Page 1 of 2
Community Advisory Group
Federal Reserve Bank of New York
33 Liberty Street
10F, Paul Volcker Boardroom
Wednesday, April 19, 2017
AGENDA
10:00am Arrival and Continental Breakfast
10:30am Welcome and Adoption of the CAG Charter, Adrian Franco, Officer
10:35am Introductory Remarks, Jack Gutt, Executive Vice President
10:40am-11:10am National Economy Update, Robert Rich, Assistant Vice President
11:10am-11:40am Regional Economy Update, Jaison Abel, Officer
11:40am-12:00pm Community Credit Presentation, Kausar Hamdani, Senior Vice President
& Claire Kramer Mills, Assistant Vice President
12:00pm Adjourn to NWC Room-10F
12:15pm Lunch
12:15pm-1:55pm Round Table Discussion with William Dudley, President &
Michael Strine, First Vice President
1. Presentations on Conditions in Upstate New York by Kate Fish,
ANCA; Michael Martin, NACS; and Stuart Mitchell, PathStone
• What are the major challenges that your constituencies face
in achieving financial security in Upstate New York?
• Are there any unique geographic factors that cause barriers
to sustainable employment?
• Are these challenges persistent or have they been
exacerbated due to specific or recent economic changes?
• How do you see these issues/challenges evolving in the
next year and in the long-run?
Page 2 of 2
2. Discussion on Conditions in the Second District by CAG
Membership: What are the most pressing socio-economic issues
facing the community you serve? In other words, what are your
constituents talking about?
(Please discuss the below topics that are most relevant to your
scope of work)
• Sustainable employment and skills/location mismatch
• Access to financial services
• Affordable housing
2:00 pm Adjourn
Regional Economic Conditions
Jaison R. Abel, Research Officer
Community Advisory Group Meeting – April 19, 2017
The views expressed here are those of the presenter and do not necessarily represent
those of the Federal Reserve Bank of New York or the Federal Reserve System.
The 2nd Federal Reserve District Regions in the District
FEDERAL RESERVE BANK OF NEW YORK
Upstate
Northern NJ
Downstate
1
Puerto Rico &
U.S. Virgin Islands
Overview of Regional Conditions
• Regional economic conditions have improved noticeably
in recent months, particularly in the manufacturing sector.
• Job growth has been strongest in and around New York
City, while growth in upstate New York and northern New
Jersey has been slower. Puerto Rico continues to lose
jobs.
• Middle-wage jobs have finally started to return, though to
different degrees across the region.
FEDERAL RESERVE BANK OF NEW YORK 2
Current Economic Conditions FRBNY Regional Business Surveys
Source: Federal Reserve Bank of New York. 3
-60
-40
-20
0
20
40
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Business Leaders Survey
(Service Sector)
Empire State Manufacturing
Survey
Apr
Diffusion Index
Shading indicates NBER recession
Current Business Climate FRBNY Business Leaders Survey
Source: Federal Reserve Bank of New York. 4
-100
-75
-50
-25
0
25
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Apr
Diffusion Index
Shading indicates NBER recession
Current Climate (Business Leaders Survey)
Regional Employment Trends Indexes of Total Employment, Seasonally Adjusted
Source: Bureau of Labor Statistics and Moody’s Economy.com. 5
85
90
95
100
105
110
115
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Upstate Metros
Downstate NY
Puerto Rico
United States
Northern NJ
Index (December 2007 = 100)
Shading indicates NBER recession
+1.8%
+1.7%
+0.9%
12-Month Percent
Change
-0.9%
+1.5%
Feb
Dashed Line Indicates
U.S. Employment Trough
(February 2010)
Recent Job Growth in the Region Annual Percent Change, February 2017
6
Strong Growth
Moderate Growth
Modest Growth
Little or No Growth
Declining Glens Falls
Elmira Binghamton
Kingston
Buffalo Rochester Syracuse
Utica
Albany
Ithaca
NYC
Watertown
Du
tch
ess
- P
utn
am
North Country
Source: Bureau of Labor Statistics and Moody’s Economy.com.
Note: Orange*, Bergen*, and Middlesex* are the
Orange-Rockland-Westchester, Bergen-Hudson-Passaic,
and Middlesex-Monmouth-Ocean Special BLS Areas.
Orange*
Middlesex*
Newark
Job Categories Based on 2015 Median Wages, United States
Source: U.S. Bureau of Labor Statistics (Occupational Employment Statistics).
Management Computer & Math
Legal Engineering
Business & Finance Healthcare Practitioners
Sciences
Education Arts & Entertainment Installation & Repair
Construction Social Services
Protective Services Administrative Support
Production Transportation
Healthcare Support Sales
Building Maintenance Personal Care
Farming Food Preparation
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
50% 20% 30% Higher Wage Middle Wage Lower Wage
7
Job Gains and Losses in the United States Net Change in Total Employment, Thousands
8 Source: U.S. Bureau of Labor Statistics (Occupational Employment Statistics).
-8,000
-6,000
-4,000
-2,000
0
2,000
4,000
2,104 2,372
-6,550
1,205
3,093
-985
2,184 2,346
2007 to 2010 2013 to 2016 2010 to 2013
278
Thousands
Higher Wage
Lower Wage
Middle Wage
Higher Wage
Higher Wage
Middle Wage
Middle Wage
Lower Wage
Lower Wage
Middle-Wage Jobs Returning
• Growth in traditional blue collar jobs:
Construction
Production
Transportation
Installation & Repair
• Education jobs growing again as local government fiscal
pressures have subsided.
• Rebound in Administrative Support jobs.
FEDERAL RESERVE BANK OF NEW YORK 9
Job Gains and Losses in the Region Net Change in Total Employment, Thousands
10 Source: U.S. Bureau of Labor Statistics (Occupational Employment Statistics).
102
18
144
-125
0
125
250
182 203
178
38 49 47
27 7 17
-60
0
60
120
Downstate NY: 2013-2016
New Jersey: 2013-2016
Downstate NY: 2010-2013
New Jersey: 2010-2013
Higher Middle Lower
Higher Middle Lower
Higher Middle Lower
Higher Middle Lower
Job Gains and Losses in the Region Net Change in Total Employment, Thousands
11 Source: U.S. Bureau of Labor Statistics (Occupational Employment Statistics).
6
-45
-5
2
-29
14
-50
-25
0
25
21
6
25
15
-25
22
-30
-15
0
15
30 Upstate NY: 2010-2013
Puerto Rico: 2010-2013
Upstate NY: 2013-2016
Puerto Rico: 2013-2016
Higher
Middle
Lower
Higher
Middle
Lower
Higher Middle Lower
Higher
Middle Lower
A Shrinking Middle Share of Jobs by Wage Group, 2007 and 2016
Source: U.S. Bureau of Labor Statistics (Occupational Employment Statistics).
0%
20%
40%
60%
80%
100%
28% 30% 27% 29% 27% 28% 25%
28%
50% 46% 54% 49% 52% 49% 60% 53%
22% 23% 20% 22% 21% 23%
16% 19%
28% 29%
52% 48%
20% 22% Higher
Wage
Middle
Wage
Lower
Wage
2007 2016
Downstate 2007 2016
Upstate 2007 2016
New Jersey 2007 2016
Puerto Rico 2007 2016
United States
NYS Minimum Wage Increase 2017 Through 2022
Source: New York State Government. 13
$8
$9
$10
$11
$12
$13
$14
$15
$16
2016 2017 2018 2019 2020 2021 2022
Long Island & Westchester
New York City Large Employers
(11+ Workers)
Upstate New York
New York City Small Employers
(<11 Workers)
(To $15)
Effects of NYS Minimum Wage Increase FRBNY Supplemental Survey Report, March 2017
Source: Federal Reserve Bank of New York.
Q: Has the recent increase in the minimum wage, effective January 1, had any effect on your decisions about compensation and employment?
36%
34%
14%
16%
51%
17%
15%
17%
No Effect
Small Effect
Moderate Effect
Significant Effect
Empire State Manufacturing Survey
Business Leaders Survey
14
US Macro Overview April 19, 2017
Real consumer spending fell for a second consecutive
month in February, suggesting a marked slowdown in
real PCE growth in Q1 compared to recent quarters.
− Weak consumer spending in 2017 likely reflects some effect
from the delay in tax refund disbursements.
February data suggested some improvement in the near-
term outlook for business equipment spending, and
single-family housing starts continued to trend upward at
a moderate rate.
Surveys continued to indicate sizable improvement in
manufacturing conditions, with production data showing
tentative signs of a sustained rebound in sectorial activity.
Payroll growth was weak in March due to weather
impacting the reported numbers, but other indicators
pointed to ongoing improvement in the labor market.
− The unemployment rate fell, the employment-population
ratio rose, and the labor force participation rate held steady
in the month.
February price data suggest headline inflation is close to
the FOMC’s objective, while core inflation still appears to
be running modestly below the objective.
U.S. equity indexes and nominal long-term Treasury
yields moved lower. Oil prices retraced part of the decline
that occurred during the first part of March, while the
dollar moved lower against most major currencies.
-10
-8
-6
-4
-2
0
2
4
6
8
10
-10
-8
-6
-4
-2
0
2
4
6
8
10
2000 2002 2004 2006 2008 2010 2012 2014 2016
2016Q4 growth revised up – divergent views for 2017Q1
% Change – Annual Rate
Source: Bureau of Economic Analysis via Haver Analytics
% Change – Annual Rate
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
1950 1960 1970 1980 1990 2000 2010
Very weak productivity growth since 2010 20-Qtr MA of 1 Quarter
% Change — Annual Rate
Source: Bureau of Labor Statistics Note: Shading shows NBER recessions.
Output Per Hour
(Nonfarm business sector)
20-Qtr MA of 1 Quarter
% Change — Annual Rate
-6
-4
-2
0
2
4
6
8
-6
-4
-2
0
2
4
6
8
2000 2002 2004 2006 2008 2010 2012 2014 2016
Consumer spending in 2017 retreats from Q4 pace
12 Month % Change 12 Month % Change
Source: Bureau of Economic Analysis,
Federal Reserve Board via Haver Analytics Note: Shading shows NBER recessions.
Real Personal
Consumption
Real
Disposable
Income
0
20
40
60
80
100
120
140
160
0
20
40
60
80
100
120
140
160
2000 2002 2004 2006 2008 2010 2012 2014 2016
Consumer confidence at or near multi-year high
Index Index
Source: Conference Board,
University of Michigan Note: Shading shows NBER recessions.
Conference
Board
Michigan
Survey
-30
-20
-10
0
10
20
30
-30
-20
-10
0
10
20
30
1980 1985 1990 1995 2000 2005 2010 2015
4 Quarter % Change 4 Quarter % Change
Source: Bureau of Economic Analysis,
Federal Reserve Board via Haver Analytics Note: Shading shows NBER recessions.
Real Business
Investment in New
Equipment
Investment in equipment rose modestly in Q4
58
60
62
64
66
2
4
6
8
10
12
2006 2008 2010 2012 2014 2016
Labor market conditions continue to strengthen
Percent Percent
Source: Bureau of Labor Statistics
via Haver Analytics
Note: Shading shows NBER recessions.
Unemployment Rate
(Left Axis)
Labor Force
Participation Rate
(Right Axis)
Employment to
Population Ratio
(Right Axis)
0
1
2
3
4
0
1
2
3
4
2007 2009 2011 2013 2015 2017
Annual % change Annual % change
Source: Bureau of Labor Statistics
via Haver Analytics
Note: Shading shows NBER recessions.
Average Hourly
Earnings
Employment
Cost Index
Mixed evidence of stronger labor compensation growth
-2
-1
0
1
2
3
4
5
-2
-1
0
1
2
3
4
5
2000 2002 2004 2006 2008 2010 2012 2014 2016
12 Month % Change 12 Month % Change
Source: Bureau of Economic Analysis
via Haver Analytics Note: Shading shows NBER recessions.
Total PCE
Core PCE
FOMC Objective
Headline inflation is close to the FOMC’s 2% objective