Northwest Economic Research Center College of Urban and Public Affairs 2019 Forecast Breakfast Economic Outlook
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U.S. ECONOMY 1/10/2019 3
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Gross Domestic Product Growth, U.S. Annualized Quarterly Percent Change, 1980Q1-2021Q2, dots indicate Fed forecasts 10% 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% Source: FRED 1/10/2019 4
Components of Real GDP for 2018 for 3 rd Quarter Consumer Spending Durables but a lower rate Business Investment, but at lower rate Total Nonresidential structures driven by commercial and health care, power and communications, and mining and wells; but manufacturing Equipment lead by industrial equipment, and information processing equipment other than computers Housing After an okay 4Q 2017, continue weakening trend since 2018Q1 in both single and multifamily Net International Trade agricultural goods export 18.4% Government Fed spending Defense Nondefense Local and State 1/10/2019 Source: BEA 5
Annual Percentage Change in Real GDP (2009 Dollars) 2005
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 2018 2018 Total Nonfarm Employment: U.S., WA, OR, ID YoY Growth Rate, Monthly, January 1991-November 2018 6% 8% 6% 4% US US WA WA OR US ORUSWA ID 4% 2% 2% 0% 0% -2% -2% -4% -4% -6% -6% -8% 1/10/2019 Source: BLS
Civilian Unemployment Rate Seasonally adjusted, Monthly, Jan 2007 November 2018 14% 12% US WA OR ID 10% 8% 6% 4% 2% Nov 2018: US: 3.7% WA: 4.3% OR: 3.9% ID: 2.6% 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 1/10/2019 Source: US BLS 8
1948 1958 1968 1978 1988 1998 2008 2018 Percent US and OR Civilian Labor Force Participation Rate Seasonally Adjusted, Monthly, Jan 1948 - November 2018 70% 68% 66% Recession US OR 64% 62% 60% 58% 56% 54% 52% Source: BLS 1/10/2019 9
Various Interest Rates Percent, Monthly, July 1954-December 2018 Sources: Freddy Mac, Board of Governors of the Federal Reserve System (via FRED) 1/10/2019 10
RIP: The Portland-Salem Consumer Price Index is Discontinued Average Annual Rates of Change Year US CPI-U Portland- Salem CPI-U West CPI-U 2015-0.4% 1.2% 1.2% 2016 1.0% 2.1% 1.9% 2017 2.1% 4.2% 2.8% Source: BLS Average Annual Rates of Change from Half Year Year US CPI-U West CPI-U Pacific CPI-U* 1st Half 2018 2.6% 3.3% 3.2% 1/10/2019 11
PCE Implicit Price Deflators Continuously Compounded Annual Rate of Change, Quarterly, Seasonally Adjusted, 2009 Q1-2018 Q2 5% 4% 3% 2% 1% 0% -1% -2% Implicit Price Deflator Core Implicit Price Deflator Fed Target -3% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: BEA 1/10/2019 12
US 2007Q1 to 2018Q4
How s Moving in Next Door? A quick look at demographics 1/10/2019 14
Population growth by selected time period 2.0% 2006-2016 2016-2017 2018-2022 2023-2027 1.5% 1.0% 0.5% 0.0% Total MSA Clackamas Clark Columbia Multnomah Skamania Washington Yamhill Source: Population Research Center, NERC 1/10/2019 15
Net Migration 2001-2017 12,000 10,000 8,000 6,000 Clackamas Clark Columbia Multnomah Skamania Washington Yamhill Mult WA Clark Clack 4,000 2,000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Yam Col Skam -2,000 Source: Population Research Center 1/10/2019 16
2012-2016 In-migrants by Current and Previous Residence Previous Residence Portland Tri-County Current Residence Willamette Valley SW Oregon & Deschutes N. Coast & E. Oregon California 20% 24% 32% 19% Washington 18% 14% 8% 24% Rest of West Region 19% 24% 31% 33% Other U.S. Region 27% 22% 22% 20% Outside of U.S. 16% 16% 7% 5% Source: U.S. Census Bureau, 2012-2016 5 year American Community Survey Public Use Microdata Sample Source: Population Research Center, PSU
Source: U.S. Census Bureau, Decennial Census, 2000-2010 and 2020 Oregon Office of Economic Analysis (2018Q3) Population Forecasts. Source: Population Research Center, PSU
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Housing 1/10/2019 24
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 U.S. Housing Permits by Type Thousands of Units, Monthly, Seasonally Adjusted, January 1990-November 2018 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Multifamily Single Family Source: Census 1/10/2019 25
Oregon, Washington, and Idaho Cities and MSAs Single Family Building Permits Percent Change 2016-2017 2016 2017 Spokane WA Seattle MSA WA Salem OR Portland MSA OR Eugene MSA OR Bend OR Boise ID 1,819 1,791 9,425 9,943 814 502 7,397 6,684 736 698 1,817 1,741 5,383 6,250-40% -20% 0% 20% Source: U.S. Census Bureau; National Association of Home Builders
Housing Price Index Percent Change Year over Year (1975 2018 Q3) 30% 25% WA OR ID 20% 15% 10% 5% WA ID OR 0% -5% -10% -15% 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 27 Source: Federal Reserve Bank of St. Louis Economic Research
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Case-Shiller Index for Select Areas YoY Percent Change, Monthly, January 2000 October 2018 25% 20% U.S. Portland Seattle 15% 10% 5% 0% -5% -10% -15% -20% 1/10/2019 28
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 1 1 1 0 0 0 Portland MSA Housing Permits, Historical and Forecast Total Permits, Quarterly, 2004Q1 2026Q4 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 Single Family Multifamily 0 Source: Census, NERC 1/10/2019 29
Economic Outlook: 1/10/2019 30
Portland MSA Outlook: Northwest Economic Research Center Regional Economic and Population Forecast (https://www.pdx.edu/nerc/ Go to Projects, scroll to Year 2017) Ten-year forecast of: Population Income Employment Housing In the seven Portland counties: Clackamas Clark (WA) Columbia Multnomah Skamania (WA) Washington Yamhill 1/10/2019 31
Wall Street Journal Forecast Consensus October 2018 Forecast WSJ Forecast 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3 2019 Q4 GDP Growth (Quarterly) 4.2% 3.5% 2.5% 2.4% 2.5% 2.3% 2.1% WSJ Forecast Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Oil Prices $45.41 $57.83 $59.21 $59.85 $59.43 $60.02 $60.42 WSJ Forecast 2016 2017 2018 2019 2020 Housing Starts (millions) 1.17 1.20 1.26 1.28 1.31 Actual Change in Home Prices 6.2% 6.7% 5.6% 3.9% 3.2% Forecast
Wall Street Journal Forecast Consensus (Continued) October 2018 Forecast WSJ Forecast Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 CPI Growth 2.2% 2.1% 2.3% 2.2% 2.1% 2.2% 2.2% Unemployment 3.9% 3.6% 3.6% 3.7% 3.8% 4.0% 4.1% 10 Year Note 2.68% 3.23% 3.35% 3.40% 3.38% 3.35% 3.36% Fed. Funds Rate 2.38% 2.70% 2.89% 2.93% 2.90% 2.83% 2.82% Actual Forecast
Short term Employment Outlook YoY Growth Rate, January 2000-December 2020 1/10/2019 34
1 0.8 0.6 0.4 0.2 0 Portland Counties Construction Employment Indexed to 2005Q1, Forecasted from 2018Q3-2028Q4 160 Ska 140 120 Clac Mul Clr Col 100 80 60 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 Clackamas Clark Columbia Multnomah Skamania Washington Yamhill 1/10/2019 35 Sources: OED, BLS, NERC
Headwinds and Tailwinds 1/10/2019 36
Recession Hazard Zone
How Do We Know a Recession is Coming? Leading Index for US and Oregon Philly Fed Leading Economic Activity Index October 2014 2017 2018 US 2.02 1.60 1.41 Oregon 2.38 1.95 1.66 Conference Board Leading Economic Index YoY% Up 0.2% in November following a 0.3% decline in October, and a 0.6% increase in September. Interest Rate Yield Curve 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity 2017 Jan. 9: 1.17; 2018 Jan. 8: 0.53; 2019 Jan. 8: 0.15 ISM Manufactures Index, Building Permits New Private Units, Stock prices, all trending down. There is no sure way to foresee if a recession is coming until we are in it. 1/10/2019 38
Short Term and a Few Long Term + and Risks An Incomplete List: Dimmer Prospects or Rosier Outlook? International China Growth Geopolitical Risks (Name your part of the world ) Tariffs: Let s Make a Deal Immigration regulation US Domestic Fiscal and Monetary Policies, Regulation (Infrastructure Spending, Tax Cuts, Dodd-Frank, Health Care, ) Energy Prices (oil prices dropped since Oct with slight firming past 2 weeks) Public Pension Funds Income Disparity, Cyber Attacks, Climate Change Closer to Home Oregon Budget Minimum Wage Housing 1/10/2019 39
Contact Follow NERC Northwest Economic Research Center (NERC) 503-725-8167 nerc@pdx.edu http://www.pdx.edu/nerc/ 1/10/2019 40