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Caveats Amidst A Rising Tide

Caveats Amidst A Rising Tide. Portland Relocation Council December 4, 2012 John W. Mitchell. Good Tidings. Volumes Increasing Upturn in Year Four Home Prices Rising Employment and Household Formation Trends BUT Policy Uncertainty Leftovers from the Great Recession.

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Caveats Amidst A Rising Tide

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  1. Caveats Amidst A Rising Tide

    Portland Relocation Council December 4, 2012 John W. Mitchell
  2. Good Tidings Volumes Increasing Upturn in Year Four Home Prices Rising Employment and Household Formation Trends BUT Policy Uncertainty Leftovers from the Great Recession
  3. Interstate Migration Rates Per 100 Population
  4. Real GDP (SAAR) Commerce Department2012
  5. Contributions to GDP GrowthQ3 2012
  6. 2011-12 Nonfarm Payroll Employment Change(,000 SA) Average 157,000 Per Month in 2012
  7. Annual Job Change October, 2011-October, 2012 (1.4%)
  8. Consumer Price Index Monthly Changes 2011-122.2% OctoberCore 2%, Annual Average 3.2% in 2011
  9. Inflation Beige Book Modest Price Pressures Energy Commodities 8.6% in Aug, 6.7% in Sept. and -.5% in October Non-Farm Business Year over Year 2.6% Compensation and 1.5% Productivity-Unit Labor Costs 1.1% Q3 Fed Balance Sheet Securities 1/3/2008 $740.6B 11/15/2012 $2.88 Trillion
  10. Interest Rates Source: US Treasury
  11. Rates At the Zero Bound Seven Years of Zero Short Term Rates ? 11/26/12 30 YEAR 3.38% War Against Savers-Search for Yield-Risk? Pension Plan Assumptions Urgency of Deficit Issues
  12. Prospects GDP Growth Fed Central Tendency 2012 1.7-2% and 2013 2.5-3% Inflation Range 1.9% to 2.2% in 2012 (BCC) with a 2.1% Mean in 2012 and 2% in 2013 Fed on Hold Until at Least Mid 2015 ASSUMPTION NO FISCAL CLIFF !
  13. Peering Into the Unknown What happens in Europe, China, Middle East ? Will the Housing Rebound Continue? Fiscal Fortunes of State and Local Governments? Looming Fiscal Policy Shifts? Monetary Policy QE 3 Underway!
  14. Residential Permits (SAAR) Census Bureau October 2012 Up 33.2% During the First 10 Months
  15. Residential Permits 2004 to 2012 Oregon (Up 43% to October 2012) Source: Census
  16. Residential Permits 2004 to 2012 Portland (Up 55.5% to October 2012) Source: Census
  17. Residential Real Estate NAR: Q3 Median 7.6% Case Shiller: Composite 20 3% to September, Portland 3.7%, Seattle 4.8%, Phoenix 20.4% FHFA: August 4.7% CoreLogic: 22.3% Underwater Q2, CA 29%, AZ 39.7%, NV 58.6%, OR 18.7%, WA 19.1% Large Price Declines Mortgage Rates More Renters New World of Financing ( P, U&P) Redos Rising Employment and Household Formation Forces
  18. Total State Tax Collections Above Previous Year for 10 Quarters
  19. Policy Excitement Fiscal Cliff Notion 1/1/2013- Think 4 and 2 Bush Tax Cuts Expire Payroll Tax Holiday Ends Extended Unemployment Compensation Ends Doc Fix, AMT Fix Sequester Process Starts New Medicare Taxes Start Back to 201- A Tightening in Policy Short Term Problem and Long Term Problem Simpson-Bowles, Debt Reduction Task Force ! Everything on the Table?
  20. Monetary Policy Different Tools Twist to Year End Exceptionally Low Rates until Mid 2015 Buy Mortgage-Backed Securities-Expand Balance Sheet Open Ended Total $85 Billion Per Month to Year End Will it make any difference? How and When does one unwind it? Uncertainty and Its Implications? Put things on Hold!
  21. North Dakota 1 Oklahoma 2 Texas 3 Indiana 4 Utah 5 Montana 6 Idaho 7 Kentucky 8 California 9 Hawaii 10 Arizona 11 Ohio 12 South Carolina 13 Washington 14 Colorado 15 Georgia 16 New York 17 Louisiana 18 Massachusetts 19 Job Growth UpdateOctober 2012 Data-Year over Year Change-43 States Up Oregon 26 Tennessee 27 South Dakota 28 Florida 30 Pennsylvania 31 Virginia 32 New Jersey 34 Minnesota 30 Illinois 35 Michigan 36 Connecticut 44 Mississippi 45 Wisconsin 46 Delaware 47 Rhode Island 48 New Mexico 49 West Virginia 50
  22. Oregon Wage and Salary Employment ( ,000-SAAR) Employment Department February, 2008 to February, 2010 -147,700 Jobs
  23. Oregon Job Change Year to October, 2012 (1%) Employment Department
  24. Oregon Job Growth Year to October, 2012Source: Department of Employment
  25. Portland Job Change Year to October, 2012 (.9%) Employment Department
  26. Annual Change in Portland Wage and Salary Employment
  27. Leftovers Youth Un and Underemployment -Scarring NYT 8/25/12 “About 1.5 million or 53.6 percent of bachelor’s degree holders under 25 were jobless or underemployed.” 40.6% of Unemployed More than 27 Weeks- Mean 40.2 Weeks, U-6 14.6% Labor Force Participation Rate October 63.8% Prior to This Year Last time was April 1983-It was 66% at the Start of the Recession Job Gap- Brookings Hamilton Project-Oregon 133,000, Washington 296,000 September 2012 Seniors Retiring Early or Staying Longer Real Family Median Net Worth Down 38.8% 2007-2010 Survey of Consumer Finances Oregon again looking at Tax System, Kicker Changed
  28. Debt Service and Financial Obligations Ratios Source: Fed
  29. Stella,The Tooth and Other Fairies Confidence Fairy No New Taxes Fairy The Rich Will Pay Fairy Free Medical Services Fairy Entitlement Fairy
  30. 2013Possibilities More of the Same Policy Paralysis-Fiscal Cliff-Recession Winston Churchill Scenario-Long Term Policy Put In Place What will the actors do ? Capital Gains, Low Interest Rates, Costco, 50 Person Full Time Triggers, Aging etc. ??? Do we have the recipe for growth?
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