enterpriseseattle forecast 2012 - ken goldstein

enterpriseSeattle’s 40th Economic Forecast Conference

Thursday, January 12, 2012Washington State Convention Center

info@enterpriseSeattle.org ▪ (206) 389-8650 ▪ www.enterpriseSeattle.org

2012 FORECAST: A LOOK AHEAD Moderator:

Jeff Marcell, enterpriseSeattle

Panelists:

- Dick Conway, Puget Sound Economic Forecaster

- Mike Dueker, Russell Investments

- Ken Goldstein, The Conference Board

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Ken Goldstein

Stuck in the Slow Lane

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Overview:

No Momentum – No Help on the Way

Ditto Global Economy - Even In Euro-Zone

(3.9% in 2011, 3.2% in 2012)

Food + Energy + Commodity + CONFIDENCE

Housing Still A Drag

Currency Speculation

Recession Risk 50-50

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Global Economy Is Coming Back

Source: IMF, The Conference Board

  2012 2013-2016 2017-2025        U S 1.8 3.0 2.3 Euro Area 0.5 1.7 1.7 Japan 2.1 1.2 1.5 Other Advanced Economies 2.5 2.6 1.7  Developing Asia (ex. China and India) 2.8 4.4 3.8 China 8.7 6.5 3.5 India 7.4 6.0 4.6

Latin America 2.9 3.4 3.2 Middle East 2.3 3.8 3.5 Africa 2.4 4.2 3.9  World Total 3.2 3.5 2.7

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The Conference Board’s Leading Economic Indexes

Industrial Production in Choppy Water

Source: The Conference Board

Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov2010 2011

U.S.A 1.2 0.8 0.2 0.9 0.7 -0.3 0.7 0.3 0.5 0.3 0.1 0.9 0.5

MEXICO 1.3 0.2 0.7 -0.2 0.8 0.5 -0.4 0.3 0.0 -1.1 -0.3 -0.5

UK -0.1 0.5 0.2 0.4 0.4 0.4 0.6 0.0 0.2 -0.5 -0.4 -0.4

GERMANY 0.9 0.7 0.7 0.7 0.2 0.5 0.5 0.3 0.0 -2.1 -1.3 0.3

FRANCE -0.3 0.7 0.9 0.6 0.8 0.2 -0.4 0.4 -0.3 -0.4 -0.6 0.5

SPAIN -1.1 0.1 1.0 0.1 -0.5 -0.2 0.0 -0.2 -0.8 -0.2 -0.4 -0.2

JAPAN 0.0 0.2 1.2 0.8 -1.2 -2.3 -0.9 0.5 1.1 0.1 -0.4 1.1

KOREA 0.9 1.2 1.2 0.0 0.7 -0.4 0.5 -0.5 -0.2 0.4 -0.7 0.0

AUSTRALIA 0.2 0.1 -0.6 -0.2 0.5 0.8 0.4 0.3 1.0 0.7 0.6 0.6

CHINA -0.1 -1.1 0.5 0.3 1.0 0.1 0.4 1.0 0.6 0.6 0.4 -0.1

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In All Regions – Even The Euro-Zone

Note: Shaded areas represent recessionsSource: The Conference Board

-25

-20

-15

-10

-5

0

5

10

15

20

25

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Nov.'11

6-month annualized percent change

US LEI

Asia LEI Euro Area LEI

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Especially Service-Sector Job Growth

Note: Shaded areas represent recessions.Data as of November 2010 are based on surveys conducted by The Nielsen Company; data prior to that are based on surveys conducted by TNS.Source: The Nielsen Company, TNS, NBER, The Conference Board

0

40

80

120

160

200

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Index, 1985=100

Dec.'11

Expectation

Present Situation

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Stuck in the Slow Lane

2011 2012 2011 2012 2013 III Q* IV Q I Q II Q ANNUAL ANNUAL ANNUAL---------------------------------------------------------------------------------------------------------------------------------------------------

Real GDP 1.8 2.8 1.3 1.6 1.8 1.8 2.2--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------CPI Inflation 3.1 1.0 1.1 1.6 3.1 1.7 1.9--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Real Consumer Spending 1.7 2.7 2.4 2.2 2.2 2.2 2.0--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Real Capital Spending 15.7 3.4 4.1 3.1 8.7 5.0 3.6--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Net Exports Bil. '00$ -402.8 -398.7 -410.0 -409.5 -410.6 -402.5 -364.3--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Industrial Production 6.2 3.5 3.1 2.5 4.1 3.2 2.6--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Unemployment Rate (%) 9.1 8.7 8.8 9.0 9.0 8.9 8.6--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------90 Day T-Bills (%) 0.02 0.05 0.05 0.17 0.06 0.14 0.3010 Yr Treas Bonds (%) 2.43 2.07 1.97 1.97 2.79 2.00 2.55--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Exchange Rates$/EURO 1.40 1.36 1.30 1.30 1.39 1.30 1.27 Yen/$ 79 77 79 80 80 81 89 --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------*Actual Data

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Price Split

Source: Department of Energy, The Conference Board

0

1

2

3

4

0

2

4

6

8

10

12

14

1994 1996 1998 2000 2002 2004 2006 2008 2010

$ per thousand cubic feet $ per gallon

Gasoline (right scale)

Natural Gas (left scale)

3Q '11

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Wealth destruction phase Cresting

Note: Shaded areas represent recessionsSource: The Conference Board

-4

-2

0

2

4

6

8

10

12

14

16

88 90 92 94 96 98 00 02 04 06 08 10 12 14

October1987Crash

JunkBondCrashandFridaythe 13thmini crash

AsianCrisis

Long TermCapital

CorporateAccountingScandals

Burstingof EquityBubble

CreditCrunch

Oct '11

Bear SternsCollapse

LehmanBrothersCollapse

The Conference Board's Experimental Monthly Financial Instability Index

SovereignDebtCrisis inEurope

U.S. DebtDowngrade

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Euro Premium Erosion

Note: Shaded areas represent recessionsSource: FRB, The Conference Board

1.0

1.1

1.2

1.3

1.4

1.5

1.62003 2004 2005 2006 2007 2008 2009 2010 2011 2012

U Forecast

-Stdev

Trend Jan. '03 - Dec. '11

+Stdev

USD/EUR

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In A Panicky World – Flight To Safety

Note: Shaded areas represent recessionsSource: FRB, The Conference Board

75

80

85

90

95

100

105

110

115

120

125

130

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Y

+Stdev

-Stdev

Forecast

Trend Jan.'03 - Dec. '11

JPY/USD