employment 28 months following trough...largest employment gains peak of business cycle to present,...

Employment 28 Months Following TroughU.S. Recessions Comparison

11/01 - 3/043/91 - 7/93

11/82 - 3/857/80 - 11/82

3/75 - 7/7711/70 - 3/73

2/61 - 6/633/58 - 8/60

5/54 - 9/5610/49 - 2/52

114

112

110

108

106

104

102

100

98

Trough Month = 100

Employment 36 Months Following PeakU.S. Recessions Comparison

3/01 - 3/047/90 - 7/93

7/81 - 7/841/80 - 1/83

11/73 - 11/7612/69 - 12/72

4/60 - 4/638/57 - 8/60

7/53 - 7/5611/48 - 11/51

108

106

104

102

100

98

96

Peak Month = 100

United States vs. EuropeJob Creation

020098969492908886848280

140

130

120

110

100

90

Index 1980=100

United StatesEurope

United States vs. EuropeJob Creation

020098969492908886848280

8

6

4

2

0

-2

-4

Percent Change, Year Ago

United StatesEurope

Largest Employment LossesPeak of Business Cycle to Present, United States

Industry*Mar-01(Thou.)

Mar-04(Thou.)

Job Losses(Thou.)

PercentDecline

Communications Equipment 252.9 155.0 97.9 -38.7Apparel Manufacturing 458.2 292.8 165.4 -36.1Semiconductor & Electronic Components 703.5 451.2 252.3 -35.9Textile Mills 352.2 237.2 115.0 -32.7Computer & Electronic Product Mfg 1,852.0 1,334.2 517.8 -28.0Computer & Peripheral Equip 300.7 218.9 81.8 -27.2Electrical Equip., Appliance, & Components 579.9 447.0 132.9 -22.9Primary Metal Manufacturing 596.6 460.7 135.9 -22.8ISPs, Web Search Portals, & Data Processing 515.0 402.6 112.4 -21.8Telecommunications 1,330.9 1,055.4 275.5 -20.7

* Minimum 100k Jobs During March 2004

Largest Employment GainsPeak of Business Cycle to Present, United States

* Minimum 100k Jobs During March 2004

IndustryMar-01(Thou.)

Mar-04(Thou.)

Job Gains(Thou.)

PercentIncrease

Home Health Care Services 630.7 742.8 112.1 17.8State Gov't Educational Services 2,061.3 2,289.2 227.9 11.1Social Assistance Services 1,918.8 2,110.2 191.4 10.0Wholesale Electronic Brokers 606.3 666.5 60.2 9.9Child Day Care Services 705.0 773.1 68.1 9.7Credit Intermediation 2,569.0 2,799.2 230.2 9.0Outpatient Care Centers 395.3 429.6 34.3 8.7Offices of Physicians 1,889.2 2,042.4 153.2 8.1Building Materials Dealers 1,151.7 1,231.9 80.2 7.0Hospitals 4,018.0 4,296.2 278.2 6.9

Historical ProductivityOutput per Man-Hour

020098969492908886848280

10

8

6

4

2

0

-2

-4

Percent Change, SAAR

Non-Farm Business SectorManufacturing Sector

Cumulative Jobs Lost or AddedCurrent vs. Previous Cycle

20032002

2

1

0

-1

-2

-3

Millions of Jobs Lost/Added

Mar. '01 Mar. '04

Previous CycleJuly '90 - June '93

Current Cycle

Household vs. Establishment SurveysUnited States

20032002200120001999199819971996

5

3

2

-0

-2

-4

-5

-7

5

3

2

-0

-2

-4

-5

-7

Percent Change, Year Ago Difference in Jobs Between Surveys

Establishment Survey - LHousehold Survey - LNet Difference - R

Household vs. Establishment SurveysEmployment Level Comparison, United States

20032002200120001999199819971996

140

135

130

125

120

115

Millions

Establishment SurveyHousehold Survey

Growth of Self-Employed WorkersUnited States

20032002

110

105

100

95

90

85

March 2001 = 100

Mar. '01 Mar. '04

1 - 34 Hours35+ Hours

Self-Employed WorkersUnited States

20032002

20

15

10

5

0

-5

-10

-15


Mar. '01 Mar. '04

1 - 34 Hours35+ Hours

A Tale of Two SurveysHow Many More Jobs in Household Survey?

20032002200120001999199819971996

7

6

5

4

3

2

1

0

Millions

Research & Development Inputs2004 State Science & Technology Index

Top Ten2nd Tier3rd TierBottom Tier

Federal Research & DevelopmentDollars per Capita, 2004


Industry Research & DevelopmentDollars per Capita, 2004


Academic Research & DevelopmentDollars per Capita, 2004


Risk Capital Infrastructure Component2004 State Science & Technology Index


Number of Business Startsper 100,000 People


IPO Proceeds as Percent of GSP2004 State Science & Technology Index

Top Ten2nd TierBottom Tier

Number of Business Incubatorsper 10,000 Business Establishments


World Knowledge Competitive IndexIT & Computer Manufacturing Employment

Rank Region Score1 Austin, US 751.12 San Francisco, US 493.03 Portland-Salem, US 323.24 Kanagawa, Japan 302.55 Phoenix-Mesa, US 284.66 Zuid-Nederland, Netherlands 265.17 Boston, US 232.88 Sacramento-Yolo, US 203.29 Stockholm, Sweden 201.910 Ireland 199.6

World Knowledge Competitive IndexBiotechnology & Chemical Sector Employment

Rank Region Score1 Hessen, Germany 322.52 Cincinnati-Hamilton, US 248.93 Philadelphia, US 242.94 Nordrhein-Westfalen, Germany 224.35 Vlaams Gewest, Belgium 220.26 Lombardia, Italy 216.57 Raleigh-Durham, US 204.48 Richmond-Petersburg, US 199.39 Grand Rapids, US 194.8

10 Indianapolis, US 176.2

World Knowledge Competitive IndexHigh Technology Service Sector Employment

Rank Region Score1 Denver-Boulder-Greeley, US 218.52 Switzerland 207.93 San Francisco, US 198.14 Washington, US 191.75 Uusimaa, Finland 186.56 Kansas City, US 172.27 Stockholm, Sweden 169.28 Atlanta, US 169.19 Raleigh-Durham, US 168.410 Louisville, US 161.1

Sales of Services through Cross-Border TradeUnited States Trade Activity

0201009998979695949392919089888786

300

252

203

155

107

58

10

US$ Billions

ExportsImports

Sales of Services through Cross-Border TradeUnited States Trade Activity

02010099989796959493929190898887

20

15

10

5

0

-5


ExportsImports

Computer ProgrammersAverage Salaries, 2003

Country Salary RangePoland & Hungary $4,800 - $8,000India $5,880 - $11,000Philippines $6,564Malaysia $7,200Russian Federation $5,000 - $7,500China $8,952Canada $28,174Ireland $23,000 - $34,000Israel $15,000 - $38,000USA $60,000 - $80,000

Employment by Foreign Firms in U.S.Top Ten States by Percent of Labor Force, 2004

State

US SubsidiaryEmployment

(Thou.)

State Labor Force

(Thou.)Percent of

Labor ForceDelaware 29.8 421.64 7.07Connecticut 123.9 1795.23 6.90South Carolina 136.7 2039.44 6.70Hawaii 41.8 625.09 6.69Massachusetts 220.8 3412.89 6.47New Hampshire 45.2 726.26 6.22New Jersey 270.8 4401.38 6.15North Carolina 237.7 4195.19 5.67Georgia 243.8 4395.94 5.55Tennessee 157 2943.5 5.33US 6326.1 147090.62 4.30

Employment by Foreign Firms in U.S.Top Ten States by Number of Employees, 2004

State

US SubsidiaryEmployment

(Thou.)State Labor

Force (thou.)% of Labor

ForceCalifornia 713.5 17569.87 4.06New York 480.8 9294.09 5.17Texas 428.1 10961.51 3.91Illinois 320.9 6391.6 5.02Florida 303.3 8301.49 3.65New Jersey 270.8 4401.38 6.15Pennsylvania 267.1 6212.74 4.30Michigan 244.2 5071.17 4.82Georgia 243.8 4395.94 5.55Ohio 242.2 5871.88 4.12

Employment by Foreign Firms in U.S.by Number of Employees, 2004

Largest Number2nd Tier3rd TierLowest Number

Employment by Foreign Firms in U.S.by Percent of Labor Force, 2004

Highest %2nd Tier3rd TierLowest %

Attributes of Jobs Outsourced

•No Face-to-Face Customer Servicing Requirement

•High Information Content

•Work Process is Telecommutable & Internet Enabled

•High Wage Differential w/Similar Occupation in Destination Country

•Low Setup Barriers

•Low Social Networking Requirement

Occupations at Risk to OutsourcingU.S. Employment

SectorsEmployment

(2001)*Avg. AnnualSalary, 2001

All Occupations (Total Employment) 128.0 34,020$ Occupations at Risk of OutsourcingOffice Support 8.6 29,791$

Computer Operators 0.2 30,780$ Data Entry Keyers 0.4 22,740$

Business & Financial Support 2.2 52,559$ Computer & Math Prfessionals 2.8 60,350$ Paralegals & Legal Assistants 0.2 39,220$ Diagnostic Support Services 0.2 38,860$ Medical Transcriptionists 0.1 27,020$

Total in Outsourcing Risk Occupations 14.1 39,631$ Percent of all Occupations 11.0%

* Employment in Millions

International Investment PatternsForeign Direct Investment vs. U.S. Direct Investment

20032002200120001999199819971996

140

120

100

80

60

40

20

0

-20

US$ Billions

U.S. Direct Investment AbroadForeign Direct Investment in U.S.

Natural Science & Engineering DegreesYearly Graduates, 1998

U.S.So. Korea

GermanyJapan

IndiaChina

Russia

250

200

150

100

50

Thousands

Scientists & Engineers in R&DTop 10 Countries

Rank Country NumberPer MillionPopulation

1 Japan 648,778 5,0952 Finland 26,378 5,0593 Sweden 40,534 4,5114 Singapore 19,737 4,1405 Norway 18,811 4,1126 United States 1,201,233 4,0997 Switzerland 26,762 3,5928 Russian Federation 501,621 3,4819 Denmark 18,816 3,476

10 Australia 66,775 3,35350 China 705,689 54572 India 167,414 157

Science & Technical Journal ArticlesTop 10 Countries

Rank Country NumberPer MillionPopulation

1 Switzerland 6,993 938.552 Sweden 8,326 926.513 Israel 5,025 810.614 Finland 4,025 771.885 Denmark 4,131 763.116 United Kingdom 39,711 658.887 Netherlands 10,441 639.848 Australia 12,525 628.989 Canada 19,685 605.55

10 New Zealand 2,375 594.6712 United States 163,526 558.0634 Russian Federation 15,654 108.6272 China 11,675 9.0274 India 9,217 8.65

Expenditures for R&DTop 10 Countries

Rank Country% of GDP

US$ Billions

1 Sweden 3.80 11.212 Israel 3.62 3.963 Finland 3.37 5.364 Japan 2.98 124.885 United States 2.69 292.546 Korea, Rep. 2.68 13.817 Switzerland 2.64 8.228 Germany 2.48 59.089 France 2.15 37.38

10 Denmark 2.09 4.400.0021 India 1.23 6.8325 China 1.00 13.7226 Russian Federation 1.00 4.29

High Technology ExportsTop 10 Countries

Rank CountryUS$

MillionsUS$ per Capita

1 United States 178,906 610.52 Japan 99,389 780.53 Germany 85,958 1,042.94 United Kingdom 67,416 1,118.65 France 67,191 1,112.06 Singapore 62,572 13,123.47 China 49,427 38.28 Malaysia 40,939 1,740.49 Korea, Rep. 40,427 831.9

10 Netherlands 38,960 2,387.50.029 Russian Federation 3,257 22.633 India 1,680 1.6

Patent Applications FiledTop 10 Countries

Rank Country NumberPer Million*Population

1 Finland 195,328 37,4592 Denmark 197,184 36,4253 Switzerland 194,547 26,1114 Austria 197,915 24,2105 Sweden 193,886 21,5756 Sierra Leone 116,129 19,7377 Portugal 198,574 19,6238 Bosnia & Herzegovina 59,157 14,7619 Norway 66,213 14,47410 Belgium 139,931 13,52261 United States 156,191 53362 Russian Federation 65,771 45669 China 96,714 7571 India 60,852 57

*Minimum Population = 4 Million

Current and Projected New JobsDue to IS Outsourcing, Selected Industries

Industry Group 2003 2008Natural Resources & Mining 1,046 1,182Construction 19,815 75,757Manufacturing 3,078 25,010Wholesale Trade 20,456 43,359Retail Trade 12,552 30,931Transportation & Utilities 18,895 63,513Publishing, Software & Comm -24,860 -50,043Financial Services 5,604 32,066Professional & Business Services 14,667 31,623Education & Health Services 18,015 47,260Leisure, Hospitality & Other Svcs. 4,389 12,506Government -3,393 4,203Total Employment 90,264 317,367

Net New Jobs

U.S. Trade in ServicesBusiness, Professional, and Technical Services

200220012000199919981997

70

60

50

40

30

20

10

US$ Billions

ReceiptsPayments

U.S. Trade in ServicesComputer and Information Services

200220012000199919981997

7

6

5

4

3

2

1

US$ Billions

ReceiptsPayments

U.S. Trade in ServicesResearch and Development and Testing Services

20022001

7

6

5

4

3

2

1

US$ Billions

ReceiptsPayments

U.S. Trade in ServicesOther Business, Professional, and Technical Services

200220012000199919981997

45

40

35

30

25

20

15

US$ Billions

ReceiptsPayments

IT Jobs Displaced in the U.S.Including Jobs Lost & Not Created Between 2000 and 2003

400

350

300

250

200

150

100

50

Thousands of Jobs

Total IT Jobs Lost Due to:•Recession•Dot-com Bubble Burst•Productivity Gains•Over-hiring in 1990s•Offshore ITO

IT Jobs Lost or not Created Due to Offshore ITO

372,000

104,000

Purchase of ICT EquipmentOffshore Service Providers Buy More ICT Equipment

200820072006200520042003200220012000

2.0

1.5

1.0

0.5

0.0

US$ Billions

Occupations Projected to Grow FastestPercent Change in Employment, 2000-2010

0 10 20 30 40 50 60 70 80 90 100

Computer Software Engineers, Applications

Computer Support Specialists

Computer Software Engineers, Systems Software

Network & Computer Systems Administrators

Network Systems & Data Comm. Analysts

Desktop Publishers

Database Administrators

Personal & Home-Care Aides

Computer Systems Analysts

Medical Assistants

Human Capital Dislocation MitigationDomestic Strategy

•New Job Policies for Displaced Workersa. Wage Insurance?

•Entry and Skill-upgrading Policies in a Career-ladder, Technology-related Jobs Where Human Capital Depreciates Rapidly.

a. Human Capital Investment Tax Credit Through Firms?

•Migration/Flexibility Policies to Mitigate Adjustment Costsa. Better Job Opportunities Information?b. Pension and Health Care Portability?

Communications EquipmentPrivate Fixed Investment

0302010099989796959493

120

100

80

60

40

30

20

10

0

-10

-20

-30

-40

US$ Billions Percent Change, Year Ago

Investment Level - LPercent Change - R

200320022001

1200

1000

800

600

400

200

Basis Points

Risk Spread, 9-11 and Iraq

Sep.11, 2001

Bush’s Speech at the UN about Iraq

Congress authorized use of

force in Iraq.

Saddam statue toppled.

200320022001

1.30

1.20

1.10

1.00

0.90

0.80

Dollar Per Euro

Decline of the Dollar 9-11 and Iraq

Sep.11, 2001

Bush’s Speech at the UN about Iraq Congress

authorized use of force in Iraq.


200320022001

135

130

125

120

115

110

105

100

Yen Per Dollar

Sep.11, 2001

Bush’s Speech at the UN about Iraq

Congress authorized use of

force in Iraq.


Decline of the Dollar 9-11 and Iraq

US Inflation

0301999795939189878583817977757371

16

14

12

10

8

6

4

2

0


Recession

Relative Growth RatesReal GDP Growth

1.14.01.80.63.16.3Latin America

0.83.62.53.12.51.4European Union

2.63.82.71.83.8-0.2United States

2.02.81.85.24.69.6Japan

7.58.010.53.813.57.9China

200320001995199019851980

Relative Unemployment Rates

7.07.17.25.2N/ALatin America

8.07.810.18.9N/AEuropean Union

6.04.05.65.67.2United States

5.34.73.22.12.6Japan

N/A3.12.92.51.8China

20032000199519901985

200019951990198519801975197019651960

70

60

50

40

30

Percent of GDP

Is the World Threatened by U.S. Budget Deficits?

Dow Jones Industrial Average

9/11 event

200320022001200019991998199719961995199419931992

120

100

80

60

40

20

Index 2000=100

Declining U.S. Labor Costs Unit Labor Costs

030201009998979695949392

6

4

2

0

-2

-4


The Major Creditor of the Post WWII Era:US is now the world's largest debtor -- by far!

Debtor to the World

Creditor to the World

95% of FDI Is Merely To Acquire The Global Assets of US-Based Firms

FDI to Establish New USBusinesses

FDI to Acquire Existing USBusinesses

Worst Ever US Losses in Current Accounts

US Current Account Balance: 2003-$541,829,000,000

Daily Deficit of -$1,484,463,000Deficit Per Minute of -$1,030,877

US Trade Balance in Advanced Tech Goods

The Explosion of US Federal Debt

US Job Growth Almost Entirely In Services Not Exposed to Import Competition

Manufacturing Jobs

Service Providing Jobs

Growth of Real Compensation Per Hour Has Slowed Sharply Since the 1970s

Growth of Real GDP Has Remained Within A Reduced, Narrow Range Since the 1970s

Federal Revenue Other than Social Security/Retirement:Lowest Level of GDP Since 1942

Regional Innovation Life Cycle

Knowledge Creation

Technology Transfer

CommercializationClusters and

Networks

Patents

Licenses

Incubation/ Research Parks

Venture Capital

Business Planning

IPOs/gazelles

Job Creation

Labor Market/ Graduates

M&A Activity

Economies of Scale

Federal R&D

Industry Consortia and Partnerships

Regulatory Environment

Value -add

Conception Formation

GrowthMaturity

Clinical Trials

Regulatory Approval

Industry R&D

Universities and Research Institutions

Product Pipeline

Proof of Concept Testing

Collaborations/ Partnerships

Knowledge Creation

Technology Transfer


Networks

Patents

Licenses


Venture Capital

Business Planning

IPOs/gazelles

Job Creation


M&A Activity

Economies of Scale

Federal R&D



Value -add


GrowthMaturity

Clinical Trials

Regulatory Approval

Industry R&D


Product Pipeline



Knowledge Creation

Technology Transfer


Networks

Patents

Licenses


Venture Capital

Business Planning

IPOs/gazelles

Job Creation


M&A Activity

Economies of Scale

Federal R&D



Value -add


GrowthMaturity

Clinical Trials/Prototype

Regulatory Approval

Industry R&D


Product Pipeline



2002-'04: First "Recovery" With Stagnant Industrial Output

Historic weakness of industrial output from March,'91 to July,'93

Stagnation of Total industrial output from Nov,'01 to March,'04

© MBG Information Services

2002-'04: First "Recovery" With Stagnant Manufacturing Output

Historic weakness of manufacturing output from March,'91 to July,'93

Stagnation of Total manufacturing output from Nov,'01 to March.'04

© MBG Information Services

employment 28 months following trough...largest employment gains peak of business cycle to present,...

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