The Economist Who Loved Me · 12/03/2016 · $0 $20 $40 $60 $80 $100 $120 $140 Feb ‐ 01 Jun ‐ 01 Oct ‐ 01 Feb ‐ 02 Jun ‐ 02 Oct ‐ 02 Feb ‐ 03 Jun ‐ 03 Oct ‐ 03

By: Anirban BasuSage Policy Group, Inc.

March 12th, 2016

The Economist Who Loved Me

On Behalf of

The Retail Contractors Association 26th Annual Conference

The World is Not (Growing) Enough

*1999: Pierce Brosnan; Sophie Marceau

-3.5%2.6%

-0.3%3.6%

7.5%6.3%6.3%

-1.0%3.1%

4.0%4.3%

2.6%1.7%

2.2%1.0%

2.7%1.3%

1.7%1.3%

1.7%2.1%

-6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

BrazilMexico

Latin America & the CaribbeanMiddle East, North Africa, Afghanistan, & Pakistan

India (1)China

Emerging & developing AsiaRussia

Emerging & developing EuropeSub-Saharan Africa

Emerging market & developing economies (2)United States

CanadaUnited Kingdom

JapanSpain

ItalyGermany

FranceEuro area

Advanced economies

Annual % Change

Estimated Growth in Output by Select Global Areas2016 Projected

Source: International Monetary Fund, World Economic Outlook Update, January 2016.

Notes: 1. For India, data and forecasts are presented on a fiscal year basis and GDP from 2011 onward is based on GDP at market prices with FY2011/12 as a base year. 2. Countries included in the calculation of quarterly estimates and projections account for approximately 80 percent of the GDP of emerging market and developing economies at purchasing power parities. 3. Countries included in the calculation of quarterly estimates and projections account for approximately 90 percent of world GDP at purchasing power parities.

$0

$20

$40

$60

$80

$100

$120

$140Fe

b‐01

Jun‐01

Oct‐01

Feb‐02

Jun‐02

Oct‐02

Feb‐03

Jun‐03

Oct‐03

Feb‐04

Jun‐04

Oct‐04

Feb‐05

Jun‐05

Oct‐05

Feb‐06

Jun‐06

Oct‐06

Feb‐07

Jun‐07

Oct‐07

Feb‐08

Jun‐08

Oct‐08

Feb‐09

Jun‐09

Oct‐09

Feb‐10

Jun‐10

Oct‐10

Feb‐11

Jun‐11

Oct‐11

Feb‐12

Jun‐12

Oct‐12

Feb‐13

Jun‐13

Oct‐13

Feb‐14

Jun‐14

Oct‐14

Feb‐15

Jun‐15

Oct‐15

Feb‐16

$/Bar

rel

February 2016: $30.62 /Barrel

NYMEX Crude Oil Future Prices in U.S. DollarsFebruary 2001 through February 2016

Source: U.S. Energy Information Administration

World Oil Demand Growth2007Q1 through 2016Q1*

Source: The World Bank; International Energy Agency

‐4.0

‐3.0

‐2.0

‐1.0

0.0

1.0

2.0

3.0

4.0

2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 2014Q1 2015Q1 2016Q1*

mb/

d, gro

wth yea

r ove

r yea

r

Other Non‐OECD

OECD

China

*2016Q1 is an estimate

Moneypenny—Metal Price IndicesFebruary 2007 through February 2016

Source: The World Bank

US$ NominalBase metals include aluminum, copper, lead, nickel, tin and zinc.Precious metals include gold, platinum, and silver.

Base Metals

Iron Ore

Precious Metals

25

45

65

85

105

125

145

165

Feb‐07

Jun‐07

Oct‐07

Feb‐08

Jun‐08

Oct‐08

Feb‐09

Jun‐09

Oct‐09

Feb‐10

Jun‐10

Oct‐10

Feb‐11

Jun‐11

Oct‐11

Feb‐12

Jun‐12

Oct‐12

Feb‐13

Jun‐13

Oct‐13

Feb‐14

Jun‐14

Oct‐14

Feb‐15

Jun‐15

Oct‐15

Feb‐16

2010=100

Source: Quandl.com

Baltic Dry IndexMarch 2009 through March 2016

March 4th349

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Mar‐09

Jul‐09

Nov‐09

Mar‐10

Jul‐10

Nov‐10

Mar‐11

Jul‐11

Nov‐11

Mar‐12

Jul‐12

Nov‐12

Mar‐13

Jul‐13

Nov‐13

Mar‐14

Jul‐14

Nov‐14

Mar‐15

Jul‐15

Nov‐15

Mar‐16

Jan. 4, 1985: 1,000

The Baltic Dry Index (BDI) is a measure of the price of shipping major raw materials such as metals, grains, and fossil fuels by sea. The BDI is a composite of 3 sub‐indices, each covering a different carrier size: Capesize, Panamax, and Supramax.

Skyfall ‐ BRAZIL• Consumer price index increased 10.7 percent in

2015, despite ongoing economic contraction;• Highest inflation rate in more than a decade;• Increases in key categories:

• Food (12.3%)• Transportation prices (10.2%)• Housing related costs (18.3%)

• Brazil’s real down 33 percent compared to the U.S. dollar by end of 2015.

• Standard & Poor’s and Fitch Ratings downgraded sovereign debt to junk status

• Boletin Focus, a weekly survey of 100 private financial analysts, predicts Brazil’s economy will contract by another 3 percent this year.

Source: Currency Exchange, Wall Street Journal

*2012: Daniel Craig, Berenice Marlohe

A View to a Kill‐ RUSSIA• Collapse in oil prices and economic sanctions

(and counter sanctions) related to Ukraine have hurt Russian economic growth;

• Economy contracted about 4 percent in 2015;• World Bank: Russia will remain in recession in

2016;

• Russia’s ruble down 20 percent compared to U.S. dollar by end of 2015;

• Continued decline in investment expected;

• Budget expenditures will drop 3 to 5 percent in 2016.

Source: Currency Exchange, CNBC

*1985: Roger Moore, Tanya Roberts

I Expect You to Grow ‐ CHINA• Growth at slowest pace in 2 decades;• World Bank predicts 6.7% economic

growth for 2016 (down from 7.0% in June);

• George Soros: China has “a major adjustment problem” on its hands;

• Stock values fell 12 percent during first week of 2016 trading;

• Government attempts to stabilize economy only made investors even more wary;

• Circuit breaker system shuts down trading when losses hit a certain level;

• Too restrictive and causes panic selling once breakers are turned off.

Source: Currency Exchange, CNN Money

*(1964) Goldfinger, misquote from Auric Goldfinger, Sean Connery, Honor Blackman

Quantum of Solace

*2008: Daniel Craig; Olga Kurylenko

Gross Domestic Product1990Q4 through 2015Q4*

‐10%

‐8%

‐6%

‐4%

‐2%

0%

2%

4%

6%

8%1990

Q4

1991Q4

1992

Q4

1993

Q4

1994

Q4

1995

Q4

1996

Q4

1997

Q4

1998

Q4

1999

Q4

2000

Q4

2001Q4

2002

Q4

2003

Q4

2004

Q4

2005

Q4

2006

Q4

2007

Q4

2008

Q4

2009

Q4

2010Q4

2011Q

420

12Q4

2013Q4

2014Q4

2015Q4

Percen

t Cha

nge from

Prece

ding Pe

riod (S

AAR)

2015Q4: +1.0%

Source: Bureau of Economic Analysis *2nd Estimate

Contributions to GDP Growth by Component 2015Q1 – 2015Q4*

Source: Bureau of Economic Analysis

‐3.0

‐2.0

‐1.0

0.0

1.0

2.0

3.0

PersonalConsumption

GovernmentSpending

Net Exports GrossInvestment

1.2

0.0

‐1.9

1.4

2.4

0.50.2

0.9

2.0

0.3

‐0.3 ‐0.1

1.38

‐0.01 ‐0.25‐0.12

SAAR (%

)

Q1‐15 Q2‐15 Q3‐15 Q4‐15

0.6

3.9

2.0

1.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

GDP

Percen

t Cha

nge from

Prece

ding Per

iod (SAAR)

2015Q4: +1.0%

*2nd Estimate

‐1,000

‐800

‐600

‐400

‐200

0

200

400

600Fe

b‐02

Jun‐02

Oct‐02

Feb‐03

Jun‐03

Oct‐03

Feb‐04

Jun‐04

Oct‐04

Feb‐05

Jun‐05

Oct‐05

Feb‐06

Jun‐06

Oct‐06

Feb‐07

Jun‐07

Oct‐07

Feb‐08

Jun‐08

Oct‐08

Feb‐09

Jun‐09

Oct‐09

Feb‐10

Jun‐10

Oct‐10

Feb‐11

Jun‐11

Oct‐11

Feb‐12

Jun‐12

Oct‐12

Feb‐13

Jun‐13

Oct‐13

Feb‐14

Jun‐14

Oct‐14

Feb‐15

Jun‐15

Oct‐15

Feb‐16

Thou

sand

s

Source: U.S. Bureau of Labor Statistics

February 2016: +242K

Net Change in U.S. Jobs, BLSFebruary 2002 through February 2016

National Nonfarm Employmentby Industry SectorFebruary 2015 v. February 2016

-141

12

41

66

75

142

253

446

470

610

698

-300 -100 100 300 500 700 900

Mining and Logging

Manufacturing

Information

Other Services

Government

Financial Activities

Construction

Leisure and Hospitality

Trade, Transportation, and Utilities

Professional and Business Services

Education and Health Services

Thousands, SA

All told 2,672K Jobs gained


February 2016:+19K

‐200

‐150

‐100

‐50

0

50

100

Feb‐00

Jun‐00

Oct‐00

Feb‐01

Jun‐01

Oct‐01

Feb‐02

Jun‐02

Oct‐02

Feb‐03

Jun‐03

Oct‐03

Feb‐04

Jun‐04

Oct‐04

Feb‐05

Jun‐05

Oct‐05

Feb‐06

Jun‐06

Oct‐06

Feb‐07

Jun‐07

Oct‐07

Feb‐08

Jun‐08

Oct‐08

Feb‐09

Jun‐09

Oct‐09

Feb‐10

Jun‐10

Oct‐10

Feb‐11

Jun‐11

Oct‐11

Feb‐12

Jun‐12

Oct‐12

Feb‐13

Jun‐13

Oct‐13

Feb‐14

Jun‐14

Oct‐14

Feb‐15

Jun‐15

Oct‐15

Feb‐16

Mon

thly N

et Cha

nge (tho

usan

ds)

National Construction Employment Monthly Net ChangeFebruary 2000 through February 2016


Industry Sector Feb‐16 Jan‐16 Feb‐15 1‐net 12‐net 12‐%Construction 6,631.0 6,612.0 6,378.0 19.0 253.0 4.0Residential Building 715.5 713.4 683.3 2.1 32.2 4.7Nonresidential Building 742.4 738.1 728.3 4.3 14.1 1.9Heavy & Civil Engineering Construction 938.3 937.6 930.4 0.7 7.9 0.8Specialty Trade Contractors 4,234.9 4,222.6 4,035.7 12.3 199.2 4.9

State‐by‐state Growth in Construction JobsDecember 2014 v. December 2015


*Construction, Mining, and Logging are included in one industry.

STATEYear-over-year Ch.

(‘000)STATE

Year-over-year Ch.

(‘000)STATE

Year-over-year Ch.

(‘000)CALIFORNIA 59.3 SOUTH CAROLINA 6.0 MISSISSIPPI 1.5FLORIDA 28.5 NEVADA 5.5 OREGON 1.5NEW YORK 26.5 OKLAHOMA 5.3 TENNESSEE* 1.5COLORADO 11.7 ARKANSAS 5.2 OHIO 1.0MICHIGAN 11.0 ILLINOIS 5.1 MAINE 0.7NEW JERSEY 10.8 HAWAII* 4.8 VERMONT 0.7IOWA 10.0 KENTUCKY 4.6 ALASKA 0.4WASHINGTON 9.9 KANSAS 4.5 NEW HAMPSHIRE 0.4MASSACHUSETTS 9.5 UTAH 4.4 DISTRICT OF COLUMBIA* 0.4GEORGIA 8.1 IDAHO 4.1 MONTANA 0.2VIRGINIA 7.8 ALABAMA 3.9 NEBRASKA* 0.1NORTH CAROLINA 7.1 WISCONSIN 2.5 RHODE ISLAND -0.1TEXAS 6.9 MINNESOTA 2.4 WYOMING -0.4MARYLAND* 6.3 CONNECTICUT 2.2 PENNSYLVANIA -0.5ARIZONA 6.2 SOUTH DAKOTA* 2.2 NEW MEXICO -1.5MISSOURI 6.2 DELAWARE* 2.0 WEST VIRGINIA -2.3LOUISIANA 6.0 INDIANA 1.9 NORTH DAKOTA -3.0

Employment Growth, U.S. States (SA) December 2014 v. December 2015 Percent Change

RANK STATE % RANK STATE % RANK STATE %

1 IDAHO 4.4 18 COLORADO 1.9 35 ALABAMA 1.02 SOUTH CAROLINA 3.3 18 INDIANA 1.9 36 MISSISSIPPI 0.93 UTAH 3.2 18 MICHIGAN 1.9 36 MISSOURI 0.94 CALIFORNIA 2.9 21 RHODE ISLAND 1.8 36 WISCONSIN 0.94 FLORIDA 2.9 22 DELAWARE 1.7 39 VERMONT 0.86 WASHINGTON 2.8 22 NEW YORK 1.7 40 PENNSYLVANIA 0.77 OREGON 2.7 24 ARKANSAS 1.6 41 KANSAS 0.58 ARIZONA 2.5 24 IOWA 1.6 41 MONTANA 0.58 HAWAII 2.5 24 NEW JERSEY 1.6 41 NEW HAMPSHIRE 0.5

10 TENNESSEE 2.3 27 MINNESOTA 1.5 44 NEW MEXICO 0.311 GEORGIA 2.2 27 OHIO 1.5 45 ALASKA -0.111 SOUTH DAKOTA 2.2 27 VIRGINIA 1.5 45 ILLINOIS -0.113 KENTUCKY 2.1 30 DISTRICT OF COLUMBIA 1.4 47 OKLAHOMA -0.513 MARYLAND 2.1 30 MAINE 1.4 48 LOUISIANA -0.913 MASSACHUSETTS 2.1 30 NEBRASKA 1.4 49 WEST VIRGINIA -1.513 NORTH CAROLINA 2.1 30 TEXAS 1.4 50 WYOMING -2.217 NEVADA 2.0 34 CONNECTICUT 1.3 51 NORTH DAKOTA -4.0


U.S. Year‐over‐year Percent Change: +2.0%

Source: Moody’s Economy

Recession Watchas of November 2015

Unemployment Rates, 20 Largest Metros (NSA)December 2015


Rank MSA UR Rank MSA UR

1Minneapolis-St. Paul-Bloomington, MN-WI Metropolitan Statistical Area 3.1 11

Phoenix-Mesa-Scottsdale, AZ Metropolitan Statistical Area 4.7

2Dallas-Fort Worth-Arlington, TX Metropolitan Statistical Area 3.7 11

San Diego-Carlsbad, CA Metropolitan Statistical Area 4.7

3Washington-Arlington-Alexandria, DC-VA-MD-WV Metropolitan Statistical Area 3.8 13

Baltimore-Columbia-Towson, MD Metropolitan Statistical Area 4.8

4San Francisco-Oakland-Hayward, CA Metropolitan Statistical Area 3.9 14

Atlanta-Sandy Springs-Roswell, GA Metropolitan Statistical Area 4.9

5Boston-Cambridge-Nashua, MA-NH Metropolitan NECTA 4.1 15

Miami-Fort Lauderdale-West Palm Beach, FL Metropolitan Statistical Area 5.0

5Philadelphia-Camden-Wilmington, PA-NJ-DE-MD Metropolitan Statistical Area 4.1 15

Seattle-Tacoma-Bellevue, WA Metropolitan Statistical Area 5.0

7 St. Louis, MO-IL Metropolitan Statistical Area (1) 4.3 17Detroit-Warren-Dearborn, MI Metropolitan Statistical Area 5.4

8New York-Newark-Jersey City, NY-NJ-PA Metropolitan Statistical Area 4.4 17

Los Angeles-Long Beach-Anaheim, CA Metropolitan Statistical Area 5.4

8Tampa-St. Petersburg-Clearwater, FL Metropolitan Statistical Area 4.4 19

Chicago-Naperville-Elgin, IL-IN-WI Metropolitan Statistical Area 5.7

10Houston-The Woodlands-Sugar Land, TX Metropolitan Statistical Area 4.6 20

Riverside-San Bernardino-Ontario, CA Metropolitan Statistical Area 5.9

1. Area boundaries do not reflect official OMB definitions.

License to Sell

*License to Kill, 1989: Timothy Dalton; Carey Lowell

15‐Year & 30‐Year Fixed Mortgage Rates March 1995 through March 2016*

Source: Freddie Mac

2.96%

3.68%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Mar‐95

Sep‐95

Mar‐96

Sep‐96

Mar‐97

Sep‐97

Mar‐98

Sep‐98

Mar‐99

Sep‐99

Mar‐00

Sep‐00

Mar‐01

Sep‐01

Mar‐02

Sep‐02

Mar‐03

Sep‐03

Mar‐04

Sep‐04

Mar‐05

Sep‐05

Mar‐06

Sep‐06

Mar‐07

Sep‐07

Mar‐08

Sep‐08

Mar‐09

Sep‐09

Mar‐10

Sep‐10

Mar‐11

Sep‐11

Mar‐12

Sep‐12

Mar‐13

Sep‐13

Mar‐14

Sep‐14

Mar‐15

Sep‐15

Mar‐16

Rate

15‐yr 30‐yr

*Week ending 3/10/2016

U.S. New Home SalesJanuary 1999 through January 2016

Source: U.S. Census Bureau

January 2016494K

0

200

400

600

800

1,000

1,200

1,400

1,600

Thou

sand

s, SAAR

U.S. Housing StartsJanuary 1999 through January 2016


0

500

1,000

1,500

2,000

2,500Jan‐99

May‐99

Sep‐99

Jan‐00

May‐00

Sep‐00

Jan‐01

May‐01

Sep‐01

Jan‐02

May‐02

Sep‐02

Jan‐03

May‐03

Sep‐03

Jan‐04

May‐04

Sep‐04

Jan‐05

May‐05

Sep‐05

Jan‐06

May‐06

Sep‐06

Jan‐07

May‐07

Sep‐07

Jan‐08

May‐08

Sep‐08

Jan‐09

May‐09

Sep‐09

Jan‐10

May‐10

Sep‐10

Jan‐11

May‐11

Sep‐11

Jan‐12

May‐12

Sep‐12

Jan‐13

May‐13

Sep‐13

Jan‐14

May‐14

Sep‐14

Jan‐15

May‐15

Sep‐15

Jan‐16

Thou

sand

s, SAAR

1 Unit 5 units or more

January 2016:1 Unit: 731K5 Units or more: 354K


U.S. Homeownership2015Q4:63.7%

60%

62%

64%

66%

68%

70%1980

Q4

1981Q4

1982

Q4

1983

Q4

1984

Q4

1985

Q4

1986

Q4

1987

Q4

1988

Q4

1989

Q4

1990

Q4

1991Q4

1992

Q4

1993

Q4

1994

Q4

1995

Q4

1996

Q4

1997

Q4

1998

Q4

1999

Q4

2000

Q4

2001Q4

2002

Q4

2003

Q4

2004

Q4

2005

Q4

2006

Q4

2007

Q4

2008

Q4

2009

Q4

2010Q4

2011Q

420

12Q4

2013Q4

2014Q4

2015Q4


U.S. Private New Multifamily ConstructionJanuary 1993 through January 2016

$0

$10

$20

$30

$40

$50

$60

$70Jan‐93

Jan‐94

Jan‐95

Jan‐96

Jan‐97

Jan‐98

Jan‐99

Jan‐00

Jan‐01

Jan‐02

Jan‐03

Jan‐04

Jan‐05

Jan‐06

Jan‐07

Jan‐08

Jan‐09

Jan‐10

Jan‐11

Jan‐12

Jan‐13

Jan‐14

Jan‐15

Jan‐16

$ Billion

s (SAAR)

U.S. Housing Building PermitsJanuary 1999 through January 2016


0

500

1,000

1,500

2,000

2,500Jan‐99

May‐99

Sep‐99

Jan‐00

May‐00

Sep‐00

Jan‐01

May‐01

Sep‐01

Jan‐02

May‐02

Sep‐02

Jan‐03

May‐03

Sep‐03

Jan‐04

May‐04

Sep‐04

Jan‐05

May‐05

Sep‐05

Jan‐06

May‐06

Sep‐06

Jan‐07

May‐07

Sep‐07

Jan‐08

May‐08

Sep‐08

Jan‐09

May‐09

Sep‐09

Jan‐10

May‐10

Sep‐10

Jan‐11

May‐11

Sep‐11

Jan‐12

May‐12

Sep‐12

Jan‐13

May‐13

Sep‐13

Jan‐14

May‐14

Sep‐14

Jan‐15

May‐15

Sep‐15

Jan‐16

Thou

sand

s, SAAR

1 Unit 5 units or more

January 2016:1 Unit: 720K5 Units or more: 442K

0%

2%

4%

6%

8%

10%

12%

1.7%2.4%

3.3%4.5%

5.5% 5.7% 5.8% 6.2%7.1% 7.1%

9.6%10.2% 10.3%

12‐M

onth % Cha

nge

S&P/Case-Shiller Home Price Indices for Select Metros December 2015, 12-Month Percentage Change

Source: Standard & Poor’s

Source: The American Institute of Architects

Architecture Billings IndexJanuary 2008 through January 2016

30

35

40

45

50

55

60

Jan‐08

May‐08

Sep‐08

Jan‐09

May‐09

Sep‐09

Jan‐10

May‐10

Sep‐10

Jan‐11

May‐11

Sep‐11

Jan‐12

May‐12

Sep‐12

Jan‐13

May‐13

Sep‐13

Jan‐14

May‐14

Sep‐14

Jan‐15

May‐15

Sep‐15

Jan‐16

January 2016: 49.6

0

100

200

300

400

500

600

700

800

Dec‐06

Apr‐07

Aug‐07

Dec‐07

Apr‐08

Aug‐08

Dec‐08

Apr‐09

Aug‐09

Dec‐09

Apr‐10

Aug‐10

Dec‐10

Apr‐11

Aug‐11

Dec‐11

Apr‐12

Aug‐12

Dec‐12

Apr‐13

Aug‐13

Dec‐13

Apr‐14

Aug‐14

Dec‐14

Apr‐15

Aug‐15

Dec‐15

Oct‐08: $719.5B

Jan‐11: $506.8B

Jan‐16:$701.9B

SAAR ($

billions

)

Public

Private

Nonresidential Construction Put‐in‐PlaceDecember 2006 through January 2016


National Nonresidential Construction Spending by SubsectorJanuary 2015 v. January 2016


‐7.9‐3.2

0.20.60.81.41.61.8

8.111.312.1

16.919.6

27.233.934.8

‐15.0 ‐5.0 5.0 15.0 25.0 35.0

Water supplyPublic safety

ReligiousTransportation

CommercialSewage and waste disposal

Conservation and developmentHealth care

PowerManufacturing

EducationalAmusement and recreation

OfficeCommunication

Highway and streetLodging

12‐month % Change

Total Nonresidential Construction YOY: +$76.7B; +12.3%

Inputs to Construction PPI (NSA)January 2001 – January 2016

‐10%

‐5%

0%

5%

10%

15%

Jan‐01

May‐01

Sep‐01

Jan‐02

May‐02

Sep‐02

Jan‐03

May‐03

Sep‐03

Jan‐04

May‐04

Sep‐04

Jan‐05

May‐05

Sep‐05

Jan‐06

May‐06

Sep‐06

Jan‐07

May‐07

Sep‐07

Jan‐08

May‐08

Sep‐08

Jan‐09

May‐09

Sep‐09

Jan‐10

May‐10

Sep‐10

Jan‐11

May‐11

Sep‐11

Jan‐12

May‐12

Sep‐12

Jan‐13

May‐13

Sep‐13

Jan‐14

May‐14

Sep‐14

Jan‐15

May‐15

Sep‐15

Jan‐16

Jan. 15 v. Jan. 16: ‐2.7%

12‐m

onth Perce

nt Cha

nge


Construction Materials PPI (NSA)12-month % Change as of January 2016

‐60% ‐50% ‐40% ‐30% ‐20% ‐10% 0% 10%

Crude Petroleum

Natural Gas

Crude Energy Materials

Iron and Steel

Steel Mill Products

Softwood Lumber

Nonferrous Wire and Cable

Fabricated Structural Metal Products

Prepared Asphalt and Tar Roofing & Siding…

Plumbing Fixtures and Fittings

Concrete Products

‐38.6%

‐31.0%

‐26.4%

‐22.3%

‐19.2%

‐7.2%

‐5.2%

‐2.0%

‐2.0%

0.8%

2.5%


Tomorrow Never Dies

*1997: Pierce Brosnan; Michelle Yeoh; Teri Hatcher

‐8.1%

‐4.2%

0.9%

2.0%

2.1%

2.2%

3.5%

4.0%

5.0%

6.1%

6.9%

8.7%

9.1%

‐10% ‐5% 0% 5% 10%

Gasoline Stations

Electronics & Appliance Stores

General Merchandise Stores

Food & Beverage Stores

Miscellaneous Store Retailers

Clothing & Clothing Accessories Stores

Health & Personal Care Stores

Furniture & Home Furn. Stores

Building Material & Garden Supplies Dealers

Food Services & Drinking Places

Motor Vehicle & Parts Dealers

Internet, etc. Retailers

Sporting Goods, Hobby, Book & Music Stores

12‐month % change

Sales Growth by Type of Business January 2015 v. January 2016*

Source: U.S. Census Bureau *January 2016 advanced estimate

Total Retail Sales: +3.4% YOY

Conference Board Leading Economic Indicators IndexAugust 2007 through January 2016

Source: Conference Board

‐1.5%

‐1.0%

‐0.5%

0.0%

0.5%

1.0%

1.5%Aug‐07

Dec‐07

Apr‐08

Aug‐08

Dec‐08

Apr‐09

Aug‐09

Dec‐09

Apr‐10

Aug‐10

Dec‐10

Apr‐11

Aug‐11

Dec‐11

Apr‐12

Aug‐12

Dec‐12

Apr‐13

Aug‐13

Dec‐13

Apr‐14

Aug‐14

Dec‐14

Apr‐15

Aug‐15

Dec‐15

One‐m

onth Perce

nt Cha

nge

January 2016: 123.2 where 2010: 100

Dr. Know

• Not a Happy New Year so far. Everyone knows about China and N.Korea, but we have problems right here;

• Corporate profit margins are slipping and interest rates are on the rise –does not sound like a great recipe for stock prices or for corporate investment;

• Only the consumer is really contributing significantly to growth, with state and local government spending playing a supporting role;

• Job growth should remain decent in the near‐term – we ended 2015 with a near‐record in total job openings.;

• All about interest rates – market guesses that one or two rate increases are likely this year –possible, but I think the second half of the year won’t be as good as the first and therefore no rate increases are likely late this year; and

• We may be transitioning very quickly from the mid‐cycle stage of the recovery to the late‐stage – 2017 outlook very murky.

*1962: Sean Connery; Ursula Andress

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