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Bruce Yandle's Economic Situation Report, June 2013

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  • 1. The 2013 Economy at Mid-Year• Operating with one lane closed.• Running on borrowed fuel.• Still getting there, for some sectors.• Looking for prosperity.• Public Choice, the IRS, Antitrust & FEMA.Capitol Hill CampusJune 21, 2013
  • 2. -4.00-3.00-2.00-1.000.001.002.003.004.005.006.00PercentYearReal GDP Growth, 1990 - 2012.Long Run Average = 3.132.4% in1Q2013
  • 3. U.S. Report CardDecade Real Per Capita GDP GrowthAnnualized1951-1960 1.25%1961-1970 3.141971-1980 2.111981-1990 2.361991-2000 2.582001-2010 0.662001-2007 1.59Average, 1951-2010 1.89%Lawrence H. Officer and Samuel H. Williamson"Annualized Growth Rate and Graphs of Various Historical Economic Series," MeasuringWorth, 2011.URL: www.measuringworth.com/growth/ Accessed 03/22/12.
  • 4. $10,000$10,500$11,000$11,500$12,000$12,500$13,000$13,500$14,000$14,500$15,0002000-01-012000-06-012000-11-012001-04-012001-09-012002-02-012002-07-012002-12-012003-05-012003-10-012004-03-012004-08-012005-01-012005-06-012005-11-012006-04-012006-09-012007-02-012007-07-012007-12-012008-05-012008-10-012009-03-012009-08-012010-01-012010-06-012010-11-012011-04-012011-09-012012-02-012012-07-012012-12-01U.S. Real & Potential GDPBillions
  • 5. $10,000$10,500$11,000$11,500$12,000$12,500$13,000$13,500$14,000$14,500$15,0002000-01-012000-06-012000-11-012001-04-012001-09-012002-02-012002-07-012002-12-012003-05-012003-10-012004-03-012004-08-012005-01-012005-06-012005-11-012006-04-012006-09-012007-02-012007-07-012007-12-012008-05-012008-10-012009-03-012009-08-012010-01-012010-06-012010-11-012011-04-012011-09-012012-02-012012-07-012012-12-01U.S. Real & Potential GDPBillions
  • 6. May 31, 2013, 12:39 p.m. EDTSocial Security trust fund to run dry in 2033Medicare finances improve modestly; Lewurges long-term fixMarketWatch. http://www.marketwatch.com/story/social-security-trust-fund-to-run-dry-in-2033-2013-05-31Federal disability trust fund on the brinkBy Tami Luhby @Luhby May 30, 2013: 5:42 AM ET
  • 7. WHAT’S GETTING HOT??• Retail Sales• Wholesale Shipments• Housing• Employment• Manufacturing
  • 8. $140,000$145,000$150,000$155,000$160,000$165,000$170,000$175,000$180,000$185,000U.S. Real Retail Sales, 1/2007 - 3/2013Millions, Seasonally Adjusted
  • 9. 051015202530351992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Machinery, Equipment & SuppliesJanuary Sales, 1992-2013$Billions13.7%growth, 2010-13.7%%, 013
  • 10. 050010001500200025001990-…1990-…1991-…1992-…1993-…1993-…1994-…1995-…1996-…1996-…1997-…1998-…1999-…1999-…2000-…2001-…2002-…2002-…2003-…2004-…2005-…2005-…2006-…2007-…2008-…2008-…2009-…2010-…2011-…2011-…2012-…U.S. Housing Starts1/1990-2/20132016
  • 11. 1240001260001280001300001320001340001360001380001400002000-01-012000-07-012001-01-012001-07-012002-01-012002-07-012003-01-012003-07-012004-01-012004-07-012005-01-012005-07-012006-01-012006-07-012007-01-012007-07-012008-01-012008-07-012009-01-012009-07-012010-01-012010-07-012011-01-012011-07-012012-01-012012-07-012013-01-01ThousandsU.S. Total Private Employment, 1/2000 - 2/20132014
  • 12. Which Industries???
  • 13. Percent Change in Value Added by IndustryMining SupportDurablesNondurablesOil & GasMiningWholesale Trade
  • 14. What’s Hot?Steel, Aluminum, Computers &Electronics, Machinery, Aircraft
  • 15. U.S. Natural Gas Reserves, 2010
  • 16. 01,0002,0003,0004,0005,0006,000Energy Consumption by Industry, 2006Trillion BTU,
  • 17. LookingForProsperity
  • 18. -3%-2%-1%0%1%2%3%4%5%6% WestVirginiaDistrictofColumbiaSouthDakotaMaineIowaNebraskaVirginiaConnecticutWisconsinMichiganRhodeIslandKansasNewMexicoMarylandAlabamaMontanaWyomingTennesseeVermontArkansasMississippiPennsylvaniaNewHampshireNewJerseyMissouriNewYorkSouthCarolinaMinnesotaFloridaMassachusettsColoradoOhioUtahCaliforniaAlaskaIdahoNorthCarolinaOregonDelawareWashingtonLouisianaGeorgiaKentuckyTexasIndianaArizonaOklahomaNevadaHawaiiNorthDakotaState Employment Growth, December 2011 - December 2012
  • 19. ECONOMICS MEETS POLITICSThe Analysis is calledPUBLIC CHOICEPOLITICAL ECONOMYor“Politics without Romance”James M. Buchanan, Nobel LaureateWe seek to explain the way the world works, not the way wemight wish it worked.
  • 20. In the Rubble of Disasters, Politicians Find Economic IncentivesMolly D. Caselao and Thomas A. Garrett. The Regional Economist, Federal Reserve Bank of St. Louis, July2003, 10-13.The Federal Emergency Management Agency (FEMA) spent nearly $22billion on disaster relief between 1991 and 1999. Sometimes, aiddisbursement is not motivated by need, however…Researchers tested whether the electoral importance of a state andwhether it was an election year motivated presidential disasterdeclarations in a state. In order to isolate the political impacts ofdisaster declaration and relief, the researchers controlled fro disastersize, private insurance disaster payments, state population, and otherstate effects.The studies found that those states with a higher measure of politicalimportance had a higher rate of presidential disaster declaration. Thestudies also found that the mean rate of disaster declaration washigher in election years compared to nonelection years.Researchers concluded that for each legislator a state had on a FEMAoversight committee, the state received an additional $31 million indisaster each year. The researchers calculated that nearly 45 percentof all FEMA disaster payments were motivated by political incentivesrather than by need.
  • 21. QUESTIONS?