Rupert Report

Peter RupertProfessor

Department of Economics, UCSBDirector, UCSB Economic Forecast Project

Economic UpdateJanuary 26, 2017

www.efp.ucsb.edu/talk

economics and the election

what to expect

uncertainty

Dodd-Frank

international trade

taxes and spending

Obamacare

oil/energy

immigration

ugh, I need a lot more slides! but...

what to expect

uncertainty

Dodd-Frank

international trade

taxes and spending

Obamacare

oil/energy

immigration

ugh, I need a lot more slides! but...

what to expect

uncertainty

Dodd-Frank

international trade

taxes and spending

Obamacare

oil/energy

immigration

ugh, I need a lot more slides! but...

what to expect

uncertainty

Dodd-Frank

international trade

taxes and spending

Obamacare

oil/energy

immigration

ugh, I need a lot more slides! but...

what to expect

uncertainty

Dodd-Frank

international trade

taxes and spending

Obamacare

oil/energy

immigration

ugh, I need a lot more slides! but...

what to expect

uncertainty

Dodd-Frank

international trade

taxes and spending

Obamacare

oil/energy

immigration

ugh, I need a lot more slides! but...

what to expect

uncertainty

Dodd-Frank

international trade

taxes and spending

Obamacare

oil/energy

immigration

ugh, I need a lot more slides! but...

what to expect

uncertainty

Dodd-Frank

international trade

taxes and spending

Obamacare

oil/energy

immigration

ugh, I need a lot more slides! but...

1929 1940 1950 1960 1970 1980 1990 2000 2010

7.0

7.5

8.0

8.5

9.0

9.5

10.0

Real GDPLogged Billions of 2009$, Seasonally Adjusted

Linear Trend

so far...

some positive signs

stock market

gdp

FOMC a bit more upbeat

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2016

8

10

12

14

16

18

20

Dow Jones Industrial Index (000’s)

Ele

ctio

n

Jan 012016

Mar 012016

May 022016

Jul 012016

Sep 012016

Nov 012016

Jan 022017

16

17

18

19

20

Dow Jones Industrial Index (000’s)

My

Bir

thda

y

Jan 012016

Mar 012016

May 022016

Jul 012016

Sep 012016

Nov 012016

Jan 022017

16

17

18

19

20

Dow Jones Industrial Index (000’s)

Per

cent

−2

0

2

4

6

2.8%

0.8%

3.1%

4%

−1.2%

4%

5%

2.3%2%

2.6%

2%

0.9% 0.8%

1.4%

3.5%

2013

2014

2015

2016

Econsnapshot.com Source: BEA

Real GDP

quarterly change at an annual rateyear−over−year change

what’s up with our friends at the Fed?

increases this year?

housing and financial aspects

home price growth has moderated

mortgage crisis has abated

foreclosures back to “normal”

yet, foreclosure timelines not!

2000 2002 2004 2006 2008 2010 2012 2014 2016

20

40

60

80

100

120

Santa Barbara[ $1,064,100]Carpinteria[ $788,600]Montecito[ $3,048,500]Goleta[ $786,800]Santa Maria[ $352,500]Lompoc[ $307,000]Guadalupe[ $266,900]

Zillow Home Value IndexIndex (100 = Pre−Recession Max Value)

2001−Feb 2004−Feb 2007−Feb 2010−Feb 2013−Feb 2016−Feb

−40

−20

0

20

40 Santa Barbara[6%]Carpinteria[0%]Montecito[7%]Goleta[3%]Santa Maria[8%]Lompoc[10%]Guadalupe[12%]

Zillow Home Value IndexYoY Growth Rate (%)

Q1 1995 Q1 1998 Q1 2001 Q1 2004 Q1 2007 Q1 2010 Q1 2013 Q4 2015

16

18

20

22

24

26

www.efp.ucsb.edu Source: Board of Governors, Flow of Funds

Ratio of HH Liabilities to HH Net WorthPercent (%)

2000 2002 2004 2006 2008 2010 2012 2014 2016

0

10

20

30

40

50

60 Riverside, CASacramento, CASan Diego, CALos Angeles, CASan Francisco, CACalifornia

Homes foreclosed per month, by MSANumber of homes per 10,000

2011−Q2 2012−Q1 2012−Q4 2013−Q3 2014−Q2 2015−Q1 2015−Q4 2016−Q3

0.10

0.15

0.20

0.25

0.30

0.35

0.40

Santa Barbara

California

United States

Percent of Home with Negative Equity

San

ta B

arba

raC

ount

y

San

ta M

aria

San

ta B

arba

raC

ity

Lom

poc

Gol

eta

Car

pint

eria

Sol

vang

Gua

dalu

pe

Bue

llton

0 %

2 %

4 %

6 %

8 %

10 %

12 %

14 %

Percent of Homes with Negative Equity

San

ta B

arba

raC

ount

y

San

ta M

aria

San

ta B

arba

raC

ity

Lom

poc

Gol

eta

Car

pint

eria

Sol

vang

Gua

dalu

pe

Bue

llton

0 %

20 %

40 %

60 %

80 %

100 %

Negative Equity Loan−to−Value: 2016Q3

100−120% 120−140% 140−160% 160−180% 180−200% >200%

income and wages

1969 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014

0.08

0.10

0.12

0.14

0.16

0.18 USCalifornia

Gini CoefficientReal per capita personal income across counties

new findings on inequality

most of the inequality is “between firms”

not “within firms”

labor markets

wages

wage growth picking up in the US

but not evenly across the state

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2016

−2

0

2

4

CPI AHE

Inflation and Average Hourly EarningsPercent change from a year ago, all private workers

[−1%, 0%]

(0%, 1%]

(1%, 2%]

(2%, 3%]

(3%, 6%]

Real Mean Wage Growth 2015 − 2016

Source: CA EDD

employment

employment growth strong

but varies by industry and geography

unemployment as well

2000 2002 2004 2006 2008 2010 2012 2014 2016

95

100

105

Santa Barbara County [ 175,120 ]California [ 15,476,015 ]United States [ 138,434,120 ]

www.efp.ucsb.edu

Total Nonfarm Payrolls, Seasonally AdjustedIndex (Dec 2007 = 100)

Notes: December 2007 level in brackets.

Source: BLS & CA EDD

2010 2011 2012 2013 2014 2015 2016 2016

100

105

110

115Buellton [ 3,127 ]Carpinteria [ 7,775 ]Goleta [ 17,433 ]Guadalupe [ 3,231 ]Lompoc [ 17,601 ]Santa Barbara City [ 51,151 ]Santa Maria [ 46,649 ]Solvang [ 2,706 ]

www.efp.ucsb.edu

Total Civilian Employment, Seasonally AdjustedIndex (Jan 2010 = 100)

Note: Current level in brackets.

Source: BLS & CA EDD

2010 2011 2012 2013 2014 2015 2016 2016

4

6

8

10

12

Buellton [ 2.9% ]Carpenteria [ 3.97% ]Goleta [ 2.71% ]Guadalupe [ 4.3% ]Lompoc [ 5.95% ]Santa Barbara City [ 3.64% ]Santa Maria [ 5.53% ]Solvang [ 5.63% ]

www.efp.ucsb.edu

Unemployment Rate, Seasonally AdjustedPercent (%)

Note: Most recent rate in brackets.

Source: BLS & CA EDD

Government

Leisure & Hospitality

Educ. & Health ServicesGoods Producing

Prof. & Bus. ServicesTotal Farm

Retail Trade

Financial ActivitiesOther Services

Wholesale Trade

Information

Trans., Ware. & Util.

19.2 14.2 13 11 10.6 10.29.5

3.12.8

2.52.1

1.7

−2.5

0.0

2.5

5.0

7.5

0 25 50 75 100Percent of Total Employment

Dec

201

5 −

Dec

201

6 G

row

th R

ate

(%)

December 2016 Employment by Industry Santa Barbara County

final thoughts

policy uncertainty

strong growth in the US

FOMC forecast: 3 25bp increases in 2017?

1929 1940 1950 1960 1970 1980 1990 2000 2010

7.0

7.5

8.0

8.5

9.0

9.5

10.0

Real GDPLogged Billions of 2009$, Seasonally Adjusted

Linear Trend

thank you!