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CT Economic Outlook 2008:Q3 to 2012:Q4

CT Economic Outlook 2008:Q3 to 2012:Q4. Edward J. Deak, Ph.D. Professor of Economics Fairfield University Connecticut Model Manager The New England Economic Partnership. U.S. Financial Crisis/Recession: CT Delayed Entry (08:Q4 v. 08:Q1). Backlog financial bonuses paid 2008

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CT Economic Outlook 2008:Q3 to 2012:Q4

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  1. CT Economic Outlook2008:Q3 to 2012:Q4 Edward J. Deak, Ph.D. Professor of Economics Fairfield University Connecticut Model Manager The New England Economic Partnership

  2. U.S. Financial Crisis/Recession:CT Delayed Entry (08:Q4 v. 08:Q1) • Backlog financial bonuses paid 2008 -Current accrual of deferred income? • Relatively limited housing bubble • Weak $ - Supported mfg jobs/income • Defense spending – Supported mfg • Relatively weaker housing bubble • Restrained new home construction • Restrained subprime/gimmic lending

  3. U.S. Financial Crisis/Recession:CT Delayed Exit (09:Q3 v. 10:Q2) • Restructuring of Financial Industry • Wall ST, Commercial/Investment Banks • Weakened Hedge Fund + Insurance Sectors • Loss of Financial Service Jobs • Jobs/Taxes in NYC, but unemployment/income in CT • Stronger $ +  Defense Spending Limit Mfg • State + Local Budget Deficits • Diminished Capital Gains/Bonus Income • Slow Growth & Aging Pop/Labor Force

  4. CT Economy in Recession:Current Status 10/08 • Jobs: Peak 12/07, Jan-Sept 08 = -4.1k •  yag: Trade, Bus Ser, Mfg, Const, Financial •  yag: Health/Ed, Gov, Leisure+Hospitality • UE Rate %: 4.4=1-6/07, 9/08 = 6.1 US=6.1 • Gov Budgets: State deficit -$300m current • Local $ cuts + layoffs, CT 2010 = $2.6B • Casino Revenues:Both 8.9%+ 09:Q1 FY • New UE Claims:55% 9/08 v. 9/07 = 6,209

  5. CT Housing Market in Recession:Current Status 10/08 • Permits: 07=16.1%=7,746, 08Q1-3=28% • Peak: 05=11,885, 07 lowest # since 1991 • Sales Existing: 07=12%, 08Q1-3=24.5% • Peak: 05=58.1k, 07=45.6k lowest since ‘96 • Median Prices:07=2%=$320.6k peak CR • 08Q1-3 8.3%=$275k, Sept’08=7.5% yag = $260k • Foreclosure Filings: Oct 08 +136% most US • Subprime Del: 08Q3=27.1%, US=26.8

  6. Annual Job Change %:CT vs. U.S 2006-2012 % Change

  7. Peak-Trough Recession Job Chg:1989-93, 2000-03, 2007-10? • 1989-93: 89:Q1=1.678k 93:Q3=1,527k • Loss = -151k % Change = -9.0% Length = 14 quarters • 2000-03: 00:Q3=1,698k 03:Q3=1,640k • Loss = -58k % Change = -3.4% Length = 12 quarters • 2007-10? 07:Q4=1,704 10:Q2=1,642k • Loss = -62k % Change = -3.6% Length = 10 quarters • Last Forecast Quarter 2012:Q4 = 1,712k

  8. Annual Unemployment Rate %:CT vs. U.S 2004-2012

  9. Peak-Trough Recession UE Rate:1989-93, 2000-03, 2007-10? • 1989-93: 88:Q1=2.77% 92:Q2=7.47% • Gain=470bp % Change = +270% Length = 17 quarters • 2000-03: 00:Q4=2.13% 03:Q2=5.53% • Gain=340bp % Change =+260% Length = 10 quarters • 2007-10? 06:Q2=4.2% 10:Q2=8.49% • Gain =429bp % Change =+202% Length = 16 quarters Last Forecast Quarter 2012:Q4 CT = 6.35% U.S. = 5.3%

  10. Nominal Income Per Capita:% Change CT vs. U.S 2004-2012 % Change Nominal Personal Income

  11. Peak-Trough Recession Nominal Per Income Per Capita:1989-93, 2000-03, 2007-10? (saar) • 1989-93: 89:Q1=$25.3k 93:Q4=$29.5k • Gain=$4.2k % Change = +17% Length = 19 quarters • 2000-03: 00:Q1=$40.7k 03:Q4=$43.6k • Gain=$2.6k % Change =+6.4% Length = 15 quarters • 2007-10? 07:Q1=$54.2k 10:Q4=$59.6k • Gain =$5.4k % Change =+10% Length = 15 quarters Last Forecast Quarter 2012:Q4 (saar) CT: 3.9%=$63,892 U.S.: 4.2%=$45,279

  12. CT v. U.S Home Permits:% Change 2004-2012

  13. Peak-Trough Recession Permit %:1989-93, 2000-03, 2007-10? (saar) • 1989-93: 89:Q1=14,658 92:Q3=7,384k • Loss = -7,274 % Change = -50% Length = 14 quarters • 2000-03: 98:Q1=12,488 01:Q2=8,216 • Loss = -4,272 % Change = -34% Length = 13 quarters • 2007-10?: 05:Q4=12,155 09:Q4=4,365 • Loss = -7,790 % Change = -64% Length = 16 quarters • Last Forecast Quarter 2012:Q4 = 8,644

  14. Median Sale Price Existing Home:CT vs. U.S. 2004-2012 000’s Current $

  15. Peak-Trough Recession Home Price:1989-93, 2000-03, 2007-10? • 1989-93: 88:Q2=$218.5k 96:Q4=$175.2k • Loss= -$43.3k % Change= -19.8% Length= 30 quarters • 2000-03: 00:Q2=$198.3k 00:Q3=$195.8k • Loss = -$2.5k % Change= -1.3% Length= 1 quarter • 2007-10?: 07:Q2=$326.8k 10:Q2=$232.2k • Loss= -$96.6k % Change= -29.6% Length= 12 quarters • Last Forecast Quarter 2012:Q4 • CT = $258.6k U.S. = $187.6k

  16. Mortgage Delinquency Rate %:CT vs. U.S 2004 - 2012 % Mortgages Delinquent

  17. Peak-Trough Recession Mortgage Delinquency Rate %:1989-93, 2000-03, 2007-10? • 1989-93: 88:Q1=2.92% 92:Q1= 4.24% • Gain= 132bp % Change= 45% Length = 16 quarters • 2000-03: 00:Q1=2.94% 02:Q4= 4.11% • Gain= 117bp % Change= 40% Length = 11 quarters • 2007-10?: 07:Q1=3.97% 09:Q1= 5.54% • Gain= 157bp % Change= 40% Length = 8 quarters • Last Forecast Quarter 2012:Q4 • CT = 4.04% U.S. = 4.51%

  18. Bankruptcies % Change:CT vs. U.S. 2004-2012 % Change

  19. Peak-Trough Recession Bankruptcies:1989-93, 2000-03, 2007-10? (saar) • 1989-93: 88:Q4=2.33k 93:Q1=9.14k • Gain= +6.81k % Change= 392% Length= 17 quarters • 2000-03: 00:Q4=10.5k 03:Q3=12.1k • Gain = 1.6k % Change= 15% Length= 11 quarters • 2007-10?: 07:Q2=5.0k 12:Q2=19.8k • Gain= 14.8k % Change= 396% Length= 20 quarters • Last Forecast Quarter 2012:Q4 • CT = 19,334 (saar)

  20. CT Outlook Conclusions • CT late into recession: US 08:Q1 v. CT 08:Q4 • Late out of recession: US 09:Q3 v. CT 10:Q2 • Job loss less than 89-93, greater 00-03 • UE rate higher than 89-93 or 00-03 • Nominal income growth constrained • New home permit decline greater + longer • Home price decline greater + shorter 89-93 • Higher delinquency and bankruptcy rates

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