u.s. & centerstate ny economic outlook · 2020. 10. 30. · another key driver: regional population...

U.S. & CenterState NY

Economic Outlook

Gary D. Keith – Regional Economist

January 22, 2020

2.1%2.0%

3.1%

1.1%

2.9%3.5%

2.5%

3.5%

Seasonally Adjusted Annual Rate

U.S. Real Gross Domestic Product Growth

A Lot Has Changed in the Past 12 Months

Growth Has Decelerated...Amid Multiple HeadwindsOn an annualized basis, economic growth has averaged 2% over

the past four quarters—the slowest pace since mid-2016

3.1% average

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2017 2018 2018 2018 2018 2019 2019 2019

2.0% average

Source: U.S. Bureau of Economic Analysis 2©2020 M&T Bank, Member FDIC M&TBank

-15%

-10%

-5%

0%

5%

10%

15%

20%

2013 2014 2015 2016 2017 2018 2019

Source: CPB World Trade Monitor Data are three-month moving averages©2020 M&T Bank, Member FDIC 3M&TBank

Growth in World Merchandise Trade

Perhaps the Biggest Headwind

Drag From Declining Global Trade

Evolving U.S. trade policies, a strong dollar and

global uncertainty are hurting export demand

World Merchandise Trade

U.S. Merchandise Exports

-1.3%-2.6%October

Seasonally Adjusted

U.S. Unemployment Rate

2%

4%

6%

8%

10%

12%

14%

16%

18%

3.5%

94 96 98 00 02 04 06 08 10 12 14 16 18 19 Dec.

5.0% average

Jan 1994 to Dec 2007

Source: U.S. Bureau of Labor Statistics

R

E

C

E

S

S

I

O

N

R

E

C

E

S

S

I

O

N

Oct 2009

10.0%

6.7%8.8% average

Jan 1994 to Dec 2007

April 2010

17.1%

“Official”

Unemployment

Rate

“Broad” (U-6)Unemployment

Rate*

Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons

*

Headwind #2

“Where Will Your Next New Hire Come From?”

For the first time on record,

the number of unemployed persons

trails the number of job openings

©2020 M&T Bank, Member FDIC 4M&TBank

M&TBank©2020 M&T Bank, Member FDIC 5Sources: U.S. Bureau of Labor Statistics, Bureau of Economic Analysis

2.4%Consumer Spending

Remains RobustWith personal consumption

representing 70% of GDP, strong

performance in this sector puts a

floor under economic growth 1990s 2000s 2010s ‘19 Nov-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

R

E

C

E

S

S

I

O

N

3.3% average

Jan 1990

to Dec 2007

2.2% average

July 2009

to Nov 2018

U.S. Real Personal Consumption Growth

2013 2014 2015 2016 2017 2018 2019 Oct.3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5 Private Sector Job OpeningsMillions

6.5

“Help Wanted” Signs

Are Still Abundant

Strong hiring plans set the stage for

further income & spending growth

The Case For Optimism? Solid Labor Fundamentals

M&TBank

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

07 08 09 10 11 12 13 14 15 16 17 18 19 20 21

Interest Rate Forecast

Forecast

©2020 M&T Bank, Member FDIC

1.99%1.50%

6

10 Year Rate

Sources: Federal Reserve, M&T Bank forecast

Overnight Rate

Monetary Policy Will Remain Accommodative

The Fed is expected to cut short-term rates only once more

(September 2020), while medium- and long-term rates are expected

to drift sideways, keeping an upward slope on the yield curve

1.9%2.3%

2.9%

2.2%1.6%

3.5%

2.9%

1.9%

-0.1%

-2.5%

2.6%

1.6%

2.2%2.5%

1.8%

2.9%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20

Sources: U.S. Bureau of Economic Analysis, Blue Chip Consensus Forecast

FORECAST

7

3.0% annual average

from 1990-2007

©2020 M&T Bank, Member FDIC M&TBank

U.S. Real Gross Domestic Product Growth

The Expansion Should Continue For Another Year

The economy is expected to slow in 2020—but still have enough momentum to overcome

potential headwinds from trade policy, geopolitical uncertainty and tightening labor supply

8

How’s the

CenterState NY

region performing?

-0.9%

1.1%

-0.3%

0.9% 0.8%

-0.3%

1.5%

0.8%1.0%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

2011 2012 2013 2014 2015 2016 2017 2018 2019

Sources: U.S. Bureau of Economic Analysis, Moody’s Analytics, M&T estimate for 2019

Est.

9©2020 M&T Bank, Member FDIC M&TBank

CenterState Region* Real Gross Domestic Product Growth

The Regional Economy Continued to Expand in 2019

After battling choppy performance earlier in the decade, the past three years

have exhibited relatively consistent growth—which should continue in 2020,

despite headwinds from the tight labor supply and trade policy uncertainty

* Syracuse, Utica-Rome, Ithaca and Watertown metro areas

-5%

0%

5%

10%

15%

20%

25%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019est

* Syracuse, Utica-Rome, Ithaca and Watertown metro areas

10

CenterState Metros*

21.0%

9.3%

©2020 M&T Bank, Member FDIC Sources: U.S. Bureau of Economic Analysis, M&T Bank estimates

…But a Familiar Story vs. the U.S.

Less Bust—But Also Less Boom

After outperforming the U.S. from

2008-13, regional GDP growth has

again fallen behind the national norm

All U.S.Metro Areas

Relative Change in Inflation-Adjusted GDP Since 2007

CenterState NY Real GDP

M&TBank

M&TBank

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

6.4%

7.4%

-28.7%

-21.8%

-20.4%

-8.1%

Rochester

Buffalo

07 08 09 10 11 12 13 14 15 16 17 18 19est

CenterState Metros

All U.S.

Metros

Buffalo-Rochester-Albany

6.4%

-14.9%

-22.3%

11©2020 M&T Bank, Member FDIC Sources: U.S. Bureau of Economic Analysis, M&T Bank estimates

Why the Difference? Drag From De-industrialization is Certainly a Factor

Real manufacturing output has declined across most Upstate NY metros over the past decade


CenterState NY Real Manufacturing GDP Growth

Relative Change Since 2007 Change by Metro Area

Albany

All U.S. Metros

SYRACUSE

UTICA-ROME

M&TBank

-3%

0%

3%

6%

9%

12%

2.5%

10.9%

-2.8%

-1.0%

-0.6%

-0.1%

07 08 09 10 11 12 13 14 15 16 17 18 19est

CenterState Metros

All U.S.

Metros


10.9%

-1.4%

0.4%


Another Key Driver: Regional Population Loss vs. Other U.S. Metro Areas

Population growth (or lack thereof) is critically important in a service-based economy

Relative Change Since 2007

CenterState NY Population Loss

Relative Change Since 2007 Change by Metro Area

All U.S. Metros

Albany

Rochester

Buffalo

SYRACUSE

UTICA-ROME

M&TBank

-5%

0%

5%

10%

15%

20%

25%

30%

CenterStateMetros

All U.S.

Metros


23.1%

12.3%

17.7%


Net Result: Less Contribution From Service Sector Industries

The region continues to lag in generating “New Economy” output and employment sources


CenterState NY Real Non-Manufacturing GDP Growth

07 08 09 10 11 12 13 14 15 16 17 18 19est

20.0%

23.1%

5.6%

14.1%

17.2%

19.0%

Albany

Buffalo

Rochester

Change by Metro AreaRelative Change Since 2007

SYRACUSE

UTICA-ROME

All U.S. Metros

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N

+1.3%+1.6%

15

Cayuga, Cortland, Herkimer, Jefferson, Lewis, Madison, Oneida,

Onondaga, Oswego, Seneca, St. Lawrence & Tompkins counties

©2020 M&T Bank, Member FDIC M&TBank

UnitedStates

Year-Over-Year Percentage Change

CenterState NY Private Sector Job Growth

CenterState NY

Regional Job Growth Accelerated in 2019

The “gap” with the national growth rate is the closest in recent memory

2017 2018 2019 preliminarySources: U.S. Bureau of Labor Statistics, NYS Department of Labor

2%

3%

4%

5%

6%

7%

8%

9%

10%

Seasonally Adjusted

CenterState NY Unemployment Rate

4.2%3.5%

CenterState NY

UnitedStates

Note: CenterState data seasonally adjusted by M&T

16



2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Nov.

Approaching

Unchartered Territory

The regional jobless rate is down

over four points since mid-2012

and is only slightly above the 3.9%

all-time low set in February 2019

June 2012

8.8%

Sources: U.S. Bureau of Labor Statistics, NYS Department of Labor©2020 M&T Bank, Member FDIC M&TBank

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

Relative Change Since January 2007

CenterState NY Labor Force

-7.3%

+7.4%

CenterState NY

UnitedStates

17



Biggest Threat to Regional Progress

A Shrinking Labor Pool

Baby Boomer retirements and

population out-migration have

caused the regional workforce to

fall by 52,000 since the start of 2007

Sources: U.S. Bureau of Labor Statistics, NYS Department of Labor©2020 M&T Bank, Member FDIC M&TBank

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Nov.

U.S. & CenterState NY

Economic Outlook

Gary D. Keith – Regional Economist

January 22, 2020

u.s. & centerstate ny economic outlook · 2020. 10. 30. · another key driver: regional population...

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