U.S. Overview Gathering Steam? Tuesday, October 1, 2013
Uneven global economic recovery Annual real GDP growth projections (%) Projections 2013 2014 World 3.1 3.1 3.8 United States 2.2 1.7 2.7 Euro Area 0.6 0.6 0.9 Japan 1.9 2 1.2 Other advanced economies 1.8 2.3 3.3 Brazil 0.9 2.5 3.2 China 7.8 7.8 7.7 India 3.2 5.6 6.3 Mexico 3.9 2.9 3.2 Russia 3.4 2.5 3.3 South Africa 2.5 2 2.9 Source: IMF, July 2013.
Markets have recovered Indexed S&P 500 Index monthly average (October 2007 = 100) S&P 500 Index 110 100 90 80 70 60 50 40 2008 2009 2010 2011 2013 Sources: Standard and Poor s, Moody s Analytics.
Weak employment rebound compared with previous recoveries Percent change in total nonfarm employment from the start of a recession 18 16 14 12 10 8 6 4 2 0-2 -4-6 -8 0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 Months after the start of recession Sources: U.S. Bureau of Labor Statistics, Milken Institute. 1973-75 1990-91 1981-82 2001 2007-09
Labor market gaining some momentum Non-farm employment, United States Percent change, year ago 4.0 2.0 Difference from previous month, thousands 600 400 200 0.0-2.0 Absolute change (right) 0-200 -400-4.0 % change (left) -600-800 -6.0 03 04 05 06 07 08 09 10 11 12 13-1000 Sources: Bureau of Labor Statistics, IHS Global Insight.
Unemployment is dropping United States Percent 11 10 9 8 7 6 5 4 3 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 Sources: Bureau of Labor Statistics, Moody s Analytics.
Workforce participation rate in decline United States Percent 68 66 64 62 60 58 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 Sources: Bureau of Labor Statistics, Moody s Analytics.
Long-term joblessness still a challenge Percent unemployed for 27 weeks or more Percent 50 40 30 20 10 03 04 05 06 07 08 09 10 11 12 13 Sources: Bureau of Labor Statistics, Moody s Analytics.
Employment gap by education Jobless rates for adults, 25 and older Percent 16 14 12 10 High school diploma Less than a high school diploma 8 6 Some college or associates degree 4 2 0 2006 2007 2008 Bachelor s degree and higher 2009 2010 2011 2013 Source: Bureau of Labor Statistics.
State and local government cuts act as a drag on the economy U.S. employment Percent change, year ago 4 2 Private 0-2 -4 Government -6-8 2003 2004 2005 2006 2007 2008 2009 2010 2011 2013 Sources: Bureau of Labor Statistics, IHS Global Insight.
Consumers remain cautious U.S. real personal consumption expenditures Percent change, year ago 6 4 2 0-2 -4 2003 2004 2005 2006 2007 2008 2009 2010 2011 2013 Sources: Bureau of Economic Analysis, IHS Global Insight.
Consumer debt service ratio is lowest in 30 years Debt service payments as percent as a share of disposable of disposable personal income, percent 15 14 13 12 11 10 1980 1984 1988 1992 1996 2000 2004 2008 Source: U.S. Board of Governors of the Federal Reserve System.
Auto sales continue strong recovery Light vehicle sales Millions, SAAR 18 16 14 12 10 8 2006 2007 2008 2009 2010 2011 2013 Sources: Bureau of Economic Analysis, U.S. Department of Commerce, Milken Institute.
U.S. home sales pick up Single-family home sales Percent change, year ago 60 40 20 Existing homes 0-20 -40 New homes -60 2003 2004 2005 2006 2007 2008 2009 2010 2011 2013 Sources: National Association of Realtors, Moody s Analytics.
Fewer foreclosures and delinquencies Percent of mortgages past due and in foreclosure Percent 11.0 Percent 1.6 10.0 1.4 9.0 1.2 8.0 7.0 % Mortgages in foreclosure (right) 1.0 0.8 6.0 5.0 % Mortgages past due (left) 0.6 0.4 4.0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2013 0.2 Sources: Mortgage Bankers Association (MBA): National Delinquency Survey; Moody's Analytics.
U.S. home prices are rising steadily Median existing single-family home price Percent change, year ago 20 10 0-10 -20 2003 2004 2005 2006 2007 2008 2009 2010 2011 2013 Sources: National Association of Realtors, Moody s Analytics.
Housing starts are trending upwards United States Millions of units 2.0 1.5 1.0 0.5 Single-family units 0.0 2003 2004 Multi-family units 2005 2006 2007 2008 2009 2010 2011 2013 Sources: U.S. Census Bureau, IHS Global Insight.
Home mortgage interest rates are rising Contract interest rate on fixed-rate conventional 30-year loans Contract interest rate, percent 5.5 5.0 4.5 4.0 3.5 3.0 2010 2011 2013 Source: Federal Home Loan Bank Board.
10-year Treasury bond yields are up Treasury constant maturities nominal - 10 year (% per annum, NSA) Percentage Points 4.0 3.5 3.0 2.5 2.0 1.5 1.0 2010 2011 2013 Source: U.S. Board of Governors of the Federal Reserve System.
U.S. corporate bond spreads 7-year corporate bonds (spread over U.S. Treasury) 700 600 500 400 BBB-rated 300 200 100 A-rated 0 2006 2007 2008 2009 2010 2011 2013 Source: Thompson Reuters Datastream.
U.S. corporate profits are steady U.S. corporate profits before tax (without IVA and Ccadj.) US$ trillions 2.4 2.2 2.0 1.8 1.6 1.4 1.2 1.0 0.8 2003 2004 2005 2006 2007 2008 2009 2010 2011 2013 Sources: Federal Reserve Board, IHS Global Insight.
Purchasing managers index indicates growth in business operations Institute for Supply Management diffusion indices Index 65 60 55 50 45 Nonmanufacturing 40 35 Manufacturing 30 2005 2006 2007 2008 2009 2010 2011 2013 Sources: Institute for Supply Management, Moody s Analytics.
Business investment lost ground U.S. fixed nonresidential private domestic investment Percent change, year ago 30 20 10 0-10 -20-30 Equipment and software Structures -40 2003 2004 2005 2006 2007 2008 2009 2010 2011 2013 Sources: Bureau of Economic Analysis, IHS Global Insight.
Manufacturing is on the mend Value of new orders for nondefense capital goods excluding aircraft Percent change, year ago 20 10 0-10 -20-30 -40 2003 2004 2005 2006 2007 2008 2009 2010 2011 2013 Sources: U.S. Census Bureau, IHS Global Insight.
Tech spending rebounds Real U.S. private domestic investment and personal consumption expenditures on ITC equipment and software Percent change, year ago 25 20 15 10 5 0-5 -10-15 2003 2004 2005 2006 2007 2008 2009 2010 2011 2013 Sources: U.S. Census Bureau, IHS Global Insight.
U.S. small businesses still cautious Small Business Optimism Index Index 120 115 110 105 100 95 90 85 2000 2002 2004 2006 2008 2010 Sources: National Federation of Independent Businesses, Moody s Analytics.
U.S. commercial and industrial lending returns to normal Quarterly change, US$ billions 100 50 0-50 -100-150 2007 2008 2009 2010 2011 Sources: Federal Reserve Board, IHS Global Insight.
U.S. manufacturing is competitive Costs, relative unit of labor (2008 = 100) 225 200 175 150 125 100 75 50 1980 1984 1988 1992 1996 2000 2004 2008 Source: Oxford Economics.
Extraction of natural gas and crude oil from shale drives growth in production United States Trillions of barrels 3.5 Trillion cubic feet 30 3.0 2.5 Oil production (left) 28 26 24 2.0 Natural gas production (right) 22 20 1.5 1980 1984 1988 1992 1996 2000 2004 2008 18 Source: Energy Information Administration.
Exports are stagnant U.S. international trade in goods and services Percent change, year ago 30 20 Exports 10 0-10 -20-30 Imports -40 2003 2004 2005 2006 2007 2008 2009 2010 2011 2013 Sources: U.S. Census Bureau, IHS Global Insight.
U.S. trade in goods and services Merchandise exports by region, Country Value (US$ bil.) Share of U.S. Exports (%) Canada 292.4 18.9% EU 265.1 17.1% Mexico 216.3 14.0% South America 127.8 8.3% China 110.6 7.1% Japan 70.0 4.5% United Kingdom 54.8 3.5% Germany 48.8 3.2% South Korea 42.3 2.7% Source: U.S. Census Bureau.
10 8 6 Two-speed recovery Projections after 2013 Real GDP growth, percent Developing economies World 4 2 0-2 Advanced economies -4-6 1980 1985 1990 1995 2000 2005 2010 2015 Source: International Monetary Fund.
Foreign exchange rates are stable U.S. dollar vs. GB pound, euro, Japanese yen Indexed U.S. dollar exchange rate, Jan 2007 = 100 140 120 Yen 100 80 Euro 60 Pound 40 2007 2008 2009 2010 2011 2013 Sources: IMF-IFS, EUROSTAT, European Central Bank, National Central Banks, IHS Global Insight.
Major equity indices In U.S. dollars Previous DJIA peak = 100 120 100 80 60 40 Dow Jones Nikkei 225 Euro Stoxx 50 Shanghai A Share 20 0 Source: Bloomberg.
Federal government net saving United States US$ billions, SAAR 0-200 -400-600 -800-1000 -1200-1400 -1600 2003 2004 2005 2006 2007 2008 2009 2010 2011 2013 Sources: Bureau of Economic Analysis, IHS Global Insight.
Federal balance sheet still growing United States $ Billion 4,000 3,500 3,000 Other assets 2,500 2,000 Treasuries 1,500 1,000 MBS / Agency debt 500 0 2007 2008 2009 2010 2011 2013 Sources: Federal Reserve Bank of Cleveland, Milken Institute. Note: Other assets include lending to banks and liquidity to key credit markets.
Lower R&D expenditures inhibit U.S. competitiveness Selected countries, most recent year R&D expenditure as a percent of GDP 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 Israel Finland Korea Japan Germany United States France United Kingdom China Sources: OECD, World Bank.
Innovation and high-quality research go hand in hand Selected countries Quality of scientific research institutions (score) 6.5 United Kingdom 6 5.5 Canada France United States Israel Japan Switzerland Germany 5 4.5 4 South Korea India Brazil China 3 3.5 4 4.5 5 5.5 6 Innovation (score) Source: World Economic Forum Global Competitiveness report 2013-2014.
Average science and math scores of 15-year-old students lag competition 2009 Scores (scaled to OECD average) 110 Science literacy Math literacy 100 90 80 OECD Average U.S. Canada Japan Germany U.K. Czech Republic Poland Mexico Sources: U.S. National Center for Education Statistics, MAPI.
STEM majors tend to earn more Average U.S. annual earnings by occupations and degree (2009) All majors STEM majors STEM Health-care professional Managerial Social sciences Source: Georgetown University: Center on Education and the Workforce.
Consumer confidence returning more slowly to lower-income households Consumer confidence, 1985=100 140 120 100 80 $50,000 and over $25,000- $34,999 60 40 20 Under $15,000 0 2007 2008 2009 2010 2011 2013 Source: The Conference Board.
CEOs forecast continued slow economic growth Third Quarter 2013 Business Roundtable CEO Economic Outlook Survey Indices Source: Business Roundtable, September 2013.