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Changing Economy in 2010/2011

Changing Economy in 2010/2011. Presentation to the National Society of Accountants for Cooperatives, Far Western Chapter, May 27, 2010 Lon Hatamiya, MBA, JD Director, Navigant Consulting, Inc. www.navigantconsulting.com. The Global Economy. Global Economy Changes (PPP).

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Changing Economy in 2010/2011

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  1. Changing Economy in 2010/2011 Presentation to the National Society of Accountants for Cooperatives, Far Western Chapter, May 27, 2010 Lon Hatamiya, MBA, JD Director, Navigant Consulting, Inc. www.navigantconsulting.com

  2. The Global Economy

  3. Global Economy Changes (PPP) Ranking of World: 2008 Ranking of World: 2009 World $69.49 trillion • E.U. $14.82 trillion • U.S. $14.29 trillion • China $7.80 trillion • Japan $4.35 trillion • India $3.27 trillion • Germany $2.86 trillion • U.K. $2.23 trillion Source: CIA World Factbook World $70.29 trillion • E.U. $14.51 trillion • U.S. $14.26 trillion • China $8.79 trillion • Japan $4.14 trillion • India $3.56 trillion • Germany $2.81 trillion • U.K. $2.51 trillion

  4. Changing Global Economy • 2009 marked the first year since WWII that global output and per capita income declined • Output declined 1%, compared with average increases of 3.5% per year since 1946 • Global trade dropped nearly 25% (largest since 1946!!)

  5. Changing Global Economy Growth Champions 2009 Decline Losers 2009 • China 8.7% • India 6.5% • Indonesia 4.5% Source: CIA World Factbook • Russia -7.9% • Mexico -6.5% • Japan -5.3% • Germany -5.0% • United Kingdom -4.8% • Italy -4.8%

  6. Global Economy Challenges • Fiscal stimulus packages put in place in 2009 required most countries to run budget deficits • National treasuries issued new public debt of over $4 trillion • To keep interest rates low, central banks monetized the debt by injecting large sums of money into the economy raising fears of possible inflation

  7. The U.S. Economy

  8. U.S. Economy in 2009: Bailout Stimulus

  9. U.S. Economy in 2010: ???

  10. U.S. Economy in 2010 • Continued uncertainty • Areas of recovery with moderate growth • Ongoing difficulties with limited private-sector job gains and continued large public-sector deficits

  11. U.S. Economy: The Good News Real gross domestic product increased at an annual rate of 3.2% in the first quarter of 2010 Reflects positive contributions from personal consumption expenditures, private inventory investment, and exports Motor vehicle output and computer sales added to the positive numbers Trade deficit increased as well Source: Bureau of Economic Analysis, US Dept. of Commerce

  12. U.S. Economy: The Bad NewsHome Foreclosures Source: RealtyTrac

  13. The U.S. Economy Real GDP Growth, 1998-2010f 3.4% 2.5% -2.4% 00 01 02 03 04 05 06 07 08 09 10f 11f Source: Bureau of Economic Analysis and Federal Reserve

  14. The California Economy

  15. California Unemployment Rate

  16. Unemployment Rate Gap Between California and U.S. • California’s unemployment rate was 12.6% in April, up 1.6% from a year ago • In comparison, the U.S. unemployment rate was 9.9% in April, up 1.0% from a year ago • Job losers comprised the largest group of unemployed persons with the number of unemployed for 27 weeks or over increasing by 118.7% since April 2009

  17. California Employment Profile Source: California EDD

  18. The U.S./California Agricultural Economy

  19. Global Slowdown Effects Agriculture • Near term weakness in global economy diminishes demand growth for crops over next several years • Net farm income declines in the near term from the record levels of 2007 and 2008 • Lower government payments and rising farm production expenses offset some of the recent gains in cash receipts and other sources of farm income

  20. Net Farm Income Declines then Projected to Rise

  21. Net Farm Income Forecast up Nearly 12% in 2010 • Net farm income is forecast to be $63B in 2010, up $6.7B (11.8%) from 2009 • Total expenses are forecast to be unchanged after decline in 2009 for the first time since 2002 (due to lower oil prices) • 2010 forecast is for a rise in cash receipts by about 2% from the sale of farm commodities

  22. FY2010 Agricultural Exports Expected to Rise to $100 Billion • 2010 agricultural exports are forecast at $100B, $3.4B above final FY2009 sales • Soybean and cotton exports are higher • Dairy and livestock exports are also up • FY2010 Horticultural exports remain strong, expected to be $21.5B

  23. Impact of exports upon California • Export forecast for fresh fruits and vegetables is higher at 5-7% increase • Dominated by almonds, tree nut exports are expected to remain strong up 24% • Wine exports are also up by 12% • However, record almond crop and slowing EU has put downward pressure on prices and export value

  24. U.S. Economy in 2010: Stimulus effects Late recovery

  25. Changing Economy 2009/2010 Thank You! Presentation by Lon Hatamiya, MBA, JD Director, Navigant Consulting, Inc. www.navigantconsulting.com

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