national outlook...national outlook j. michael jones, phd december 4, 2020 office of state budget...
TRANSCRIPT
NATIONAL OUTLOOK
J. MICHAEL JONES, PHD
DECEMBER 4, 2020
Office of State Budget Director
Control Scenario(Probability – 50%)
GDP growth slows to 0.6% in FY2021and 2.2% in FY2022
Sharp deceleration in growth from FY2021Q1 growth of 33.1%
COVID-19 infection rates exceed expectations going into colder
weather months and new restrictions implemented
Previous stimulus efforts fading and new stimulus removed from
baseline assumptions
GDP pre-pandemic peak reached in FY2022Q3
Overshooting on housing starts and consumer purchases of durable
goods unwind over the next several quarters
Federal Reserve maintains Federal Funds rates near 0%
Increases in Brent oil prices, as oil expected to be $53.17/bbl by
FY2022Q3, stabilizing US domestic drilling and production activity
2
Optimistic Scenario
(Probability – 25%)
GDP growth increases to 1.3% in FY2021and 3.1% in FY2022
New fiscal stimulus fuels recovery
Direct payments to households of $270 billion
Re-introduction of emergency unemployment benefits at $300 per week
Extension of PUA and PEUC unemployment programs to FY2021Q4
COVID-19 vaccine availability by FY2021Q2 and widespread
availability the next quarter
Employment increases by 4.4% in FY2022
Unemployment under 4.5% by FY2022Q3
Real Consumer Spending increase by 3.5% in FY2022
GDP pre-pandemic peak reached in FY2022Q1
3
Pessimistic Scenario
(Probability – 25%)
GDP growth decreases to -0.4% in FY2021and 1.6% in FY2022
No new fiscal stimulus
Increase in COVID-19 cases, hospitalizations, and deaths relative to
baseline forecast
Retrenchment of consumer spending and pace of economic
expansion slows
Employment increases by 3.0% in FY2022
Unemployment under 5.0% by FY2024Q1
Real Consumer Spending increase by 1.6% in FY2022
GDP pre-pandemic peak reached in FY2023Q1- two quarters later
than baseline forecast
4
Real GDP(Billions of Chained 2012 Dollars, Annual Rate, BEA)
$12,000
$13,000
$14,000
$15,000
$16,000
$17,000
$18,000
$19,000
$20,000
$21,000
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Optimistic Pessimistic Control
5
Real GDP(IHS Markit, Annual Growth Rates)
2.5%
-1.1%
0.6%
2.2%
2.5%
-1.1%
1.3%
3.1%
2.5%
-1.1%
-0.4%
1.6%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
FY2019 FY2020 FY2021 FY2022
Control Optimistic Pessimistic
6
U.S. Employment – Total Non-Farm Payrolls(Millions, BLS)
120.0
125.0
130.0
135.0
140.0
145.0
150.0
155.0
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Optimistic Pessimistic Control
7
U.S. Employment – Total Non-Farm Payrolls(IHS Markit Forecast, Annual Growth Rates)
1.5%
-1.9% -2.0%
3.7%
1.5%
-1.9%
-1.5%
4.4%
1.5%
-1.9%
-2.8%
3.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
FY2019 FY2020 FY2021 FY2022
Control Optimistic Pessimistic
8
U.S. Employment – Manufacturing(Millions, BLS)
11.0
11.5
12.0
12.5
13.0
13.5
14.0
14.5
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Optimistic Pessimistic Control
9
U.S. Employment – Manufacturing(IHS Markit Forecast, Annual Growth Rates)
1.9%
-1.7%
-2.5%
1.4%
1.9%
-1.7%
-2.1%
2.3%
1.9%
-1.7%
-2.6%
1.6%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
FY2019 FY2020 FY2021 FY2022
Control Optimistic Pessimistic
10
Housing Starts(Millions, Annual Rate, U.S. Bureau of the Census)
0.0
0.5
1.0
1.5
2.0
2.5
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Optimistic Pessimistic Control
11
Housing Starts(IHS Markit Forecast, Annual Growth Rates)
-2.6%
8.3%
6.7%
-6.2%
-2.6%
8.3%
10.1%
-3.9%
-2.6%
8.3%
5.1%
-9.4%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
FY2019 FY2020 FY2021 FY2022
Control Optimistic Pessimistic
12
Real Personal Income(Billions of Chained 2012 Dollars, Annual Rate, BEA)
$10,000
$11,000
$12,000
$13,000
$14,000
$15,000
$16,000
$17,000
$18,000
$19,000
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Optimistic Pessimistic Control
13
Real Personal Income(IHS Markit Forecast, Annual Growth Rates)
2.9%
3.8%
-0.2%
-0.8%
2.9%
3.8%
0.3%
-0.2%
2.9%
3.8%
-1.0% -0.9%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
FY2019 FY2020 FY2021 FY2022
Control Optimistic Pessimistic
14
Real Consumer Spending (Excluding Food and Energy)(Billions of 2012 Dollars, Annual Rate, BEA)
$7,000
$8,000
$9,000
$10,000
$11,000
$12,000
$13,000
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Optimistic Pessimistic Control
15
Real Consumer Spending (Excluding Food and Energy)
(IHS Markit Forecast, Annual Growth Rates)
2.7%
-1.7%
1.0%
2.6%2.7%
-1.7%
1.9%
3.5%
2.7%
-1.7%
-0.2%
1.6%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
FY2019 FY2020 FY2021 FY2022
Control Optimistic Pessimistic
16
Real Consumer Spending on Durable Goods(Billions of 2012 Dollars, Annual Rate, BEA)
$700
$900
$1,100
$1,300
$1,500
$1,700
$1,900
$2,100
$2,300
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Optimistic Pessimistic Control
17
Real Consumer Spending on Durable Goods
(IHS Markit Forecast, Annual Growth Rates)
4.8%
2.9%
12.7%
-0.5%
4.8%
2.9%
14.2%
0.6%
4.8%
2.9%
10.7%
-1.8%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
FY2019 FY2020 FY2021 FY2022
Control Optimistic Pessimistic
18
Nominal Consumption of Gasoline and Oil(Billions of Dollars, Annual Rate, BEA)
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Optimistic Pessimistic Control
19
Nominal Consumption of Gasoline and Oil
(IHS Markit Forecast, Annual Growth Rates)
3.3%
-14.4%
-12.9%
13.0%
3.3%
-14.4%
-10.5%
15.5%
3.3%
-14.4%-14.8%
11.9%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
FY2019 FY2020 FY2021 FY2022
Control Optimistic Pessimistic
20
Unit Sales of New Light Vehicles(Millions, Annual Rate, BEA)
8.0
10.0
12.0
14.0
16.0
18.0
20.0
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Optimistic Pessimistic Control
21
Unit Sales of New Light Vehicles (IHS Markit Forecast, Annual Growth Rates)
-0.9%
-12.0%
4.3%
0.9%
-0.9%
-12.0%
4.8%
0.2%
-0.9%
-12.0%
3.3%
-0.3%
-14.0%
-12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
FY2019 FY2020 FY2021 FY2022
Control Optimistic Pessimistic
22
Real Gross Private Fixed Investment(Billions of Chained 2012 Dollars, Annual Rate, BEA)
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Optimistic Pessimistic Control
23
Real Gross Private Fixed Investment
(IHS Markit Forecast, Annual Growth Rates)
3.4%
-1.0%
0.9%
0.8%
3.4%
-1.0%
2.3%
3.0%
3.4%
-1.0%
0.6%
-0.3%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
FY2019 FY2020 FY2021 FY2022
Control Optimistic Pessimistic
24
Real Exports of Goods and Services(Billions of Chained 2012 Dollars, Annual Rate, BEA)
$1,100
$1,300
$1,500
$1,700
$1,900
$2,100
$2,300
$2,500
$2,700
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Optimistic Pessimistic Control
25
Real Exports of Goods and Services (IHS Markit Forecast, Annual Growth Rates)
0.5%
-6.4%
-4.9%
9.4%
0.5%
-6.4%
-4.7%
9.8%
0.5%
-6.4% -6.5%
8.5%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
FY2019 FY2020 FY2021 FY2022
Control Optimistic Pessimistic
26
Real Exports of Motor Vehicles and Parts(Billions of Chained 2012 Dollars, Annual Rate, BEA)
$50
$70
$90
$110
$130
$150
$170
$190
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Optimistic Pessimistic Control
27
Real Exports of Motor Vehicles and Parts
(IHS Markit Forecast, Annual Growth Rates)
-2.3%
-15.1%
11.7%
15.3%
-2.3%
-15.1%
12.0%
15.9%
-2.3%
-15.1%
8.5%
12.8%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
FY2019 FY2020 FY2021 FY2022
Control Optimistic Pessimistic
28
KENTUCKY ECONOMIC
OUTLOOK
J. MICHAEL JONES, PHD
DECEMBER 4, 2020
Office of State Budget Director
Kentucky Non-Farm Employment(Thousands, KY MAK Model)
1,600.0
1,650.0
1,700.0
1,750.0
1,800.0
1,850.0
1,900.0
1,950.0
2,000.0
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Optimistic Pessimistic Control
30
Non-Farm Employment – US and Kentucky(Fiscal Year Growth Rates, IHS Markit and KY MAK Model)
1.7% 2.09% 1.9%1.7%
1.5% 1.5%
-1.9%-2.0%
3.7%
1.29% 1.6% 1.4%
0.9%
0.5% 0.5%
-3.1%
-1.6%
3.3%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022
US - Control KY - Control
31
Kentucky Non-Farm Employment Forecasts(KY MAK Model, Annual Growth Rates)
0.5%
-3.1%
-1.6%
3.3%
0.5%
-3.1%
-1.1%
4.1%
0.5%
-3.1%
-2.6%
2.4%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
FY2019 FY2020 FY2021 FY2022
Control Optimistic Pessimistic
32
Kentucky Manufacturing Employment(Thousands, KY MAK Model)
200.0
210.0
220.0
230.0
240.0
250.0
260.0
270.0
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Optimistic Pessimistic Control
33
Manufacturing Employment – US and Kentucky(Fiscal Year Growth Rates, IHS Markit and KY MAK Model)
0.9%
1.6%
0.6% 0.15%
1.4%
1.9%
-1.7%
-2.5%
1.4%
1.7%
3.0%2.8%
2.1%
0.3%0.5%
-4.0%
0.23%0.16%
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022
US - Control KY - Control
34
Kentucky Manufacturing Employment Forecasts(KY MAK Model, Annual Growth Rates)
0.5%
-4.0%
0.23% 0.16%
0.5%
-4.0%
0.8%
1.3%
0.5%
-4.0%
-0.3%
0.8%
-5.00%
-4.00%
-3.00%
-2.00%
-1.00%
0.00%
1.00%
2.00%
FY2019 FY2020 FY2021 FY2022
Control Optimistic Pessimistic
35
Kentucky Personal Income(Millions of Dollars, KY MAK Model)
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
$200,000
$220,000
$240,000
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Optimistic Pessimistic Control
36
Personal Income – US and Kentucky(Fiscal Year Growth Rates, IHS Markit and KY MAK Model)
3.0%
6.1%
3.4%3.7%
5.4%
4.8%
5.1%
1.3% 1.3%
2.3%
5.4%
2.9%
2.4%
3.5%
3.7%
5.4%
0.9%
1.2%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022
US - Control KY - Control
37
Kentucky Personal Income Forecasts(KY MAK Model, Annual Growth Rates)
3.7%
5.4%
0.9%
1.2%
3.7%
5.4%
1.4%
1.8%
3.7%
5.4%
0.2% 0.1%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
FY2019 FY2020 FY2021 FY2022
Control Optimistic Pessimistic
38
Kentucky Wages and Salaries(Millions of Dollars, KY MAK Model)
$50,000
$60,000
$70,000
$80,000
$90,000
$100,000
$110,000
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Optimistic Pessimistic Control
39
Wages and Salaries – US and Kentucky(Fiscal Year Growth Rates, IHS Markit and KY MAK Model)
3.3%
5.6%
3.8%
3.6%
5.2%
4.9%
1.7%
3.1%
4.7%
2.3%
4.8%
3.8%
3.2%2.9%
3.5%
0.8%
1.4%
4.5%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022
US - Control KY - Control
40
Kentucky Wages and Salaries(KY MAK Model, Annual Growth Rates)
3.5%
0.8%
1.4%
4.5%
3.5%
0.8%
2.1%
5.1%
3.5%
0.8%
0.3%
2.9%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
FY2019 FY2020 FY2021 FY2022
Control Optimistic Pessimistic
41