babson capital/unc charlotte economic forecast march 11, 2014
TRANSCRIPT
Babson Capital/UNC Charlotte
Economic ForecastMarch 11, 2014
Outline for Today
• Review of 2013
• Positive Economic Signs
• Negative Economic Signs
• North Carolina Outlook for 2014
• The Employment Picture
• Regional Perspective
• Housing Trends
Current Expansion
• Began July 2009
• 56 months
• 7th longest of 33 total expansions since December 1854
North Carolina in 2013
0
1
2
3
4
2013 I 2013 II 2013 III 2013 IV
-0.1
3.6
2.3
4.1
Quarterly Growth Rates in
Forecasted RGSP
2013 Sector Analysis
Wholesale Trade 3.6
Percent of Real Sector Growth
Total Real GSP Growth 2.5 % Mining 1.2TWU 4.3
E&H Services 4.9
Agriculture 22.7P
erce
nt
of T
otal
Rea
l GS
P0.80.03.7
9.1
10.7
3.2
5.0
5.8
3.6
10.6
2.0
Construction 1.9
Durables 0.7
Retail Trade 1.8
Government 1.7
FIRE 2.9
Nondurables -0.5
B&P Services 4.1
Information 2.0
H&L Services 2.1Other Services 2.9
7.3
21.7
13.3
3.2
Wholesale Trade 1.1
Percent of Employment Growth
Total Employment Growth 1.6% Mining 0.0TWU 3.8
E&H Services 1.4
Per
cen
t of
Tot
al E
mp
loym
ent
0.13.1
5.8
5.1
4.1
11.5
4.31.8
13.8
17.5
Construction -2.2
Durables 0.4
Retail Trade 2.7
Government -0.1
FIRE 1.3
Nondurables 0.2
B&P Services 4.1
Information 7.6
L&H Services 2.1
Other Services 1.0
10.6
5.0
13.8
3.5
2013Year-End Employment
Trends
64,500 Net Jobs
2013 North Carolina
Unemployment Rate
6
6.5
7
7.5
8
8.5
9
9.5
10
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
NC Seasonally Adjusted NC Seasonally Adjusted Forecast US Seasonally Adjusted
December Rate 6.9%
• Housing Stock/Prices • Interest Rates• Inflation• Consumer Credit• Consumer Confidence• Dollar• Gas Prices• Budget Deficit
Positive Indicators
0
2
4
6
8
10
12
14
16
Jan-
05 Apr Ju
l
Oct
Jan-
06 Apr Ju
l
Oct
Jan-
07 Apr Ju
l
Oct
Jan-
08 Apr Ju
l
Oct
Jan-
09 Apr Ju
l
Oct
Jan-
10 Apr Ju
l
Oct
Jan-
11 Apr Ju
l
Oct
Jan-
12 Apr Ju
l
Oct
Jan-
13 Apr Ju
l
Oct
Jan
January 200912.4 Months Supply
December 20144.7 Months Supply
U.S. Monthly New Home Inventory
(Seasonally Adjusted)
0
1
2
3
4
5
6
7Current Rate
0 - .25%
Monthly Federal Funds Rate 1996-2013
Percentage Changes in CPI 1949-2013
-1
1
3
5
7
9
11
13
15
Annual Increases
2009 -0.4%2010 1.6%2011 3.0%2012 1.7%2013 1.5%
1980-2013 U.S. Household Debt
Payments as a Percent of Income
0
5
10
15
20
1/1/
1980
10/1
/198
07/
1/19
814/
1/19
821/
1/19
8310
/1/1
983
7/1/
1984
4/1/
1985
1/1/
1986
10/1
/198
67/
1/19
874/
1/19
881/
1/19
8910
/1/1
989
7/1/
1990
4/1/
1991
1/1/
1992
10/1
/199
27/
1/19
934/
1/19
941/
1/19
9510
/1/1
995
7/1/
1996
4/1/
1997
1/1/
1998
10/1
/199
87/
1/19
994/
1/20
001/
1/20
0110
/1/2
001
7/1/
2002
4/1/
2003
1/1/
2004
10/1
/200
47/
1/20
054/
1/20
061/
1/20
0710
/1/2
007
7/1/
2008
4/1/
2009
1/1/
2010
10/1
/201
07/
1/20
114/
1/20
121/
1/20
13
Peak 2007 III 13.18%
Current 9.93%
0
20
40
60
80
100
120
Jul 0
7
Apr
08
Sep
08
Dec
08
May
09
Jan
10
Apr
10
Aug
10
Mar
11
Jul 1
1
Jan
12
Aug
12
Feb
13
13-D
ec
112.6
95.2
62.8
56.9
38.0
44.9
25.0
40.847.4
54.1
46.0
57.7
63.3
51.053.5
70.465.4
59.264.9
69.6
81.5 81.7
Consumer Confidence
•October 1992 54.6
•March 2009 25.0
•January 2014 81.7
0.5
0.7
0.9
1.1
1.3
1.5
1.7
$0.87
$1.36
2000-2013 Dollar Price of Euro
0.00
1.00
2.00
3.00
4.00
5.00
Ja
nu
ary
Feb
rua
ry
Ma
rch
20
12
Ap
ril
20
12
Ma
y 2
01
2
Ju
ne
20
12
Ju
ly 2
01
2
Au
gu
st 2
01
2
Sep
tem
ber
20
12
Oc
tob
er 2
01
2
No
vem
ber
20
12
Dec
emb
er 2
01
2
Ja
nu
ary
20
13
Feb
rua
ry 2
01
3
Ma
rch
20
13
Ap
ril
20
13
Ma
y 2
01
3
Ju
ne
20
13
Ju
ly 2
01
3
Au
gu
st 2
01
3
Sep
tem
ber
20
13
Oc
tob
er 2
01
3
No
vem
ber
20
13
Dec
emb
er 2
01
3
Ja
nu
ary
Feb
rua
ry
3.443.64
3.91 3.963.79
3.603.50
3.783.91
3.81
3.523.38 3.39
3.74 3.783.64 3.68 3.69 3.66 3.64
3.603.42
3.32 3.36 3.39 3.43
Monthly Gas Prices2012-2014
Effect of EnergyPrice Increase on U.S. Economy
• Annual Transportation Usage– 187 billion gallons per year
• Annual Total Usage– 288 billion gallons per year
• Effect of a $.50 increase in price– Transportation $93.5 billion per year
– Total $144.0 billion per year
1980 – 2023 U.S. Budget Deficit
-1500
-1000
-500
0
500
1000
Yea
r
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
f
2015
f
2017
f
2019
f
2021
f
2023
f
2013 Budget Deficit $672 billion
2015 Budget Deficit $388 billion
• Excess Reserves
• Trade Deficit
• Tax Increases
Negative Indicators
2008 – 2014 Banking System Excess Reserves
0200400600800
100012001400160018002000220024002600
1/1/
2008
3/1/
2008
5/1/
2008
7/1/
2008
9/1/
2008
11/1
/200
81/
1/20
093/
1/20
095/
1/20
097/
1/20
099/
1/20
0911
/1/2
009
1/1/
2010
3/1/
2020
5/1/
2010
7/1/
2010
9/1/
2010
11/1
/201
01/
1/20
113/
1/20
115/
1/20
117/
1/20
119/
1/20
1111
/1/2
011
1/1/
2012
3/1/
2012
5/1/
2012
7/1/
2012
9/1/
2012
11/1
/201
21/
1/20
133/
1/20
135/
1/20
137/
1/20
139/
1/20
1311
/1/2
013
1/1/
2014
February Excess Reserves $2,517 billion
1992-2013 U.S. Trade Deficits
-900000
-800000
-700000
-600000
-500000
-400000
-300000
-200000
-100000
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
2009 Trade Deficit$382 Billion
2008 Trade Deficit$681 Billion
2006Trade Deficit$799 Billion
2013TradeDeficit$475 Billion
Spending Cuts2014 - 2015
• Fiscal Year 2014
• Original Sequestration– $100 billion
• New Sequestration– $50 billion
• Fiscal Year 2015
• Original Sequestration– $100 billion
• New Sequestration– $75 billion
North Carolina Forecast2014
0
1
2
3
4
2014 I 2014 II 2014 III 2014 IV
2.1
3.5
2.9 2.8
Quarterly Growth Rates in
Forecasted RGSP
2014 Sector Analysis
Wholesale Trade 3.6
Percent of Real Sector Growth
Total Real GSP Growth 3.0 % Mining 1.9TWU 3.4
E&H Services 2.2
Agriculture 11.9P
erce
nt
of T
otal
Rea
l GS
P0.90.03.7
9.1
10.7
3.2
5.0
5.8
3.6
10.5
2.0
Construction 4.2
Durables 2.9
Retail Trade 2.4
Government 3.8
FIRE 3.3
Nondurables 2.5
B&P Services 1.8
Information 2.1
H&L Services 1.7Other Services 4.1
7.2
21.8
13.4
3.1
Wholesale Trade 3.2
Percent Employment Growth
Total Employment Growth 1.5% Mining -4.4TWU 3.3
E&H Services 1.7
Per
cen
t of
Tot
al E
mp
loym
ent
0.13.2
5.8
5.0
4.2
11.5
4.41.8
13.8
17.2
Construction 3.7
Durables 1.7
Retail Trade 1.8
Government 0.0
FIRE 0.1
Nondurables 0.3
B&P Services 1.7
Information 0.7
L&H Services 1.8
Other Services 2.3
10.7
5.0
13.8
3.5
2014 Year-End Employment
Trends
60,000 Net Jobs
2013-2014 North Carolina
Unemployment Rate
5
6
7
8
9
10
11
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
NC Seasonally Adjusted NC Seasonally Adjusted Forecast US Seasonally Adjusted
December Rate 6.9%
Employment Picture
• Employment Decline: -8,736,000• Employment Gain: 7,557,000• Percent Recovered: 86.5%
2007-2013 United States
Payroll Employment
• Employment Decline: -334,600• Employment Gain: 243,900• Percent Recovered: 72.9%
2007-2013 North Carolina
Payroll Employment
What’s the Target?
3,000,000 Jobs per Year250,000 Jobs per Month
US Job Growth 20122,193,000 jobs
182,750 per month
(Second Largest Job Growth Since 1999)
US Job Growth 20132,186,000 jobs
182,150 per month
(Third Largest Job Growth Since 1999)
-6,000
-5,000
-4,000
-3,000
-2,000
-1,000
0
1,000
2,000
3,000
4,000
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
2011
201
2
201
3
-848
1,168
2,810
3,844
2,157
2,810
3,3913,014
3,170
1,944
-1,757
-532
62
2,019
2,4842,071
1,115
-3,617
-5,052
1,022
2,1032,193
2,186
U.S. Job Growth
1990 - 2013
-300
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
-10.9
92.6116.3 108.6
80.795.8
115.4102.4
83.8
30.2
-83.2
-22.4-24.9
87.173.4
153.4
65.2
-117.6
-204.2
45.8 50.4
89.9
64.5
NC Job Growth
1990 - 2013
NC Job Growth 201289,900 jobs
7,490 per month
(Second Largest Job Growth Since 1998)
NC Job Growth 201364,500 jobs
5,375 per month
(Sixth Largest Job Growth Since 1998)
July 2013
Unemployment Rates
State RateNEVADA 9.5ILLINOIS 9.2NORTH CAROLINA 8.9RHODE ISLAND 8.9GEORGIA 8.8MICHIGAN 8.8CALIFORNIA 8.7NEW JERSEY 8.6MISSISSIPPI 8.5TENNESSEE 8.5
December 2013
Unemployment Rates
State RateRHODE ISLAND 9.3NEVADA 9.0ILLINOIS 8.9CALIFORNIA 8.3MICHIGAN 8.3KENTUCKY 7.9MISSISSIPPI 7.8TENNESSEE 7.7ARIZONA 7.6ARKANSAS 7.4CONNECTICUT 7.4GEORGIA 7.4NEW JERSEY 7.2MASSACHUSETTS 7.1OHIO 7.1OREGON 7.1NEW YORK 7.0NORTH CAROLINA 6.9INDIANA 6.8PENNSYLVANIA 6.8WASHINGTON 6.7SOUTH CAROLINA 6.6
2013North Carolina
Labor Force
4,600,000
4,620,000
4,640,000
4,660,000
4,680,000
4,700,000
4,720,000
4,740,000
4,760,000
4,780,000
4,800,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2013North Carolina Unemployment
300,000
320,000
340,000
360,000
380,000
400,000
420,000
440,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2013North Carolina
Employment
4,300,000
4,310,000
4,320,000
4,330,000
4,340,000
4,350,000
4,360,000
4,370,000
4,380,000
4,390,000
4,400,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
0
1
2
3
4
5
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70
January 20103.97 Persons per Job Opening December 2013
1.56 Persons per Job Opening
NC Number of Unemployed per Job Opening
(Not Seasonally Adjusted)
January 2008 1.21 Persons per Job Opening
Regional Perspective
MSA Jobs Gained
Geography Jobs Gained Percentage
North Carolina 256.6 0.77
Charlotte-Gastonia-Rock Hill NC-SC MSA 93.5 1.29
Raleigh-Cary MSA 47.8 1.44
Durham-Chapel Hill MSA 20.5 1.45
Greensboro-High Point MSA 14.0 0.38
Asheville MSA 8.4 0.76
Wilmington MSA 7.4 0.55
Winston-Salem MSA 7.2 0.43
Greenville MSA 5.3 1.23
Burlington MSA 3.4 0.52
Hickory-Lenoir-Morganton MSA 2.5 0.13
Fayetteville MSA 2.5 1.92
Goldsboro MSA 1.0 0.32
Rocky Mount MSA -1.5 -0.21
MSA Jobs Percentage
Geography Jobs Gained Percentage
North Carolina 256.6 0.77
Fayetteville MSA 2.5 1.92
Durham-Chapel Hill MSA 20.5 1.45
Raleigh-Cary MSA 47.8 1.44
Charlotte-Gastonia-Rock Hill NC-SC MSA 93.5 1.29
Greenville MSA 5.3 1.23
Asheville MSA 8.4 0.76
Wilmington MSA 7.4 0.55
Burlington MSA 3.4 0.52
Winston-Salem MSA 7.2 0.43
Greensboro-High Point MSA 14 0.38
Goldsboro MSA 1.0 0.32
Hickory-Lenoir-Morganton MSA 2.5 0.13
Rocky Mount MSA -1.5 -0.21
MSANumber of Unemployed
Number of Unemployed (not seasonally-adjusted)
January 2008 December 2013
Area Name Number of Unemployed Number of Unemployed
Asheville, NC Metropolitan Statistical Area, NC 9,204 10,682
Burlington, NC Metropolitan Statistical Area, NC 3,886 4,601
Charlotte-Gastonia-Concord, NC-SC Metropolitan Statistical A, NC 45,910 60,303
Durham-Chapel Hill, NC Metropolitan Statistical Area, NC 10,931 13,287
Fayetteville, NC Metropolitan Statistical Area, NC 8,560 12,464
Goldsboro, NC Metropolitan Statistical Area, NC 2,648 3,588
Greensboro-High Point, NC Metropolitan Statistical Area, NC 20,140 25,011
Greenville, NC Metropolitan Statistical Area, NC 4,794 6,398
Hickory-Lenoir-Morganton, NC Metropolitan Statistical Area, NC 11,584 11,718
Jacksonville, NC Metropolitan Statistical Area, NC 3,137 4,359
Raleigh-Cary, NC Metropolitan Statistical Area, NC 22,717 30,963
Rocky Mount, NC Metropolitan Statistical Area, NC 4,970 6,363
Wilmington, NC Metropolitan Statistical Area, NC 9,225 12,669
Winston-Salem, NC Metropolitan Statistical Area, NC 11,981 14,403
MSA Number of Job Openings
Number of Job Openings
January 2008 December 2013
Area Name Number of Job Openings Number of Job Openings
Asheville, NC Metropolitan Statistical Area, NC 7,082 9,961
Burlington, NC Metropolitan Statistical Area, NC 2,173 2,558
Charlotte-Gastonia-Concord, NC-SC Metropolitan Statistical A, NC 54,910 49,251
Durham-Chapel Hill, NC Metropolitan Statistical Area, NC 19,724 15,268
Fayetteville, NC Metropolitan Statistical Area, NC 7,487 7,795
Goldsboro, NC Metropolitan Statistical Area, NC 1,875 1,538
Greensboro-High Point, NC Metropolitan Statistical Area, NC 8,673 17,695
Greenville, NC Metropolitan Statistical Area, NC 5,315 4,619
Hickory-Lenoir-Morganton, NC Metropolitan Statistical Area, NC 4,861 5,151
Jacksonville, NC Metropolitan Statistical Area, NC 2,122 2,893
Raleigh-Cary, NC Metropolitan Statistical Area, NC 34,937 33,956
Rocky Mount, NC Metropolitan Statistical Area, NC 2,119 2,274
Wilmington, NC Metropolitan Statistical Area, NC 6,717 7,868
Winston-Salem, NC Metropolitan Statistical Area, NC 9,369 8,072
MSA Job Supply and Demand
Number of Unemployed to Number of Job Openings January 2008 December 2013
Area Name Number of Unemployed per Job Opening Number of Unemployed per Job Opening
Asheville, NC Metropolitan Statistical Area, NC 1.30 1.07
Burlington, NC Metropolitan Statistical Area, NC 1.79 1.80
Charlotte-Gastonia-Concord, NC-SC Metropolitan Statistical A, NC 0.84 1.22
Durham-Chapel Hill, NC Metropolitan Statistical Area, NC 0.55 0.87
Fayetteville, NC Metropolitan Statistical Area, NC 1.14 1.60
Goldsboro, NC Metropolitan Statistical Area, NC 1.41 2.33
Greensboro-High Point, NC Metropolitan Statistical Area, NC 2.32 1.41
Greenville, NC Metropolitan Statistical Area, NC 0.90 1.39
Hickory-Lenoir-Morganton, NC Metropolitan Statistical Area, NC 2.38 2.27
Jacksonville, NC Metropolitan Statistical Area, NC 1.48 1.51
Raleigh-Cary, NC Metropolitan Statistical Area, NC 0.65 0.91
Rocky Mount, NC Metropolitan Statistical Area, NC 2.35 2.80
Wilmington, NC Metropolitan Statistical Area, NC 1.37 1.61
Winston-Salem, NC Metropolitan Statistical Area, NC 1.28 1.78
Housing in 2013
0
100
200
300
400
500
600
700
800
I II III
IV
I II III
IV
I II III
IV
I II III
IV
I II III
IV
I II III
IV
I II III
IV
2007 2008 2009 2010 2011 2012 2013
749.3
717.3
671.7
616.4
565.5538.4
507.4
452.1
405.5
376.3392 395.2 383.1
400.8
365.6 374.7 377.1 381 386.8 398.1418.4 425.7
443.7468.8
490.3513.2
532.6 531
US Residential Construction (NIPA) 2007-2013
US Residential Building Permits
Year Total Permits Single Family Permits1991 948.8 753.5
1992 1,094.9 910.7
1993 1,199.1 986.5
1994 1,371.6 1,068.5
1995 1,332.5 997.3
1996 1,425.6 1,069.5
1997 1,441.1 1,062.4
1998 1,612.3 1,187.6
1999 1,663.5 1,246.7
2000 1,592.3 1,198.12001 1,636.7 1,235.6
2002 1,747.7 1,332.6
2003 1,889.2 1,460.9
2004 2,070.1 1,613.4
2005 2,155.3 1,682.0
2006 1,838.9 1,378.2
2007 1,398.4 979.9
2008 905.4 575.6
2009 583.0 441.1
2010 604.6 447.3
2011 624.1 418.5
2012 829.7 518.7
2013 957.0 608.5
NC Residential Building Permits
Year Total Permits Single Family Permits2002 79,824 66,4002003 79,226 66,8832004 93,077 77,1472005 97,910 84,9752006 99,979 82,6722007 85,777 70,3392008 54,652 39,0822009 33,800 25,3882010 33,889 26,0472011 32,804 24,863
2012 48,692 29,9452013* 50,510 35,399
* Based on 11 months of data
0
2
4
6
8
10
12
14
16
Jan-
05
Apr Ju
l
Oct
Jan-
06
Apr Ju
l
Oct
Jan-
07
Apr Ju
l
Oct
Jan-
08
Apr Ju
l
Oct
Jan-
09
Apr Ju
l
Oct
Jan-
10
Apr Ju
l
Oct
Jan-
11
Apr Ju
l
Oct
Jan-
12
Apr Ju
l
Oct
Jan-
13
Apr Ju
l
Oct
January 200912.4 Months Supply
November 2013 4.3 Months Supply
U.S. Monthly New Home Inventory
(Seasonally Adjusted)
US Case Schiller Housing Price Index
(Composite 20)
Month Index Condition Percent Change
January 2000 100.00 Base
July 2006 206.52 Peak 106.5%
March 2012 134.07 Trough -35.1%
December 2012 146.08 9.0%
December 2013 165.69 Current 13.4%
Charlotte Case Schiller Housing Price Index
Month Index Condition Percent Change
January 2000 100.00 Base
July 2007 135.61 Peak 35.6%
January 2012 108.39 Trough -20.1%
December 2012 115.05 6.1%
December 2013 124.07 Current 7.8%
Keys to Watch
• Consumer Confidence
• Consumer Debt
• Housing Prices
• Excess Reserves
• US Monthly Job Growth (1st Friday)
• Gasoline Prices
Babson Capital/UNC Charlotte
Economic ForecastMarch 11, 2014
Current Expansion
• Began July 2009
• 54 months
• 7th longest of 33 total expansions since December 1854
Updated Sept 2013
1980 19741969 19481953
19571981 1990 2001
2007
1960