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Economic Update: North Carolina and the U.S. September 15, 2010 PowerPoint Presentation
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Economic Update: North Carolina and the U.S. September 15, 2010

Economic Update: North Carolina and the U.S. September 15, 2010

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Economic Update: North Carolina and the U.S. September 15, 2010

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  1. Economic Update:North Carolina and the U.S.September 15, 2010 Dr. Andrew Brod Center for Business and Economic Research Bryan School of Business and Economics University of North Carolina at Greensboro Email: AndrewBrod@uncg.edu Web: http://cber.uncg.edu

  2. First, a Word from My Sponsor • CBER is the main contact point at UNCG for economic-development research • Contract research • Economic-impact analyses • Surveys • Economic profiles • Econometrics, data mining… and more! • Public education

  3. The Recession is Over, But…

  4. The Recession is Over, But…

  5. The Recession is Over, But…

  6. The Recession is Over, But…

  7. The Recession is Over, But…

  8. It’s Going to be Okay … according to 2½-year-old Meyer Brod

  9. This Pie Chart Proves It

  10. Expansion of 2001-07: Lame Source: Economic Policy Institute

  11. Great Recession of 2008-09 • It probably ended in the summer of ‘09. • Longest and deepest recession since the Great Depression • The non-government National Bureau of Economic Research will make the official call. • But the economy isn’t strong yet. • Expansion means things are getting better, not that they’re good. • Are we measuring and dating recessions correctly? • Unemployment rate is a lagging indicator. • Should we focus on per-capita real GDP?

  12. Great Recession of 2008-09 • NBER isn’t in the business of forecasting recessions and expansions. • November 2001: Announces that a recession began in March 2001. • July 2003: Announces that the recession ended in November 2001. • NBER’s announcement this time: • Announced in December 2008 that the recession began in December 2007. • No surprise: 96% of NABE economists surveyed in November 2008 said a recession was underway.

  13. Great Recession of 2008-09 • A double-dip recession-within-a-recession: • In mid-2008, it looked like we might avoid an outright recession. • Real GDP actually rose in Q2. • Rising commodity prices not due to speculation, which implies they were being used. • But on 9/15/08, the government let Lehman fail. • That’s when things got ugly • The recession-within-a-recession was the first since the Great Depression to be triggered by a financial crisis. • Will there be a triple dip? • Probably not

  14. Recession History • Since WWII, recessions have been short. • That wasn’t always the case. • 1946 Employment Act, 1978 Humphrey-Hawkins Act: • Authorized federal govt. to manage economy • Creeping socialism, or effective management? Source: National Bureau of Economic Research

  15. Recession History • Recessions are changing. • The post-recession job recovery is slowing. • Number of months for employment to reach pre-recession levels: 2001: 54 in NC Average of 1st 6 postwar recessions Source: Economic Policy Institute

  16. Recession History Will we miss breaking the record set by the 2001 recession? Employment, SA, % change from peak month Source: Bureau of Labor Statistics, Bureau of Census

  17. Real GDP Growth Average growth 1946-2000 = 3.4% 2009 @ -2.6% GDP in 2005 dollars: Annual growth Source: Bureau of Economic Analysis

  18. Real GDP Growth 2008:3 thru 2009:1 were the worst 3 quarters “ever” (since 1947) Strong growth in 2009:4 but weakening since then 2010:2 @ 1.6% GDP in 2005 dollars: Chge from prevqrtr, SAAR Source: Bureau of Economic Analysis

  19. Real GDP & GDP/S Growth NC: 2008 @ 0.1% Source: Bureau of Economic Analysis

  20. Real GDP/S Growth, 2007 . Source: Bureau of Economic Analysis

  21. Real GDP/S Growth, 2008 . Source: Bureau of Economic Analysis

  22. Payroll Employment Late 2008/ early 2009: drops of 600K+ for 5 months in a row Good rises in spring, but stalling this summer 47 months Aug @ 130.3 million Monthly, SA, millions Source: Bureau of Labor Statistics

  23. Payroll Employment in N.C. SA employment gains stalling in NC as well 54 months Jul @ 3.90 million Monthly, SA, millions Source: Bureau of Labor Statistics

  24. Initial Unemployment Claims No longer moving in the right direction 9/4 @ 478K Weekly, in thousands, SA, 4-week moving avg Source: Department of Labor

  25. NC Initial Unemployment Claims Possibly still moving in the right direction 8/28 @ 12.7K Weekly, in thousands, NSA, 4-week moving avg Source: Department of Labor

  26. Unemployment Rates NC: Jul @ 9.8% US: Aug @ 9.6% Improving slowly US Avg. 1947-2000 = 5.7% Monthly, SA Source: Bureau of Labor Statistics

  27. State Unemployment Rates Source: Bureau of Labor Statistics

  28. A Little Political Economy Source: John Judis, “Job One,” The New Republic, September 22, 2009

  29. A Little Political Economy Source: John Judis, “Job One,” The New Republic, September 22, 2009

  30. A Little Political Economy Direction matters as well: A year later, unemp. is about the same, but Obama’s disapproval rating is up slightly, to 45-50% Source: John Judis, “Job One,” The New Republic, September 22, 2009

  31. A Little Political Economy

  32. A Little Political Economy

  33. Avg. Private Sector Work Week Production and non-supervisory employees Aug @ 33.5 Monthly, hours per week, SA Source: Bureau of Labor Statistics

  34. Avg. Manufacturing Work Week US: Aug @ 41.2 NC: Jul @ 40.3 Production and non-supervisory employees Monthly, hours per week, SA for US, NSA for NC Source: Bureau of Labor Statistics

  35. N.C. Employment Growth Change from December to December, NSA Source: Bureau of Labor Statistics

  36. S&P 500 Index Oct ‘08: 8th worst month on record 57% from Oct ‘07 peak to Mar ‘09 trough But 66% since then 2008: 38% 2009: 23% 2010:  1% 9/13 @ 1122 Lowest close since 9/12/96 Daily close, 2008-10 Source: Wall Street Journal

  37. Consumer Confidence Index Decline in Oct ‘08 was 3rd largest in CCI history Feb ’09: all-time low since index began in 1967 Aug @ 53.5 Monthly, SA, 1985 = 100 Source: Conference Board

  38. Industrial Production Index Up in 11 of the last 13 months 2008: 9.4% 2009: 1.6% 2010: 4.3% Sept ’08 was the largest one-month drop since 1946 Jul @ 93.4 Monthly, SA, 2007 = 100 Source: Federal Reserve Board

  39. Industrial Utilization Jun ‘09 level lowest since series started in 1967 But up since then 2008: 8.3% 2009: 1.4% 2010: 3.3% Jul @ 74.8% Monthly, SA Source: Federal Reserve Board

  40. ISM Indexes: PMI and NMI PMI: Aug @ 56.3 NMI: Aug @ 51.5 Dec ‘08 PMI was the lowest since 1980 Monthly, SA, 50 = “no change” Source: Institute for Supply Management

  41. Retail Sales* Huge drops in Fall ’08, but upward trend throughout ’09 and ‘10 Aggregate annual sales (NSA) 0.4% in 2008 and 6.2% in 2009 Aug @ $363.7 billion *and Food Services Monthly, SA, billions of nominal dollars Source: Census Bureau

  42. Retail Auto Sales Auto sales fell 27% in 2008! Cash for Clunkers: 11.5% in Aug ‘09 But then 15.8% in Sep 7.7% in 2009 Aug @ $55.4 billion Monthly, SA, billions of nominal dollars Source: Census Bureau

  43. Retail Home-Furnishings Sales Furniture sales fell… 2.9% in ’07 13.3% in ’08 3.1% in ’09 Increases in Fall ‘09 and Winter ‘10 have disappeared Aug @ $7.5 billion Monthly, SA, billions of nominal dollars Source: Census Bureau

  44. Consumer Price Inflation Still dancing at the edge of deflation For 2009, +2.7% Jul @ 3.8% Monthly change in CPI, SAAR Source: Bureau of Labor Statistics

  45. Consumer Price Inflation “Core” inflation still too close to zero for comfort Monthly change in CPI, 2008-10, SAAR Source: Bureau of Labor Statistics

  46. Oil Prices Aug @ $76.60 Crude oil, WTI, spot price ($/bbl), monthly avg. Source: Department of Energy

  47. Energy Prices Matter Less Now High oil prices didn’t push us into recession, in part because the economy is becoming more energy-efficient Relative annual energy consumption: 1000 Btu per dollar of real GDP Source: Department of Energy

  48. Interest Rates Aug @ 0.19% Federal Funds Rate (effective), monthly average Source: Federal Reserve Board

  49. Interest Rates Aug @ 4.43% Conventional mortgage rate, monthly average Source: Federal Reserve Board

  50. Dollar Hovering Trade-Weighted Dollar Index (real) Aug @ 87.9 Broad index, 1973 = 100 Source: Federal Reserve Board