Wisconsin is Open for Business
October 20, 2011
StateStateof of
Wisconsin’s Wisconsin’s EconomyEconomy
1
Wisconsin Freight Rail Day
2011
Dennis WintersChief, Office of Economic Advisors
Department of Workforce DevelopmentOctober 20, 2011
State of Wisconsin’s EconomyState of Wisconsin’s Economy
Wisconsin Freight Rail Day
2011
Wisconsin is Open for Business
October 20, 2011
StateStateof of
Wisconsin’s Wisconsin’s EconomyEconomy
2
Wisconsin Freight Rail Day
2011
FIRST OF ALL, YOU NEED TO UNDERSTAND WISCONSIN’S ECONOMY
Wisconsin is Open for Business
October 20, 2011
StateStateof of
Wisconsin’s Wisconsin’s EconomyEconomy
3
Wisconsin Freight Rail Day
2011
G.D.P. Grows at Tepid 1.9% Pace Despite Stimulus
The New York Times, July 31, 2008
U.S. Economy Grows at Solid Pace in 2nd Quarter Washington Post, July 31, 2008
Yes, Virginia, It is a Recession
Business Week, July 31, 2008
Still on the right road – The American economy has often defied predictions of its demise. It has
done so again.
The Economist, July 31, 2008
CONFUSED? NO WONDERWHO DO YOU BELIEVE
Wisconsin is Open for Business
October 20, 2011
StateStateof of
Wisconsin’s Wisconsin’s EconomyEconomy
4
Wisconsin Freight Rail Day
2011
CONFUSED? NO WONDERWHICH DO YOU BELIEVE
Home price dip extends to 4th month9:20am: Case-Shiller index declines 0.4% in January as market recovery appears to have stalled.
CNN, March 30, 2010
Home Prices in 20 U.S. Cities Unexpectedly Climb 0.3%, Case-Shiller Says ,Home prices in 20 U.S. cities unexpectedly rose in January, indicating the housing market is stabilizing as the economy expands.
Bloomberg, March 30, 2010
Wisconsin is Open for Business
October 20, 2011
StateStateof of
Wisconsin’s Wisconsin’s EconomyEconomy
5
Wisconsin Freight Rail Day
2011
INDUSTRIAL PRODUCTION RISES FOR FOURTH MONTH• INDUSTRIAL PRODUCTION IN THE U.S. UNEXPECTEDLY ROSE IN
AUGUST, SIGNALING MANUFACTURING WILL SUPPORT THE WORLD’S LARGEST ECONOMY.
Bloomberg, September 14, 2011http://www.bloomberg.com/news/economy/
U.S. JOBLESS CLAIMS ROSE TO HIGHEST SINCE JUNE • APPLICATIONS FOR U.S. UNEMPLOYMENT BENEFITS
UNEXPECTEDLY ROSE LAST WEEK TO THE HIGHEST LEVEL SINCE THE END OF JUNE, UNDERSCORING THE RISK OF FURTHER WEAKNESS IN THE LABOR MARKET.
Bloomberg, September 14, 2011http://www.bloomberg.com/news/economy/
CONFUSED? NO WONDERWHAT DO YOU BELIEVE
Wisconsin is Open for Business
October 20, 2011
StateStateof of
Wisconsin’s Wisconsin’s EconomyEconomy
6
Wisconsin Freight Rail Day
2011
TIMINGIS EVERYTHING
“We hope to become manifestly, aggressively, stunningly bullish of equities,” Dennis Gartman, hedge fund manager and author of The Gartman Letter, said in his Monday commentary. “Until then, we are sellers of rallies.”
–USA TODAY, October 8, 2011.
Wisconsin is Open for Business
October 20, 2011
StateStateof of
Wisconsin’s Wisconsin’s EconomyEconomy
7
Wisconsin Freight Rail Day
2011
• GDP
• DJIA
• JOBS
HOW DO YOU SPELLRECOVERY?
Wisconsin is Open for Business
October 20, 2011
StateStateof of
Wisconsin’s Wisconsin’s EconomyEconomy
8
Wisconsin Freight Rail Day
2011
Real GDP Growth
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
2000q1 2002q1 2004q1 2006q1 2008q1 2010q1 2012q1
Pe
rce
nt
Q/Q
Ch
an
ge
Source: Bureau of Economic Analysis, OEA
WHAT IS RECOVERY?GDP; Eight positive quarters, Q2 up 1.3%
Wisconsin is Open for Business
October 20, 2011
StateStateof of
Wisconsin’s Wisconsin’s EconomyEconomy
9
Wisconsin Freight Rail Day
2011
Real Gross Domestic Product
$12,500
$12,600
$12,700
$12,800
$12,900
$13,000
$13,100
$13,200
$13,300
$13,400
$13,500
200
6-I
200
6-II
200
6-III
200
6-IV
200
7-I
200
7-II
200
7-III
200
7-IV
200
8-I
200
8-II
200
8-III
200
8-IV
200
9-I
200
9-II
200
9-III
200
9-IV
201
0-I
201
0-II
201
0-III
201
0-IV
2011
-I
2011
-II
2011
-III
2011
-IV
Bill
ions
Source: BEA, OEA
BUSINESS CYCLE SEVERESTILL NOT RECOVERED AFTER EIGHT QUARTERS
Source: http://seekingalpha.com/article/115525-the-scariest-chart-ever?source=article_sb_popular
Wisconsin is Open for Business
October 20, 2011
StateStateof of
Wisconsin’s Wisconsin’s EconomyEconomy
11
Wisconsin Freight Rail Day
2011
Source: Wisconsin Department of Revenue
RETAIL SALESUSING THE APPROPRIATE ADJUSTMENTS
Wisconsin is Open for Business
October 20, 2011
StateStateof of
Wisconsin’s Wisconsin’s EconomyEconomy
12
Wisconsin Freight Rail Day
2011
HOUSING STARTS FLAT AT BEST
US Housing Starts(1000 x monthly single unit SAAR)
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
Jan-
05
May
-05
Sep
-05
Jan-
06
May
-06
Sep
-06
Jan-
07
May
-07
Sep
-07
Jan-
08
May
-08
Sep
-08
Jan-
09
May
-09
Sep
-09
Jan-
10
May
-10
Sep
-10
Jan-
11
May
-11
Source: U.S. Census, OEA
Wisconsin is Open for Business
October 20, 2011
StateStateof of
Wisconsin’s Wisconsin’s EconomyEconomy
13
Wisconsin Freight Rail Day
2011
RAIL MOVEMENTS EVEN WITH LAST YEAR
Wisconsin is Open for Business
October 20, 2011
StateStateof of
Wisconsin’s Wisconsin’s EconomyEconomy
14
Wisconsin Freight Rail Day
2011
WHAT IS RECOVERY?DJIA; UP 77% SINCE MARCH 9, 2009
Source: http://moneycentral.msn.com/investor/charts/chartdl.aspx
Wisconsin is Open for Business
October 20, 2011
StateStateof of
Wisconsin’s Wisconsin’s EconomyEconomy
15
Wisconsin Freight Rail Day
2011
CORPORATE PROFITS LOOK HEALTHYMOSTLY DUE TO COST CUTTING
Wisconsin is Open for Business
October 20, 2011
StateStateof of
Wisconsin’s Wisconsin’s EconomyEconomy
16
Wisconsin Freight Rail Day
2011
MANAGING RISK WHERE IS THE INCENTIVE TO EXPAND
Wisconsin is Open for Business
October 20, 2011
StateStateof of
Wisconsin’s Wisconsin’s EconomyEconomy
17
Wisconsin Freight Rail Day
2011
PRODUCTION CAPACITY PEAKED?
Wisconsin is Open for Business
October 20, 2011
StateStateof of
Wisconsin’s Wisconsin’s EconomyEconomy
18
Wisconsin Freight Rail Day
2011
Private Nonresidential Fixed Investment
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
1980-I 1983-I 1986-I 1989-I 1992-I 1995-I 1998-I 2001-I 2004-I 2007-I 2010-I
($ b
illio
ns)
Nonresidential Structures Equipment and software
INVESTMENT GROWTH IS IN PRODUCTIVITY, NOT EXPANSION
Source: BEA, OEA
Wisconsin is Open for Business
October 20, 2011
StateStateof of
Wisconsin’s Wisconsin’s EconomyEconomy
19
Wisconsin Freight Rail Day
2011
Source: Federal Reserve Board, Data Download Program
Reserves of Depository Institutions(billions of dollars)
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Jan
2008
Apr
200
8
Jul 2
008
Oct
200
8
Jan
2009
Apr
200
9
Jul 2
009
Oct
200
9
Jan
2010
Required Reserves
Total reserves
EXTENDING CREDITBANKS ARE CONSTRICTED TO LEND FUNDS
Wisconsin is Open for Business
October 20, 2011
StateStateof of
Wisconsin’s Wisconsin’s EconomyEconomy
20
Wisconsin Freight Rail Day
2011
WHAT IS RECOVERY?JOBS; STILL DOWN 120,000
Source: Bureau of Labor Statistics, LMI, OEA
Wisconsin Total Nonfarm Jobs (NSA)
2,600,000
2,650,000
2,700,000
2,750,000
2,800,000
2,850,000
2,900,000
2,950,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2007200920102011
Wisconsin is Open for Business
October 20, 2011
StateStateof of
Wisconsin’s Wisconsin’s EconomyEconomy
21
Wisconsin Freight Rail Day
2011
JOBS RECOVERYHOW IS THIS ONE NOT LIKE THE OTHER ONES
Source: Bureau of Labor Statistics, LMI, OEA
Wisconsin is Open for Business
October 20, 2011
StateStateof of
Wisconsin’s Wisconsin’s EconomyEconomy
22
Wisconsin Freight Rail Day
2011
JOB RECOVERY WILL TAKE TIME, BUT THINGS ARE TURNING UP
Source: BLS, OEA
Job Losses in Recent Recessions - Wisconsin - # of Months Since Recession Declaration
-7.0%
-6.0%
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61
Source: DWD, OEA, X12 adjustment of not seasonally adjusted CES via U.S. BLS
Job
Loss
es R
elati
ve to
Pea
k M
onth
1981 Recession
1990 Recession
2001 Recession
2007-2009 Recesion
Wisconsin is Open for Business
October 20, 2011
StateStateof of
Wisconsin’s Wisconsin’s EconomyEconomy
23
Wisconsin Freight Rail Day
2011
Source: BLS, DOR, OEA
♦ Blue is history (CES SA, December 2010 is benchmark, 2,317,200).
♦ Orange is DOR forecast (quarterly then annual, Spring 2011 Outlook).
♦ Yellow is 250,000 goal for December 2014 (2,567,200).
Total Private Jobs
2,200,000
2,250,000
2,300,000
2,350,000
2,400,000
2,450,000
2,500,000
2,550,000
2,600,000
Wisconsin is Open for Business
October 20, 2011
StateStateof of
Wisconsin’s Wisconsin’s EconomyEconomy
24
Wisconsin Freight Rail Day
2011
Recovery is self-sustaining, but fragile. Employment may breach in 2014. Strength of recovery subject to consumer income
and wealth uncertainty.
Risks High unemployment dampens income growth. Prolonged high gasoline prices sap consumption. European Union fiscal problems wash over the
global financial markets.
IN CONCLUSIONCONTINUED RECOVERY, BUT FRAGILE
Wisconsin is Open for Business
October 20, 2011
StateStateof of
Wisconsin’s Wisconsin’s EconomyEconomy
25
Wisconsin Freight Rail Day
2011
Questions ?
Wisconsin is Open for Business
October 20, 2011
StateStateof of
Wisconsin’s Wisconsin’s EconomyEconomy
26
Wisconsin Freight Rail Day
2011
Dennis Winters
Phone: 608-267-3262
Email: [email protected]
Website: www.dwd.wisconsin.gov
OEA website: www.dwd.wisconsin.gov/oea
CONTACT INFORMATION
Top Related