Upload
others
View
3
Download
0
Embed Size (px)
Citation preview
inAction
Peter RupertProfessor and Chairperson
Department of Economics, UCSBDirector, UCSB Economic Forecast Project
EFP Update, Alisal RanchJanuary 14, 2016
Roadmap for today
national perspective: FOMC (aka the Fed)
narrow the focus to California and local areas
“forecast” the future
Federal Open Market Committee
finally!!!
they raised rates! up 0.25 percentage points
the world did not implode!
why did they raise now?
Federal Open Market Committee
finally!!!
they raised rates! up 0.25 percentage points
the world did not implode!
why did they raise now?
Federal Open Market Committee
finally!!!
they raised rates! up 0.25 percentage points
the world did not implode!
why did they raise now?
Jul−54 Jan−60 Jan−70 Jan−80 Jan−90 Jan−00 Jan−10 Dec−15
0
5
10
15
Source: FRB St. Louis
Effective Federal Funds RatePercent
Jan−06 Jan−07 Jan−08 Jan−09 Jan−10 Jan−11 Jan−12 Jan−13 Jan−14 Jan−15 Dec−15
0
1
2
3
4
5
Source: FRB St. Louis
Effective Federal Funds RatePercent
FOMC
parse the Dec. 16 FOMC statement
“economic activity has been expanding at amoderate pace”
recall:
Y = C + I + G + (X −M)
FOMC
parse the Dec. 16 FOMC statement
“economic activity has been expanding at amoderate pace”
recall:
Y = C + I + G + (X −M)
economic activity
Y = C + I + G + (X −M)
Y = Real GDP, Income, or Expenditures
C = Real Personal Consumption Expenditures
I = Investment Expenditures
G = Real Government Expenditures
X −M = eXports - Imports
1947 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
9.5
10.0
10.5
11.0
Econsnapshot.com Source: BEA
Real GDPLog Real Per Capita GDP, 2009$, Seasonally Adjusted
Linear Trend
1929 1935 1945 1955 1965 1975 1985 1995 2005 2014
7.0
7.5
8.0
8.5
9.0
9.5
10.0
Econsnapshot.com Source: BEA
Real GDPLogged Billions of 2009$, Seasonally Adjusted
Linear Trend
County Income Inequality
how is income distributed across CA?
CA Average: $45.3
$20−$30
$30−$40
$40−$50
$50−$60
$60−$70
$80+
Per−Capita Personal Income: 2014 In Thousands
Source: BEA
1969 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012
0.08
0.10
0.12
0.14
0.16
0.18
Economic Forecast Project Source: BEA
Gini CoefficientReal per capita personal income across counties
−10
0
10
20
Col
usa
Alp
ine
Mod
ocYu
baIm
peria
lG
lenn
Sie
rra
Lass
enM
arip
osa
Del
Nor
teS
utte
rIn
yoT
rinity
Hum
bold
tF
resn
oTe
ham
aP
lum
asS
acra
men
toB
utte
Yolo
Sol
ano
Sis
kiyo
uC
alav
eras
Ker
nLa
keM
ono
Men
doci
noS
an B
erna
rdin
oA
mad
orLo
s A
ngel
esS
an J
oaqu
inE
l Dor
ado
Sha
sta
Sta
nisl
aus
San
Die
goT
uolu
mne
Mon
tere
yS
an L
uis
Obi
spo
Mer
ced
Tul
are
Nev
ada
Nap
aP
lace
rS
an B
enito
Ala
med
aR
iver
side
Kin
gsS
an F
ranc
isco
San
ta B
arba
raM
ader
aO
rang
eC
ontr
a C
osta
Vent
ura
Son
oma
San
Mat
eoS
anta
Cla
raS
anta
Cru
zM
arin
US Average: 6%CA Average: 8.95%
Percent Change in Per−Capita Personal Income 2007−2009
Source: BEA
0
20
40
60
Alp
ine
San
ta C
lara
Mad
era
San
Fra
ncis
coK
ings
Sie
rra
Plu
mas
Tul
are
San
Mat
eoM
erce
dLa
ssen
Mar
inK
ern
Gle
nnIn
yoA
lam
eda
Trin
ityT
uolu
mne
San
ta C
ruz
Mar
ipos
aLa
keM
endo
cino
El D
orad
oC
alav
eras
Sis
kiyo
uA
mad
orS
onom
aN
evad
aN
apa
San
Lui
s O
bisp
oTe
ham
aS
tani
slau
sM
odoc
Hum
bold
tC
ontr
a C
osta
Impe
rial
Del
Nor
teYo
loB
utte
Los
Ang
eles
San
Ben
itoS
anta
Bar
bara
San
Die
goO
rang
eM
ono
Fre
sno
Vent
ura
Pla
cer
San
Joa
quin
Sha
sta
Sac
ram
ento
Sol
ano
Yuba
Mon
tere
yS
an B
erna
rdin
oR
iver
side
Sut
ter
Col
usa
US Average: 6%CA Average: 8.95%
Percent Change in Per−Capita Personal Income 2009−2014
Source: BEA
Financial Activities
Government Prof. & Bus. ServicesManufacturing
Educ. & Health ServicesRetail trade
Information
Total Farm
Leisure & HospitalityWholesale trade
Construction
Mining
Other Services
Trans., Ware. & Util.
19.1 16.2 11.5 8.6 8 6.65.4
5.15
4.23.3
2.72.5
1.7
−30
−20
−10
0
10
0 25 50 75 1002014 Percent of Total GDP
2013
−20
14 G
row
th R
ate
(%)
Real Gross Domestic Product (GDP) by Industry Santa Barbara County
...FOMC
“Household spending and business fixed investmenthave been increasing at solid rates in recentmonths...”
Y = C + I + G + (X −M)
0 10 20 30 40
1.0
1.1
1.2
1.3
1.4
Quarters after peakSource: BEA
Real Personal Consumption ExpendituresPeak before recession = 1
1960 cycle1969 cycle1973 cycle1981 cycle1990 cycle2001 cycleCurrent cycle
Q4 1951 Q1 1960 Q1 1970 Q1 1980 Q1 1990 Q1 2000 Q1 2010
450
500
550
600
650
www.efp.ucsb.edu Source: Board of Governors, Flow of Funds
Net Worth as a Percentage of Disposable IncomePercent (%)
Q1 1960 Q2 1966 Q2 1972 Q2 1978 Q2 1984 Q2 1990 Q2 1996 Q2 2002 Q2 2008 Q2 2014
−15
−10
−5
0
5
10
15
Net Wealth [ 4.68% ]Personal Consumption [ 3.47% ]
www.efp.ucsb.edu Note: Most recent value in brackets.
Source: Board of Governors and Bureau of Economic Analysis
Net Wealth and Personal Consumption ExpendituresAnnual Growth Rate (%)
0 10 20 30 40
0.8
1.0
1.2
1.4
1.6
1.8
2.0
Quarters after peakSource: BEA
Non−Residential Fixed InvestmentPeak before recession = 1
1960 cycle1969 cycle1973 cycle1981 cycle1990 cycle2001 cycleCurrent cycle
...FOMC
“and the housing sector has improved further;however, net exports have been soft.”
1999 2001 2003 2005 2007 2009 2011 2013 2015
4
5
6
7
Economic Forecast Project Source: NAR
Existing Home SalesMillions of Units, Seasonally Adjusted
2000 2002 2004 2006 2008 2010 2012 2014 2015
500
1000
1500
2000
Economic Forecast Project Source: Census
Housing StartsNumber of Units, Seasonally Adjusted
2000 2002 2004 2006 2008 2010 2012 2014 2015
100
120
140
160
180
200
Economic Forecast Project Source: BLS
Case−Shiller 20 City CompositeIndex 2000=100
2000−Feb 2002−Feb 2004−Feb 2006−Feb 2008−Feb 2010−Feb 2012−Feb 2014−Feb
40
60
80
100
120
Santa BarbaraSan DiegoSan FranciscoLos AngelesRiversideKingsCaliforniaUnites States
www.efp.ucsb.edu
Source: Zillow Research Data
Note: Current value in brackets.
Zillow Home Value Index (ZHVI)Index (100 = Pre−Recession Maximum Value)
can we afford it?
income
housing price
−20
−10
0
10
20
Div
iden
ds,
inte
rest
, ren
t
Net
ear
ning
s by
pl
ace
of r
esid
ence
Per
sona
l cur
rent
tr
ansf
er r
ecei
pts
CaliforniaSanta Barbara
Percent Change in Per−Capita Personal Income by Component 2007−2009
Source: BEA
0
5
10
15
Div
iden
ds,
inte
rest
, ren
t
Net
ear
ning
s by
pl
ace
of r
esid
ence
Per
sona
l cur
rent
tr
ansf
er r
ecei
pts
CaliforniaSanta Barbara
Percent Change in Per−Capita Personal Income by Component 2009−2014
Source: BEA
−10
0
10
20
Div
iden
ds,
inte
rest
, ren
t
Net
ear
ning
s by
pl
ace
of r
esid
ence
Per
sona
l cur
rent
tr
ansf
er r
ecei
pts
CaliforniaSanta Barbara
Percent Change in Per−Capita Personal Income by Component 2007−2014
Source: BEA
0
20
40
60
Kin
gs
San
Ber
nard
ino
Mer
ced
Tul
are
Mad
era
Fres
no
Sacr
amen
to
Sola
no
Plac
er
Stan
isla
us
Riv
ersi
de
San
Joaq
uin
Los
Ang
eles
San
Lui
s O
bisp
o
Mon
tere
y
Ven
tura
San
Die
go
Sono
ma
Nap
a
Ora
nge
Sant
a C
ruz
Sant
a C
lara
Ala
med
a
Con
tra
Cos
ta
Mar
in
Sant
a B
arba
ra
San
Mat
eo
San
Fran
cisc
o
CA Average: 30%
US Average: 57%
CAR Affordability 2015Q2
Source: California Realtors Association
...FOMC
“The pace of job gains slowed and theunemployment rate held steady.”
J A S O N D J F M A M J J A S O N D
−100
0
100
200
300
400
econsnapshot.com Source: BLS
Net Employment ChangeThousands, SA
first estimatesecond estimatethird estimate
2000 2002 2004 2006 2008 2010 2012 2014 2015
4
5
6
7
8
9
10
Economic Forecast Project Source: BLS
Unemployment RatePercent, SA
1948 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
2
4
6
8
10
12
14
Economic Forecast Project Source: BLS
Unemployed PersonsMillions, SA
employment
large differences within and across counties
0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%
Agri., Forestry, Fishing & Hunting
Mining
Construction
Manufacturing-Durable
Manufacturing-Nondurable
Wholesale Trade
Retail Trade
Information
Financial Activities
Prof. & Business Services
Educational & Health Services
Leisure and Hospitality
Government
Industry Employment for Santa Barbara County Areas2013, Employment Shares (%)
City of Santa Barbara
Goleta Valley
Carpinteria
Santa Maria
Santa Ynez Valley
Lompoc
Source: QCEW
01234
Current Annual Empl. Growth (%)
Anaheim−Irvine MD
Bakersfield
Chico
El Centro
Fresno
Hanford−Corcoran
Los Angeles MD
Madera
Merced
Modesto
Napa
Oakland−Berkeley MD
Ventura
Redding
Riverside
Sacramento
Salinas
San Diego−Carlsbad
San Francisco MD
San Jose−Santa Clara
San Luis Obispo
San Rafael MD
Santa Cruz
Santa Barbara
Santa Rosa
Stockton−Lodi
Vallejo−Fairfield
Visalia−Porterville
Yuba City
0 5 10 15 20
Current Unempl. Rate (%)
1948 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
56
58
60
62
64
Economic Forecast Project Source: BLS
Employment to Population RatioPercent
60
80
100
120
140
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
16 to 19 years 20 to 24 years 25 to 34 years 35 to 44 years45 to 54 years 55 to 64 years 65 years and over
California: Employment to Population RatioMen (Index: 2002 = 100)
Source: BLS − Local Area Unemployment Statistics
50
75
100
125
150
175
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
16 to 19 years 20 to 24 years 25 to 34 years 35 to 44 years45 to 54 years 55 to 64 years 65 years and over
California: Employment to Population RatioWomen (Index: 2002 = 100)
Source: BLS − Local Area Unemployment Statistics
93
94
95
96
97
98
99
100
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Men Total Women
California: Participation Rate(Index 2002 = 100)
Source: BLS − Local Area Unemployment Statistics
75
100
125
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
16 to 19 years 20 to 24 years 25 to 34 years 35 to 44 years
45 to 54 years 55 to 64 years 65 years and over
California: Participation RateMen (Index: 2002 = 100)
Source: BLS − Local Area Unemployment Statistics
60
70
80
90
100
110
120
130
140
150
160
170
180
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
16 to 19 years 20 to 24 years 25 to 34 years 35 to 44 years
45 to 54 years 55 to 64 years 65 years and over
California: Participation RateWomen (Index: 2002 = 100)
Source: BLS − Local Area Unemployment Statistics
lingering issues
current stance of policy
regulatory pressures
1984 1988 1992 1996 2000 2004 2008 2012 2015
0
500
1000
1500
2000
2500
3000Excess ReservesRequired ReservesTotal ReservesCash Assets
Economic Forecast Project Source: FRB St. Louis
ReservesBillions of Dollars
1954 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
0
5
10
15
Econsnapshot.com Source: BLS, BEA
Taylor RuleFF = .5*(5.0−URATE) + 2 + INF + .5*(INF−2)
Implied Taylor RuleEffective Fed Funds Rate
outlook for the rest of the world
still sucks
outlook for the rest of the world
still sucks
2004 2005 2007 2008 2010 2011 2013 2014
0.85
0.90
0.95
1.00
1.05
1.10
Econsnapshot.com Source: OECD
Real GDPIndex, 2010=1, Quarterly, SA
USUKGermanyFranceNetherlandsIrelandSpainItalyPortugalGreece
final thoughts
some good, some bad
1967 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2015
70
75
80
85
90
Capacity Utilization Rate
Source: Board of GovernorsEconomic Forecast Project
82.5 is estimated inflation boom/bust level
1986 1990 1994 1998 2000 2004 2006 2010 2012 2016
20
40
60
80
100
120
140 West Texas IntermediateBrent
Economic Forecast Project Source: U.S. Energy Information Administration
Oil PricesPrice per barrel, weekly
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2015
0.5
1.0
1.5
2.0
2.5
3.0
Economic Forecast Project Source: FRB St. Louis
5 Year Inflation ExpectationsPercent
1948 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
56
58
60
62
64
Economic Forecast Project Source: BLS
Employment to Population RatioPercent
how to not grow a business
Waste Connections...Folsom to Dallas:
“Then the other part of it was the cost of doingbusiness in California. Highest tax rates in thenation. Until recently very expensive real estate.Tremendous regulation and really a brokenlegislature. Something thats got a built-instructural deficit thats not going to improve,”explained Mittelstaedt. “The reality is this is justa very difficult place to do business. Its a veryexpensive place to do business.”
“forecasting”
where we are: google trends (nowcasting)
where will we be: Fed forecasts
1947 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
9.5
10.0
10.5
11.0
Econsnapshot.com Source: BEA
Real GDPLog Real Per Capita GDP, 2009$, Seasonally Adjusted
Linear Trend
final thoughts
lots of weakness out there
and yes, signs of strength
1947 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
9.5
10.0
10.5
11.0
Econsnapshot.com Source: BEA
Real GDPLog Real Per Capita GDP, 2009$, Seasonally Adjusted
Linear Trend
thank you!