($Billion, Left) Owners Equity (% of value, Right)

Owners’ Equity Has Been Growing

Source: Federal Reserve Board

0

200

400

600

800

1,000

1,200

1,400

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Total student debt by age group

up to 29

30 to 39

40 to 49

50 to 59

60+

Billions of Dollars

Age:

Student Debt Totaled $1.3 Trillion in 2016, Up

170% from 2006

Source: New York Fed Consumer Credit Panel/Equifax

Delinquency and Default Associated with Lower Credit Scores

and Homeownership Rates at Age 30

25

744

667

596

549

500

550

600

650

700

750

800

never late(52%)

ever 30-90days late

(5%)

ever 120+days late

(12%)

everdefaulted

(31%)

Median Credit Score in 2016*

36%

18%

12%

3%

never late(52%)

ever 30-90days late

(5%)

ever 120+days late

(12%)

everdefaulted

(31%)

Homeownership in 2016*

* Among borrowers who were age 30 in 2016 and left school between 2006-2011.

Source: New York Fed Consumer Credit Panel/Equifax

REFERENCE

0

1

2

3

4

0

1

2

3

4

2007 2009 2011 2013 2015 2017

Annual % change Annual % change

Source: Bureau of Labor Statistics via Haver Analytics Note: Shading shows NBER recessions.

Average Hourly Earnings

Employment Cost Index

Growth of Average Hourly Earnings and ECI

Housing leverage distribution approaching 2005

0

10

20

30

40

50

60

70

80

90

100%

of m

ort

gaged p

ropert

ies

2005

q220

06q2

2007

q220

08q2

2009

q220

10q2

2011

q220

12q2

2013

q220

14q2

2015

q220

16q2

CLTV < 60% CLTV 60 - 80%

CLTV 80 - 100% CLTV 100 - 120%

CLTV > 120%

Source: A. Fuster and A. Haughwout, “Tracking and Stress-Testing US Household Leverage,” 2016, updated.

28

Super-prime share rises as subprime falls

Source: New York Fed Consumer Credit Panel/Equifax

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

2003 2008 2016

Total Balances By Credit Score

<620

620-659

660-719

720-759

760+

Credit Score:

23.7%

29.9%

21.0%

8.9%

16.6%

33.9%

24.6%

15.7%

6.8%

19.0%

41.3%

23.0%

15.9%

6.6%

13.2%

$12.6 Trillion

Trillions of Dollars

$8.1 Trillion

$12.7 Trillion

*data for 4th quarter of each year; credit scores are Equifax Riskscore 3.0 29

As credit quality improves, delinquency rates fall

0

5

10

15

Credit Card

Mortgage

Auto Loan

HELOC

Percent of Balance 90+ Days Delinquent

Percent

Source: New York Fed Consumer Credit Panel/Equifax

Student Loan

30

Higher Default Rates Among Borrowers

from Lower Income Areas

Source: New York Fed Consumer Credit Panel/Equifax, Internal Revenue Service

35%

24%

18%

13%

0%

5%

10%

15%

20%

25%

30%

35%

40%

less than $40k $40k-$60k $60k-$80k $80k+Area Average Income

5 year default rate by income area (2006-2011 cohorts)