Microsoft PowerPoint - Waddell_VHC_070820_2Sonya Ravindranath Waddell Vice President and Economist, Regional and Community Analysis Research Department Federal Reserve Bank of Richmond
July 8, 2020
Where were we then? The Pre-Virus Economy • GDP was growing at a steady pace with strong consumer
spending and a rebound in residential investment, although some softness in business investment.
• Employment was expanding and the unemployment rate was at its lowest level since the late 1960s.
• Virginia economic activity was tracking that of the U.S., with (albeit weaker) employment growth and historically low unemployment rates.
The effects of COVID-19 really started for the U.S. in the middle of March, although supply chain frictions emanating from the outbreak in China began as early as December in some industries.
2
Where are we now? • The U.S.
– Almost 47 million people filed for unemployment since the middle of March – Unemployment rate peaked at 14.7% in April, down to 11.1% in June – Employment fell by more than 20 million (!!) jobs in April and then rose by
2.5 million in May and another 4.8 million in June – GDP fell 4.8% in the first quarter, and it will fall further in the second.
Everything from consumption/retail sales to economic activity indices to sentiment indices dropped notably
• Virginia and the Region – Unemployment claims in Virginia shot up – Unemployment rates rose and employment fell considerably in April, but
the May employment report in Virginia showed improvement – Manufacturing and service sector indices for the full Fifth District had their
largest drops in the history of the series, but have since turned around – Housing indicators showed some decline but have since improved
3
Even with the social distancing measures enacted in only the last two weeks of Q1, GDP declined sharply
4
-50
-40
-30
-20
-10
0
10
20
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
% Change, SAAR
Q2: -41.9
Q3: 13.2
Q4: 10.1
Q1: 2020 US: -5.0%
5
0
1000
2000
3000
4000
5000
6000
7000
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
United States Unemployment Insurance Initial Claims United States
Week ending March 7: 211,000 Week ending March 14: 282,000 Week ending March 21: 3,307,000 Week ending March 28: 6,867,000 Week ending April 4: 6,615,000 Week ending April 11: 5,237,000 Week ending April 18: 4,442,000 Week ending April 25: 3,867,000 Week ending May 2: 3,176,000 Week ending May 9: 2,687,000 Week ending May 16: 2,446,000 Week ending May 23: 2,123,000 Week ending May 30: 1,897,000 Week ending June 6: 1,566,000 Week ending June 13: 1,540,000 Week ending June 20: 1,482,000 Week ending June 27: 1,427,000
Thousands
Continuing claims remain elevated
6
0
5000
10000
15000
20000
25000
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
United States Unemployment Insurance Continued Claims United States
Week ending March 7: 1702 Week ending March 14: 1784 Week ending March 21: 3059 Week ending March 28: 7446 Week ending April 4: 11914 Week ending April 11: 15819 Week ending April 18: 18011 Week ending April 25: 22377 Week ending May 2: 22548 Week ending May 9: 24912 Week ending May 16: 20841 Week ending May 23: 21268 Week ending May 30: 20606 Week ending June 6: 20289 Week ending June 13: 19231 Week ending June 20: 19290
Thousands
Employment is on a recovery path
Monthly Change June: 4800 May: 2699
April: -20787
…And unemployment is high
Source: Bureau of Labor Statistics, Federal Reserve Board of Governors/Haver Analytics
June 2020 US: 11.1%
8
0
2
4
6
8
10
12
14
16
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Unemployment Rate (Percent)
-40
-30
-20
-10
0
10
20
30
40
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
% Change, SAAR
9
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
0.2
0.4
0.6
0.8
1.0
1.2
1.4
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Millions, SAARMillions, SAAR
New Home Sales (Left axis) Existing Home Sales (Right axis)
90s Average: New Sales
90s Average: Existing Sales
10
0.0
0.2
0.4
0.6
0.8
1.0
1.2
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Millions, SAAR Single-family Housing Permits Single-family Housing Starts
May 2020 Permits: 0.75 Starts: 0.68
90's Average Permits: 1.010
90's Average Starts: 1.105
Source: Bank of Tokyo-Mitsubishi UFJ and Census Bureau via Haver Analytics
11
12
-20
-15
-10
-5
0
5
10
15
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
YoY % Chg Total Sales Non-Distressed Sales
April 2020 Total: 5.4%
Regional Economy
Source: Department of Labor/Haver Analytics
14
0
30
60
90
120
150
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Thousands Virginia Unemployment Insurance Initial Claims Virginia
Week ending March 7: 2527 Week ending March 14: 2706 Week ending March 21: 46277 Week ending March 28: 112497 Week ending April 4: 147369 Week ending April 11: 104619 Week ending April 18: 82729 Week ending April 25: 72488 Week ending May 2: 59631 Week ending May 9: 52139 Week ending May 16: 44699 Week ending May 23: 39242 Week ending May 30: 31379 Week ending June 6: 29231 Week ending June 13: 27186 Week ending June 20: 25293 Week ending June 27: 33062
Continuing claims are coming down some
0
50
100
150
200
250
300
350
400
450
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Thousands Virginia Unemployment Insurance Continued Claims Virginia
Week ending March 7: 21336 Week ending March 14: 21628 Week ending March 21: 41827 Week ending March 28: 133184 Week ending April 4: 236791 Week ending April 11: 297993 Week ending April 18: 341295 Week ending April 25: 376689 Week ending May 2: 392673 Week ending May 9: 403557 Week ending May 16: 402926 Week ending May 23: 398411 Week ending May 30: 396056 Week ending June 6: 386893 Week ending June 13: 375579 Week ending June 20: 367259
Source: Department of Labor/Haver Analytics
15
-16
-14
-12
-10
-8
-6
-4
-2
0
2
4
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
YoY % Chg (SA) U.S. Virginia
May 2020 US: -11.7% VA: -9.1%
Source: Bureau of Labor Statistics/Haver Analytics
16
0.5
5.3
8.8
18.6
1.9
6.4
14.5
16.7
7.5
3.7
16.1
0.2
5.5
6.2
16.3
1.8
5.7
20.1
13.4
7.2
4.8
18.8
0 2 4 6 8 10 12 14 16 18 20 22
Natural Resources & Mining
18
-533
261
1,403
399
160
10
-39
354
250
453
-19
-952
-1,279
-7,575
-2,603
-2,202
-261
-279
-3,248
-1,317
-1,018
-53
Government
Other
United States Employment Change March to April April to May
Jobs are coming back across industries
19
-20.9
0.3
19.9
6.2
10.2
-0.7
-1.1
4.3
-1.3
2.7
0.2
-28.6
-24.7
-163.8
-62.0
-45.6
-5.6
0.1
-58.8
-10.2
-6.1
-0.3
-180 -160 -140 -120 -100 -80 -60 -40 -20 0 20
Government
Other
Virginia Employment Change March to April April to May
Employment varies by industry
20
65
75
85
95
105
115
125
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Education & Health Services
Source: Bureau of Labor Statistics/Haver Analytics
Unemployment rates are coming down
0
2
4
6
8
10
12
14
16
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Percent U.S. Virginia
21
22
23
Source: Bank of Tokyo-Mitsubishi UFJ/ Haver Analytics
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
0
5
10
15
20
25
30
35
40
45
50
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
SAAR, thousandsSAAR, thousands
Virginia (Left Axis)
24
Permitting activity tracks the U.S. but remains below where it was in the 1990s
25
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
UnitsUnits Virginia (Left Axis) United States (Right Axis)
Virginia 1990s average
Source: CoreLogic Information Solutions
-20
-15
-10
-5
0
5
10
15
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
YoY % Chg U.S.
26
27
-20
-15
-10
-5
0
5
10
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
YoY % Chg Virginia Richmond Virginia Beach Washington, D.C.
April 2020 VA: 4.0%
Washington, D.C.: 5.7%
28
-20
-15
-10
-5
0
5
10
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
YoY % Chg Virginia Charlottesville Blacksburg Roanoke
April 2020 VA: 4.0%
Charlottesville: 1.8% Blacksburg: 5.4%
29
70
75
80
85
90
95
100
105
110
Index February 1 = 100
0
1
2
3
4
Percent 30-59 days 60-89 days 90+ days
90 + Day Delinquency Rate
0
1
2
3
4
5
6
Percent United States Virginia
32
0
1
2
3
4
5
Percent United States
33
• The second quarter (April-June) numbers will look worse than the first quarter.
• The June employment report was unequivocally positive. Hopefully, that signals an economy that will improve faster than anticipated—in the U.S. and Virginia—though the labor market is not likely to look the same.
• What are the unknowns? Among other things… – How will the pandemic progress over the next few weeks and
months? – When will businesses reopen? What operational changes will they
see in the short- and long-term? – When will consumers return in large number and where will they
go? – When will employees be able and willing return?
Questions/Comments