The 2019 Economic Outlook Forum The Outlook for MS February 2019 Mississippi University Research Center Mississippi Institutions of Higher Learning Darrin Webb, State Economist dwebb@mississippi.edu (601)432-6556 To subscribe to our publications, email Janna Taylor at jtaylor@mississippi.edu Visit our website for state and county level economic data www.mississippi.edu/urc Follow URC on Twitter @MississippiURC
Quick Overview of National Economy After a robust 3.4% growth in the 3 rd quarter, the economy cooled in the fourth quarter (IHS Markit says 2.4%) Despite the late-year slowdown, 2018 Growth was at or near 3.0% While the US economy remains fundamentally sound, a variety of forces will drive growth slower in 2019 (IHS Markit says 2.1%) February 2019 MS University Research Center, IHL 2
Millions of 2012 $ Annual Growth: 2008 4.2% 2009-4.7% 2010 0.5% 2011-1.3% 2012 0.9% 2013 0.0% 2014-0.2% 2015 0.3% 2016 0.4% 2017 0.1% $120,000 $100,000 $80,000 Annual MS Real GDP 12% 10% 8% 6% Annualized Quarterly Growth $60,000 4% 2% $40,000 $20,000 $0 Very little upward momentum since the recession. 0% -2% -4% -6% Positive growth in 6 of the last 7 quarters. Growth in the first half of 2018 was notably stronger. -8% 2010 2011 2012 2013 2014 2015 2016 2017 2018 February 2019 MS University Research Center, IHL 3
Real GDP Growth Private Sector VS Government 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% Contractions in government had a notable dampening effect on GDP growth in 2010, 2012 and 2015. Roughly 83% of MS GDP comes from the private sector. 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Private Government Total February 2019 MS University Research Center, IHL 4
Index 2004=100 MS Index of Coincident Indicators 128 126 124 Improvement in the MSCI has been generally steady. March, April and May were essentially flat. Growth improved in the last half of 2018 122 120 118 116 114 112 110 Jan-16 Jan-17 Jan-18 The Mississippi Index of Leading Indicators reflects economic conditions expected for the coming months. The index is constructed by the University Research Center and indexed to 2004. There are 7 components of the Index: MS Initial Unemployment Claims; MS Income Tax Withholdings; MS Value of Residential Building Permits; MS MFG Employment Intensity Index; ISM Index of US MFG Activity; US Consumer Expectations Index and US Retail Sales. February 2019 MS University Research Center, IHL 5
Index 2004=100 MS Index of Leading Indicators 125 120 115 110 105 100 95 90 85 The MSLI has been relatively flat for some time and weakened in the closing months of 2018. The trend is not strong enough or long enough to suggest any real change in the economy in the shortterm. In other words, the MSLI points to continued modest improvement, but nothing more. 80 Jan-16 Jan-17 Jan-18 The Mississippi Index of Leading Indicators reflects economic conditions expected for the coming months. The index is constructed by the University Research Center and indexed to 2004. There are 7 components of the Index: MS Initial Unemployment Claims; MS Income Tax Withholdings; MS Value of Residential Building Permits; MS MFG Employment Intensity Index; ISM Index of US MFG Activity; US Consumer Expectations Index and US Retail Sales. February 2019 MS University Research Center, IHL 6
Jan-07 Jun-07 Nov-07 Apr-08 Sep-08 Feb-09 Jul-09 Dec-09 May-10 Oct-10 Mar-11 Aug-11 Jan-12 Jun-12 Nov-12 Apr-13 Sep-13 Feb-14 Jul-14 Dec-14 May-15 Oct-15 Mar-16 Aug-16 Jan-17 Jun-17 Nov-17 Apr-18 Sep-18 MS Unemployment Rate 12.0 10.0 8.0 6.0 4.0 2.0 The unemployment rate is at an historically low level. 4.7% in December. 0.0 February 2019 MS University Research Center, IHL 7
Iowa Hawaii New Hampshire Vermont Minnesota Nebraska North Dakota South Dakota Virginia Idaho Wisconsin Missouri Colorado Utah Kansas Massachusetts Oklahoma Indiana Maine South Carolina Tennessee Florida Montana Arkansas Delaware North Carolina Texas United States Alabama Georgia Connecticut Michigan New York Oregon Rhode Island California Illinois Maryland New Jersey Wyoming Pennsylvania Kentucky Washington Nevada Ohio Arizona New Mexico Mississippi Louisiana West Virginia Alaska Unemployment Rate 2018 Average 14% 12% MS annual average unemployment rate for 2018 was 4.8%. There was very little variation across states for reported unemployment rates. The real unemployment rate in MS was 8.7%. This was more than 2% below the rate 2 years ago. The real unemployment rate adds discouraged and other marginally attached workers and those working part time for economic reasons. 10% 8% 6% 4% 2% 0% Unemployment Rate as commonly reported Additions to Reported Unemployed The real unemployment rate combines the two series in the chart. February 2019 MS University Research Center, IHL 8
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 MS Initial Unemployment Claims 25,000 Annual Average 9,000 3-Month Moving Average Seasonally Adjusted 20,000 8,000 7,000 15,000 6,000 5,000 10,000 4,000 3,000 5,000 - Claims have trended down and are at historically low levels. 2,000 1,000 0 Jan-16 Jan-17 Jan-18 February 2019 MS University Research Center, IHL 9
Iowa Nebraska South Dakota Wisconsin Minnesota New Hampshire North Dakota District of Columbia Vermont Colorado Maryland Connecticut Massachusetts Delaware Kansas Wyoming Maine Missouri Rhode Island Pennsylvania Indiana New Jersey Montana Virginia Idaho Oregon Illinois Nevada Washington Ohio United States Michigan Georgia Utah Hawaii Florida North Carolina Texas New York California Alaska Arizona South Carolina Tennessee Kentucky Louisiana Oklahoma Mississippi New Mexico Arkansas Alabama West Virginia 88.3% 88.0% 87.8% 87.8% 87.7% 87.7% 86.8% 86.6% 86.4% 86.0% 85.6% 85.5% 85.3% 84.6% 84.6% 84.6% 84.5% 84.4% 84.3% 84.0% 83.9% 83.5% 83.3% 83.2% 82.9% 82.8% 82.7% 82.4% 82.3% 82.1% 82.1% 81.9% 81.7% 81.7% 81.2% 81.1% 81.1% 81.1% 80.9% 80.5% 80.4% 80.3% 79.6% 79.5% 79.4% 78.9% 78.8% 78.2% 77.6% 77.5% 76.6% 75.2% Prime Working-Age Labor Force Participation 90% Percentage of the Population between the ages of 25 & 54 years old that are either employed or actively looking for a job. Preliminary Annual Average for 2018 85% 80% 75% 70% 65% February 2019 MS University Research Center, IHL 10
Workforce Participation by Age Group 90.0% 80.0% 70.0% 60.0% 50.0% 64.2% 70.2% 71.1% 80.6% 80.6% 82.5% 82.9% 81.8% 79.1% 80.8% 78.9% 74.6% 52.1% 65.0% 61.9% 40.0% 35.1% 32.7% 30.0% 25.4% 19.6% 20.0% 18.6% 14.2% 10.0% 0.0% Total, 16 to 19 years Total, 20 to 24 years Total, 25 to 34 years Total, 35 to 44 years Total, 45 to 54 years Total, 55 to 64 years Total, 65 years and over MS SE (excl. MS) US February 2019 MS University Research Center, IHL 11
Thousands Nonfarm Employment in MS 1,180 1,170 1,160 Pre-Recession Peak Employment Level 1,150 1,140 1,130 1,120 1,110 1,100 1,090 Employment improved remarkably in the last half of 2017, with improvement being broad based. This surge allowed us to finally exceed the pre-recession peak. Growth in 2018 was a fairly robust 1.3%. Slightly ahead of 2015 and 2016. 1,080 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 February 2019 MS University Research Center, IHL 12
FL NC SC TN AL GA KY MS US FL AR OK TX LA AL AR GA KY MS NC SC TN US AL AR GA FL LA NC MS OK TN SC US AL LA OK AR LA KY TX MS AR GA FL LA KY NC SC OK US AR AL LA OK KY MS OK GA FL KY MS LA NC SC OK TN US AL GA FL KY MS LA OK NC TN SC US AR KY LA LA AR AL MS AL AL AR KY MS TX AR AL OK KY LA OK KY MS TN TX US AR US NC TN GA FL TX NC TN SC US TX AL GA MS OK NC SC TN US FL GA SC GA NC TN SC US TX GA NC SC TN TX TX TX FL TX FL FL Average Annual Growth in Employment 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% Mississippi was not hit as hard in the recession as other states. However, the state s recovery has generally been slower. MS growth in 2018 exceeded AR, KY and LA and equal to that observed in AL -8.0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 February 2019 MS University Research Center, IHL 13
Utah Texas North Dakota Colorado Washington Idaho Florida California Massachusetts Oregon Georgia South Carolina Tennessee New York Nevada South Dakota North Carolina United States Arizona Montana Minnesota Nebraska New Hampshire Virginia Oklahoma Hawaii Indiana Maryland Delaware Kentucky Pennsylvania Iowa Missouri Michigan Arkansas Wisconsin Ohio Kansas New Jersey Rhode Island Illinois Louisiana Alaska Alabama Mississippi Vermont New Mexico Maine Connecticut West Virginia Employment Relative to Pre-Recession December 2018 as a Percentage Above (Below) December 2007 25% 20% 15% 10% 8.5% 5% 0% 1.2% -5% February 2019 MS University Research Center, IHL 14
1940 1942 1944 1946 1948 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Annual Average Nonfarm Employment 1400.0 The slow recovery is unusual historically speaking. This is due in part to a shift away from lowskill manufacturing jobs which tended to be highly responsive to the business cycle. Growth in recent years has been similar to that observed in the 80s. 1200.0 1000.0 800.0 600.0 400.0 200.0 0.0 February 2019 MS University Research Center, IHL 15
Where are the Jobs by Industry? Mississippi added an average 15,267 jobs in 2018 over 2017 Professional Services Leisure & Hospitality Education & Health Services Manufacturing Financial Activities Government Trade, Transportation & Utlities Construction Other Services Mining & logging Information -300-417 2,933 2,017 1,100 975 908 817 583 517 6,133-4,000-2,000 0 2,000 4,000 6,000 8,000 February 2019 MS University Research Center, IHL 16
Where are the Job by County? Jobs Gained (Lost) 2017-2018 Source: MDES Annual Averages 2/7/19 Mississippi: 15,267 34 counties saw declines 4 counties had no change 44 counties saw gains
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 MS Construction Employment 70 Annual Average 47 Monthly Seasonally Adjusted 60 46 50 45 40 44 30 43 20 10 0 After strong growth in the 90s, employment has generally trended downward. The notable exceptions are the period following Katrina & during large projects of 2013-2014. 42 41 Construction employment has made modest improvement in 2018, though somewhat weaker in the last half of the year. 40 Jan-16 Jan-17 Jan-18 February 2019 MS University Research Center, IHL 18
MS Residential Building Permits Number of Units 1,400 Annual 1,000 3-Month Moving Average Seasonally adjusted 1,200 900 1,000 800 700 800 600 600 500 400 400 200 0 Between 2007 and 2011 there was a 73% decline in activity. Despite 6 years of gain, we remain low historically. 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 300 200 100 Permits declined in early 2018, recovered, then remained flat. 0 Jan-16 Jan-17 Jan-18 Graphs may understate building activity as permits are not required in the county. February 2019 MS University Research Center, IHL 19
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 MS Manufacturing Employment 300.0 Annual Average 148 Monthly Seasonally Adjusted 250.0 147 200.0 146 145 150.0 144 143 100.0 50.0 MFG employment generally declined after NAFTA. Since 2010 the state has experienced modest gains 142 141 After a weak beginning, manufacturing ended strong in 2018. 0.0 140 139 Jan-16 Jan-17 Jan-18 February 2019 MS University Research Center, IHL 20
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 MS MFG Workweek Length 42.5 42.0 Annual Average 43 3-Month Moving Average Seasonally Adjusted 41.5 42.5 41.0 40.5 42 40.0 41.5 39.5 41 39.0 38.5 38.0 Workweek length has been especially strong in recent years. 40.5 40 Workweek slowed in 2018 but remains above 40 hours 37.5 39.5 Jan-16 Jan-17 Jan-18 February 2019 MS University Research Center, IHL 21
10% 8% 6% 4% 2% 0% -2% Two Measures of Income Growth by Qtr Y/Y Growth by Qtr, Adjusted for Inflation -4% Withholdings, DOR Wage Disbursements, BEA Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 February 2019 MS University Research Center, IHL 22
Real Median Household Income $52,000 $51,083 $50,000 $48,751 $48,000 $46,000 $44,000 $47,261 $47,292 $46,755 $45,665 $45,082 $44,835 $46,830 $45,874 $44,916 $42,984 $43,529 $42,933 $44,694 $46,285 $45,704 $47,198 $42,000 $40,000 $38,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 February 2019 MS University Research Center, IHL 23
Real Sales Tax Transfers Y/Y Growth in 6 Month Moving Average 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 February 2019 MS University Research Center, IHL 24
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Bar Graph: Millions of Dollars Line Graph: Annual % CHG MS Gaming Revenue $3,500 $3,000 20.0% 15.0% $2,500 10.0% $2,000 5.0% $1,500 0.0% $1,000-5.0% $500-10.0% $0-15.0% Coast River Total % CHG Total February 2019 MS University Research Center, IHL 25
Seriously Delinquent Loans as a Share of All Mortgages in MS 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% February 2019 MS University Research Center, IHL 26
Loans in Foreclosure as a Share of All Mortgages in MS 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% February 2019 MS University Research Center, IHL 27
Jan-07 Jun-07 Nov-07 Apr-08 Sep-08 Feb-09 Jul-09 Dec-09 May-10 Oct-10 Mar-11 Aug-11 Jan-12 Jun-12 Nov-12 Apr-13 Sep-13 Feb-14 Jul-14 Dec-14 May-15 Oct-15 Mar-16 Aug-16 Jan-17 Jun-17 Nov-17 Apr-18 Sep-18 Number of MS Households Receiving SNAP Benefits 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 February 2019 MS University Research Center, IHL 28
Highlights of MS Economy MS has generally underperformed US and SE especially since the recession Most data show 2018 improved over 2017 Income growth remains modest affecting sales and income tax collection Job growth in 2018 was relatively strong with most sectors seeing gains Unemployment & initial claims are at historical lows Measures of distress (late mortgage payments, foreclosures, & SNAP participation) are all improving February 2019 MS University Research Center, IHL 29
Growth In Real MS GDP Historical and University Research Center Projections 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% -6.0% 4.1% 4.2% 2.6%2.7% 2.6%2.5% 2.1% 1.7% 1.1% 1.2%1.2%1.3% 0.9% 0.6% 0.5% 0.3%0.4% 0.0% 0.1% -0.2% -1.1% -1.3% -4.7% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 February 2019 MS University Research Center, IHL 30
Mississippi University Research Center Mississippi Institutions of Higher Learning Darrin Webb, State Economist dwebb@mississippi.edu (601)432-6556 To subscribe to our publications, including Mississippi s Business and The Mississippi Outlook email Janna Taylor at jtaylor@mississippi.edu.