Real gross domestic growth United States, 2000 prices Compound annual growth rate 10 5 0-5 -10 81 83 85 87 89 91 93 95 97 99 01 03 05 07 Sources: BEA, Global Insight.
Consumer sentiment University of Michigan, diffusion index Index (1966Q1=100) 120 100 80 60 40 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 Sources: University of Michigan, Federal Reserve Bank of St. Louis.
Real consumer spending United States Percent change, year ago 6 4 2 0-2 92 94 96 98 00 02 04 06 08 Sources: BEA, Global Insight.
Real fixed non-residential domestic investment United States, 2000 prices Percent change, year ago 15 10 5 0-5 -10-15 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Sources: BEA, Global Insight.
Computer and peripheral equipment Private fixed investment US$ billions, SAAR 105 Percent change, year ago 20 100 95 90 85 80 75 Investment level (L) Change (R) 10 0-10 -20 70 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007-30 Sources: BEA, Global Insight.
Software Private fixed investment US$ billions, SAAR 240 220 200 180 160 140 120 100 80 1997 1998 1999 Sources: BEA, Global Insight. 2000 Investment level (L) Change (R) Percent change, year ago 20 10 0-10 -20-30 2001 2002 2003 2004 2005 2006 2007
Electronic components Change in value of orders Percent change, year ago 80 60 40 New orders 20 0-20 -40 Unfilled orders -60 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sources: U.S. Census, Global Insight.
Nondefense capital spending (excluding aircraft) Change in value of new orders Percent change, year ago 20 10 0-10 -20-30 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sources: U.S. Census, Global Insight.
National defense spending Expenditures and gross investment Percent change, year ago 20 15 10 5 0-5 -10 87 89 91 93 95 97 99 01 03 05 07 Sources: BEA, Global Insight.
Oil consumption United States Barrels per $100K of real GDP 140 120 100 80 60 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 Sources: Energy Information Administration, Global Insight, Milken Institute.
Real consumer spending on durable goods United States Percent change, year ago 12 10 8 6 4 2 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Sources: Bureau of Economic Analysis, Global Insight.
Retail sales Excluding motor vehicles Percent change, year ago 12 10 8 6 4 2 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sources: U.S. Census, Global Insight.
Manufacturing managers diffusion index Institute for Supply Management Index 65 60 55 50 45 40 35 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sources: Institute for Supply Management, Global Insight.
Crude oil spot price West Texas Intermediate Dollars per barrel 120 100 80 60 40 20 0 90 92 94 96 98 00 02 04 06 08 Sources: Wall Street Journal, Global Insight.
Retail gasoline prices Regular grade US$ per gallon 3.5 3.0 2.5 2.0 1.5 1.0 0.5 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sources: Wall Street Journal, Global Insight.
Corporate profits Profits before tax (without IVA and CCadj.) Percent change, year ago 50 40 30 20 10 0-10 -20 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Sources: BEA, Global Insight.
Corporate spread Moody s corporate Aaa minus 10-yr treasury bond Percentage Points 2.5 2.0 1.5 1.0 0.5 2002 2003 2004 2005 2006 2007 2008 Sources: Federal Reserve, Moody s Economy.com, Milken Institute.
Interest rates Fed funds rate vs. rate of long-term government bonds Percent 7 6 5 Government bonds 4 3 2 Fed funds rate 1 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sources: Federal Reserve, Global Insight
Yield curve 10-year government bond minus fed funds rate Percent 4 3 2 1 0-1 -2 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sources: Federal Reserve, Milken Institute.
S&P 500 composite Dividend yield Ratio 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 88 90 92 94 96 98 00 02 04 06 08 Sources: Standard & Poor s, Milken Institute.
Foreign direct investment Direct investment inflows US$ billions 160 140 120 100 80 60 40 20 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Sources: IMF, Global Insight.
Foreign purchases of U.S. securities Net foreign purchases US$ billions 250 200 150 100 50 0-50 -100 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Sources: BEA, Global Insight.
Real estate investment trusts (REIT) sector Net acquisition of financial assets US$ billions 500 400 300 200 100 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Sources: Federal Reserve, Milken Institute.
Household savings Percent of disposable personal income Percent 10 8 6 4 2 0-2 87 89 91 93 95 97 99 01 03 05 07 Sources: Federal Reserve, Milken Institute.
Federal expenditures As percent of GDP Percent 21.0 20.5 20.0 19.5 19.0 18.5 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Sources: BEA, Global Insight.
Federal budget deficit SAAR US$ billions 300 200 100 0-100 -200-300 -400-500 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Sources: BEA, Global Insight.
Federal budget deficit As percent of GDP Percent 3.0 2.0 1.0 0.0-1.0-2.0-3.0-4.0-5.0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Sources: BEA, Global Insight.
Employment picture United States Percent 6.5 6.0 5.5 5.0 4.5 4.0 Unemployment rate (L) Percent change, year ago Employment change (R) 4 3 2 1 0-1 3.5 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008-2 Sources: BLS, Global Insight.
Construction vs. total non-farm employment United States Percent change, year ago 15 10 Construction 5 0-5 Total non-farm -10-15 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 Sources: U.S. Census, Moody s Economy.com.
Wages and unemployment United States Percent 6.5 6.0 5.5 5.0 4.5 4.0 Unemployment rate (L) Percent change, year ago Real wages (R) 4 3 2 1 0-1 -2 3.5 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008-3 Sources: BLS, Global Insight.
Civilian unemployment rate United States Percent 11 10 9 8 7 6 5 4 3 60 65 70 75 80 85 90 95 00 05 Sources: BLS, Global Insight.
Construction-put-in-place United States Percent change, year ago 30 Non-residential 20 10 0-10 -20 Residential -30 95 97 99 01 03 05 07 Sources: U.S. Census, Moody s Economy.com.
Housing affordability index United States Base=100 160 140 120 100 80 60 40 75 80 85 90 95 00 05 Sources: NAR, Global Insight.
Consumer inflation rate Consumer prices and wages Percent change, year ago 4.5 4.0 3.5 Real wages 3.0 2.5 2.0 Core CPI 1.5 1.0 0.5 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sources: BLS, Global Insight.
Consumer price index Food and energy Percent change, year ago 30 20 Energy 10 0 Food -10-20 88 90 92 94 96 98 00 02 04 06 08 Sources: BLS, Global Insight.
Dollar at record lows Major currencies index (in real terms) Index (March 1973=100) 140 130 120 110 100 90 80 70 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 Sources: Federal Reserve, Moody s Economy.com.
Euros per dollar Exchange rate Euros per dollar 1.20 1.10 1.00 0.90 0.80 0.70 0.60 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sources: BLS, Global Insight.
Official reserves Total reserves minus gold US$ billions 80 75 70 65 60 55 Reserves minus gold (L) As % of GDP (R) Percent 0.8 0.7 0.6 0.5 0.4 50 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 0.3 Sources: IMF, Global Insight.
U.S. international trade Exports vs. imports (goods and services) Percent change, year ago 30 20 Exports 10 0 Imports -10-20 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sources: U.S. Census, Global Insight.
Trade balance Merchandise exports and imports US$ billions 250 200 150 100 Imports Exports 50 0-50 -100 1998 1999 2000 2001 Trade balance 2002 2003 2004 2005 2006 2007 2008 Sources: U.S. Census, Global Insight.
Exports to G-8 Merchandise exports Percent change, year ago 30 20 10 Canada U.K. 0-10 Japan -20-30 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sources: U.S. Census, Global Insight.
Exports to newly industrialized countries and China Merchandise exports Percent change, year ago 60 40 China 20 0-20 Newly industrialized countries -40 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sources: U.S. Census, Global Insight.
Exports to NAFTA Merchandise exports Percent change, year ago 40 30 20 Canada 10 0-10 Mexico -20 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sources: U.S. Census, Global Insight.
Single-family home sales United States Millions, SAAR 6.5 Millions, SAAR 1.4 6.0 5.5 New homes (R) 1.2 1.0 5.0 0.8 4.5 Existing homes (L) 0.6 4.0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 0.4 Sources: U.S. Census, National Association of Realtors, Moody s Economy.com.
Median existing single-family home price United States US$ thousands 240 220 200 180 160 140 120 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sources: National Association of Realtors, Moody s Economy.com.
Median existing single-family home price United States Percent change, year ago 20 15 10 5 0-5 -10-15 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sources: National Association of Realtors, Moody s Economy.com.
Single-family housing starts United States Percent change, year ago 40 20 0-20 -40-60 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sources: U.S. Census, Global Insight.
Homes sit longer on the market United States Millions 4.0 Months 11 3.5 3.0 2.5 Homes available for sale (L) 10 9 8 7 2.0 1.5 Months supply (R) 6 5 4 1.0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 3 Sources: National Association of Realtors, Moody s Economy.com.
Mortgage rates United States Percent 9.0 8.0 7.0 30-yr fixed 6.0 5.0 4.0 3.0 2.0 1-yr ARM 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sources: Mortgage Banker s Association, Moody s Economy.com.
Mortgage originations United States US$ trillions, SAAR 6 5 4 Total originations 3 2 1 0 97 98 99 00 01 02 03 Refinance originations 04 05 06 07 Sources: Federal Reserve Board, Moody s Economy.com.
Growing share of subprime loans in foreclosure United States Millions of loans 7 Percent 3.5 6 5 4 Percent in foreclosure (R) Loans serviced (L) 3.0 2.5 3 2.0 2 1 1.5 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1.0 Source: Mortgage Bankers Association.
Commercial and industrial loans Commercial banks assets US$ billions 1600 1400 1200 1000 800 600 400 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Sources: Federal Reserved Board, Moody s Economy.com, Milken Institute.
Flow of commercial mortgages All sectors US$ billions, SAAR 400 300 200 100 0-100 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 Sources: Federal Reserve, Global Insight.
U.S. competitive advantages Global Competitiveness Report, 2007 2008 Category Rank/131 University/industry research collaboration 1 Technological Readiness 1 Utility patents 1 Venture capital availability 1 Brain drain 1 Quality of scientific research institutions 2 Company spending on R&D 2 Local avail. of specialized research & training serv. 2 Firm-level tech absorption 4 Availability of latest technologies 6 Source: The Global Competitiveness Report 07-08
U.S. competitive disadvantages Global Competitiveness Report, 2007 2008 Category Rank/131 Business costs of terrorism 124 National savings rate 107 Government surplus/deficit 91 Government debt 89 Primary enrollment 69 Wastefulness of government spending 53 Quality of math and science ed. 45 Education expenditure 43 Secondary enrollment 42 Burden on government regulation 40 Source: The Global Competitiveness Report 07-08
Quality of math and science education (1 = Lag s far behind most countries, 7 = Among best in the world) Score 5.5 5.0 4.5 Mean = 4.1 4.0 3.5 3.0 2.5 India Korea,Rep. Japan Russian Fed. Canada Germany U.K. U.S. Mexico China Source: The Global Competitiveness Report 07-08
Value chain breadth (1 = Companies primarily involved in production, 7 = Do more than just produce) Score 7 6 5 4 Mean = 3.8 3 2 Japan Germany Korea, Rep. U.K. U.S. India Canada Russian Fed. Mexico China Source: The Global Competitiveness Report 07-08
Availability of scientists and engineers (1 = Nonexistent or rare, 7 = Widely available) Score 6.0 5.5 5.0 Mean = 4.3 4.5 4.0 3.5 Japan India Canada U.S. Germany Russian Fed. Mexico Korea, Rep. U.K. China Source: The Global Competitiveness Report 07-08
Capacity for innovation (1 = Low, 7 = High) Score 6.5 6.0 5.5 5.0 4.5 4.0 Mean = 3.4 3.5 3.0 Japan U.S. Germany Korea, Rep. U.K. Canada India China Mexico Russian Fed. Source: The Global Competitiveness Report 07-08
Consumer credit debt United States US$ billions 1000 800 600 400 200 0 1973 1978 1983 1988 1993 1998 2003 2008 Sources: Federal Reserve Board, Moody s Economy.com.
Household properties with foreclosure activity United States, 2007 Thousands 550 500 450 400 350 300 250 200 Sources: Realty Trac, Wikipedia. Q1 Q2 Q3 Q4
Delinquency rates At all commercial banks Percent 3.5 3.0 2.5 Residential real estate loans 2.0 1.5 1.0 0.5 1997 1998 1999 2000 2001 2002 2003 2004 Commercial loans 2005 2006 2007 Sources: Federal Reserved Board, Moody s Economy.com.
Mortgage loan frauds reported United States Thousands 30 25 20 15 10 5 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: Financial Crimes Enforcement Network.
Subprime crisis overview December 2006 - current S&P 500 Index 1600 1550 1500 1450 1400 1350 1300 1250 Dec. 06 Ownit Mortgage, a subprime lender, files for bankruptcy Feb. 07 HSBC says it set aside $10.6b for bad loans, incl. subprime 12/06 Apr. 07 New Century, a mortgage broker, files for bankruptcy Jul. 07 Two Bear Stearns hedge funds file for bankruptcy Aug. 07 Fed cuts discount rate to 5.75% Sources: BusinessWeek (March 31, 2008), Standard & Poor s, Global Insight. Jan. 11, 08 BofA agrees to buy Countrywide Oct. 07 Merrill announces $7.9b in subprime write-downs, surpassing Citi s $6.5b Jan. 30, 08 Fed cuts discount rate to 3.5% 07Q1 07Q2 07Q3 07Q4 Mar. 11, 08 Fed offers troubled banks as much as $200b Mar. 16, 08 JP Morgan offers to buy Bear Mar. 18, 08 Fed cuts discount rate to 2.4%; Fed funds rate to 2.25% 08Q1
Subprime write-downs MBS and CDOs Note: As of April 21, 2008, financial institutions had recognized subprimerelated losses or write-downs exceeding U.S. $245 billion. Sources: The Banker (March 2008), Wikipedia. Loss Rank Company (US$ billions) 1 Citigroup $39.1 2 UBS $37.7 3 Merrill Lynch $29.1 4HSBC $17.2 5 Morgan Stanley $11.5 6AIG $11.1 7 Bank of America $8.0 8 Deutsche Bank $7.0 9 JP Morgan Chase $5.5 10 Wachovia $5.0
Bond insurance losses Stemming from subprime debt US$ billions 20 $19.0* 15 10 5 0 $2.5 $0.6 1990-2000 2001-06 *Projected, 2005-07 Sources: Bloomberg Markets (March 2008).
Federal Spending Under CBO s Alternative Fiscal Scenario 40 Percentage of Gross Domestic Product Actual Projected 30 20 Medicare and Medicaid 10 Social Security Other Spending (Excluding debt service) 0 1962 1972 1982 1992 2002 2012 2022 2032 2042 2052 2062 2072 2082
Sources of Growth in Projected Federal Spending on Medicare and Medicaid Percentage of GDP 20 15 10 Effect of Excess Cost Growth Interaction of Aging and Excess Cost Growth 5 Effect of Aging of Population 0 2007 2012 2017 2022 2027 2032 2037 2042 2047 2052 2057 2062 2067 2072 2077 2082
Medicare Spending per Beneficiary in the United States By Hospital Referral Region, 2005
S&P/Case-Shiller 10-City Composite Home Price Index and Implied Values from Futures Prices Percentage Change from a Year Ago
Mortgage Delinquencies Percentage of Loans
Mortgage Foreclosures Initiated Percentage of Loans
Rates on 30-Year Mortgages Percent
Popular Adjustable-Rate-Mortgage Indexes Percent
Inferred Prices of Subprime Mortgage Tranches Cents, 100 Is Par
Yields on 10-Year Bonds Percent
Spread Between the Three-Month Libor Rate and the Expected Federal Funds Rate Percentage Points
Human Capital Nobel Prize winning economist Gary Becker estimates that human capital comprises approximately 75% of the assets of the U.S. 2005 Human Capital $238 Trillion Market 2005 U.S. Balance Sheet $62 Trillion Market Human & Social Capital 74% U.S. Financial Assets 26% Non- Corporate Equities 10% Pension Fund Reserves 17% Other Financial 5% Corp. Equities & Mutual Funds 16% Bonds Deposits 4% 10% Other Tangible 6% Real Estate 32% Sources: Gary Becker. Source: U.S. Federal Reserve.
Return on Human Capital Investment R e t u r n Preschool Programs School Opportunity Cost of Funds The rate of return to a dollar investment made while a person is young is higher than the rate of return to the same dollar made at a later age. Nobel Prize Economist James Heckman Job Training Age Source: James Heckman, University of Chicago.
Per Capita GDP $30,000 $25,000 $28,939 15x $20,000 $15,000 Singapore Jamaica $10,000 $5,000 $0 Source: IFS, WEO; in 2006 USD. $1,899 $1,861 1960 2006 $3,929 3x
Wages and Unemployment United States Percent 6.5 6.0 5.5 5.0 4.5 4.0 Unemployment rate (L) Percent change, year ago Real wages (R) 4 3 2 1 0-1 -2 3.5 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008-3 Sources: BLS, Global Insight.
If the President s tax cuts are not extended, taxes will soon far exceed their historical level. Federal Receipts Projections Percent of GDP 20.5 20.0 19.5 Current law 19.0 Extend tax cuts 18.5 40-year historical average = 18.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Congressional Budget Office, Budget and Economic Outlook: Fiscal Years 2008 to 2018.