The U.S. Economic Outlook Chartspresented by WilliamC Dudley Charts presented by William C. Dudley President and Chief Executive Officer Federal Reserve Bank of New York Washington and Lee University H. Parker Willis Lecture in Political Economics Lexington, VA April 1, 2010
Current Account Balance as a of GDP 2 2 0 0-2 -2-4 -4-6 -6-8 -8 1970 1976 1982 1988 1994 2000 2006 Note: Shading represents NBER recessions, vertical line 1 Source: Bureau of Economic Analysis
Real Broad Trade Weighted Value of the US Dollar Index Index 130 130 120 120 110 110 100 100 90 90 80 1980 1985 1990 1995 2000 2005 2010 Source: Federal Reserve Board Note: Shading represents NBER recessions, vertical line 80 2
10-Year Treasury Note Yield at Constant Maturity 20 20 16 16 12 12 8 8 4 4 0 1980 1985 1990 1995 2000 2005 2010 Source: Federal Reserve Board Note: Shading represents NBER recessions, vertical line 0 3
Net Stock: Private Residential, Nonresidential Structures, and Equipment and Software % Change Year to Year % Change Year - Year 10 10 Equipment and Software 8 8 6 6 4 4 Residential 2 2 Nonresidential Structures 0 0 1960 1966 1972 1978 1984 1990 1996 2002 2008 Note: Shading represents NBER recessions, vertical line 4 Source: Bureau of Economic Analysis
Total Balance by Credit Score Quintile Billions of Dollars 2005-Q1 2008-Q3 2009-Q3 Median Credit Score of Quintile of of Change from Previous of Change from Previous (2005-Q1) Total Debt Total Total Debt Total Period Total Debt Total Period 807 2020.0 22.2% 2290.0 18.7% 13.4% 2190.0 18.8% -4.4% 767 2330.00 25.6% 3110.00 25.5% 5% 33.5% 3010.00 25.8% -3.2% 708 2360.0 26.0% 3450.0 28.2% 46.2% 3300.0 28.3% -4.3% 631 1450.0 16.0% 2280.0 18.7% 57.2% 2130.0 18.3% -6.6% 538 928.0 10.2% 1090.0 8.9% 17.5% 1040.0 8.9% -4.6% Total 9088.0 100.0% 12220.0 100.0% 34.5% 11670.0 100.0% -4.5% Source: FRBNY Equifax Panel Dataset 5
Homeownership Rate 70 70 68 68 66 66 64 64 62 62 1970 1976 1982 1988 1994 2000 2006 Note: Shading represents NBER recessions, vertical line Source: Census Bureau 6
Consumption and Personal Saving 72 15 70 68 Personal Saving Rate (right axis) Consumption as Share of GDP (left axis) 12 9 66 6 64 62 3 60 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 Source: Bureau of Economic Activity Note: Shading represents NBER recessions, vertical line 7
Loan Performance House Price Index & Commercial Real Estate Price Index Index 240 240 Index 200 200 Loan Performance: HPI 160 Commercial 160 Real Estate 120 120 80 80 2000 2003 2006 2009 Note: Shading represents NBER recessions, vertical line 8 Source: Loan Performance and MIT Real Estate Center
First Mortgages: 90+ Day Delinquency Rates (Series set to 1.0 at 4Q prior to NBER peak) Ratio Ratio 50 5.0 50 5.0 % of number of loans Q4 09 40 4.0 40 4.0 3.0 Current Cycle 3.0 2.0 2.0 2001 Cycle 1.0 1.0 1974-1975 Cycle 1990-1991 Cycle 1981-1982 Cycle 0.0 0.0-8 -6-4 -2 0 2 4 6 8 10 12 Quarters Since 4Q Prior to NBER Peak 9 Source: Mortgage Bankers Association
of 90+ days Late Mortgage Balance Owned by Multiple Home Owners 45 40 3+ home owners 2 home owners 45 40 35 35 30 30 25 25 20 20 15 15 10 10 5 5 0 04Q1 05Q1 06Q1 07Q1 08Q1 09Q1 Source: Equifax, FRBNY 0 10
Household Liabilities as a of Net Worth 30 30 25 25 20 20 15 15 10 10 1970 1976 1982 1988 1994 2000 2006 Note: Shading represents NBER recessions, vertical line 11 Source: Federal Reserve Board
Ratio Real GDP (Series Set to 1.0 at NBER Peak) 1.10 1.10 Ratio 1.05 1.05 1981 Cycle 1973 Cycle 1.00 1.00 Current Cycle 0.95 0.95-4 -2 0 2 4 6 8 10 12 Quarters Since NBER Peak 12 Source: Bureau of Economic Analysis
Difference 6.0 Unemployment Rate (Series Set to 0.0 at NBER Peak) Difference 6.0 5.0 Current Cycle 5.0 4.0 4.0 3.0 1973 Cycle 3.0 2.0 2.0 1981 Cycle 1.0 1.0 0.0 0.0-1.0-1.0-4 -2 0 2 4 6 8 10 12 Quarters Since NBER Peak 13 Source: Bureau of Labor Statistics
Labor Force Participation Rate and Average Weekly Hours 3 Month Moving Average Hours 3 Month Moving Average 68 36.0 Participation Rate (left axis) 35.5 67 35.0 66 34.5 34.0 65 Average Weekly Hours (right axis) 33.5 64 33.0 32.5 63 32.0 1980 1985 1990 1995 2000 2005 2010 Note: Shading represents NBER recessions, vertical line Source: Bureau of Labor Statistics 14
Ratio 1.10 Nonfarm Business Sector: Hours Worked (Series Set to 1.0 at NBER Peak) Ratio 1.10 1.05 1981 Cycle 1.05 1.00 1.00 1973 Cycle 0.95 0.95 0.90 Current Cycle 0.90 085 0.85 085 0.85 0.80 0.80-4 -2 0 2 4 6 8 10 12 Quarters Since NBER Peak 15 Source: Bureau of Labor Statistics
Total and Core CPI % Change - Year to Year % Change - Year to Year 6 6 5 Total CPI 5 4 4 3 3 2 2 1 Core CPI 1 0 0-1 -1-2 1998 2000 2002 2004 2006 2008 2010 Note: Shading represents NBER recessions, vertical line 16 Source: Bureau of Labor Statistics -2
6-Month % Change - Annualized Exports and Industrial Production 6-Month % Change - Annualized 30 20 Exports (left axis) 15 10 10 0-10 -20 Industrial Production: Manufacturing (right axis) 5 0-5 -10-15 -30-20 -40 1995 1997 1999 2001 2003 2005 2007 2009 Source: Federal Reserve 17 Note: Shading represents NBER recessions, vertical line Board and Census Bureau -25
Net Worth over Disposable Personal Income 700 700 650 Net Worth/DPI 650 600 600 550 550 500 500 450 450 400 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 Note: Shading represents NBER recessions, vertical line 18 Source: Federal Reserve Board 400
Household Liabilities as a of Net Worth 30 30 25 25 Average over 20 last 10 years 20 15 15 10 10 1970 1976 1982 1988 1994 2000 2006 Note: Shading represents NBER recessions, vertical line 19 Source: Federal Reserve Board
MBA Purchase Mortgage Applications and Existing Home Sales Index 450 Thousands 500 8000 Purchase Loan Applications 400 (left axis) 7000 350 6000 300 Existing Home Sales (right axis) 5000 250 200 1999 2001 2003 2005 2007 2009 Source: Mortgage Bankers Association, National Association of Realtors 4000 20 Note: Shading represents NBER recessions, vertical line
Vacancy Rates 3.5 12 3.0 10 2.5 Rental Vacancy Rate (right axis) 2.0 8 1.5 1.0 Homeowner Vacancy Rate (left axis) 6 05 0.5 4 1970 1976 1982 1988 1994 2000 2006 Note: Shading represents NBER recessions, vertical line 21 Source: Census Bureau
Total Receipts of State and Local Governments % Change Year to Year % Change Year to Year 30 30 20 Federal Current Grants Receipts 20 10 10 0 0-10 Receipts -10 Less Grants -20-20 -30-30 1985 1991 1997 2003 2009 Note: Shading represents NBER recessions, vertical line 22 Source: Bureau of Economic Analysis
Real Imports and Exports 2-qtr % Change - Annualized 2-qtr % Change - Annualized 30 30 20 20 Imports Exports 10 10 0 0-10 -10-20 -20-30 1999 2001 2003 2005 2007 2009 Note: Shading represents NBER recessions, vertical line 23 Source: Bureau of Economic Analysis -30
Corporate Profits as a Fraction of National Income Ratio Ratio 0.14 0.14 0.12 0.12 0.10 0.10 0.08 0.08 006 0.06 006 0.06 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 Note: Shading represents NBER recessions, vertical line 24 Source: Bureau of Economic Analysis
Corporate Net Cash Flow as a Fraction of Nominal GDP Ratio Ratio 0.12 0.12 0.10 0.10 0.08 0.08 006 0.06 006 0.06 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 Note: Shading represents NBER recessions, vertical line 25 Source: Bureau of Economic Analysis
Manufacturing Capacity Utilization Rate 85 85 80 80 75 75 70 70 65 65 60 1999 2001 2003 2005 2007 2009 Source: Federal Reserve Board Note: Shading represents NBER recessions, vertical line 60 26
Rent Inflation % Change - Year to Year % Change - Year to Year 50 5.0 50 5.0 4.5 40 4.0 3.5 30 3.0 2.5 20 2.0 1.5 10 1.0 0.5 Tenant Rent (8%) Owners' Equivalent Rent (31%) 4.5 40 4.0 3.5 30 3.0 2.5 20 2.0 1.5 10 1.0 0.5 0.0 0.0 1996 1998 2000 2002 2004 2006 2008 2010 Note: Shading represents NBER recessions, vertical line 27 Source: Bureau of Labor Statistics Numbers in parentheses represent share of core CPI.
1003 Productivity, Compensation, and Unit Labor Costs % Change - Year to Year 10 Nonfarm Business Sector % Change - Year to Year 10 8 6 Compensation per Hour 8 6 4 4 2 2 0-2 Output per Hour 0-2 -4 Unit Labor Costs -4-6 -6 1999 2001 2003 2005 2007 2009 Note: Shading represents NBER recessions, vertical line 28 Source: Bureau of Labor Statistics
TIPS Implied Inflation Compensation: 2-3, 4-5, 5-10 Year Horizons 40 4.0 40 4.0 3.5 30 3.0 5-10 Year Mar 30: 2.92 3.5 30 3.0 2.5 20 2.0 1.5 4-5 Year 2-3 Year Mar 30: 257 2.57 Mar 30: 1.92 2.5 20 2.0 1.5 10 1.0 10 1.0 0.5 0.5 00 0.0 00 0.0-0.5-0.5-1.0 10 Jun-07 Aug-07 Nov-07 Feb-08 May-08 Jul-08 Oct-08 Jan-09 Apr-09 Jun-09 Sep-09 Dec-09 Mar-10 Source: Federal Reserve Board Note: Carry Adjusted. -1.0 10 29