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Dr. Yandle's Quarterly Economic Update: March 2012
 

Dr. Yandle's Quarterly Economic Update: March 2012

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    Dr. Yandle's Quarterly Economic Update: March 2012 Dr. Yandle's Quarterly Economic Update: March 2012 Presentation Transcript

    • Getting off the Ground The Incredible Boom Why Not Here? The Nation Regions OutlookMercatus Capitol Hill CampusMarch 15, 2012Bruce Yandleyandle@bellsouth.net
    • The Coming Global Boom• In 2011, world GDP stood at $71 trillion dollars.• If over the next 30 years, real GDP grows at an average rate of 2.5%, the long historic average, then the 2042 level of real GDP will double to $142 trillion dollars.• There will be as much total GDP generated in those 30 years as has been generated cumulatively over history.• That’s a lot of stuff!
    • Will Population Growth Eliminate the Gain?
    • No!• In 2011, the world population stood at 7 billion. Per capita GDP was $10,100, in 2011 dollars.• The world 2040 population is estimated to reach 9.0 billion.• If GDP grows at 2.5% annually, then per capita GDP will stand at $15,777. $15,777 is lot a more than $10,100.
    • Will the U.S. Connect to the Global Engine?
    • Top 25 Countries, 2010 GDP Growth 18 16 14 12Annual Growth Rate 10 8 6 4 2 0 International Monetary Fund
    • Top 25 Countries, 2010 GDP Growth 18 16 14 12Annual Growth Rate 10 8 6 4 2 0 International Monetary Fund
    • North Korea vs. South Korea 2009 Per Capita Income = $1,800 2009 Per Capita Income = $30,000
    • Wait a minute! What aboutthe good ole USA?
    • 0 100,000,000 150,000,000 250,000,000 350,000,000 50,000,000 200,000,000 300,000,000 United States Indonesia Brazil Pakistan Bangladesh Nigeria Russia Japan Mexico Philippines Vietnam Ethiopia Germany Egypt Turkey IranCongo (Kinshasa) Thailand France United Kingdom Italy China & India Omitted Burma South Africa Korea, South 2010 Population, Top 40 Countries, Spain Ukraine Colombia Sudan people! Tanzania Argentina Kenya Poland Algeria Canada Uganda We are third most populous. Lots of Morocco Peru Iraq
    • Mean Household Income Earned by Top 60%, 1967 - 2010 (Constant 2010 Dollars)60,000 $49,309 for 2010 AND (still) able to50,000 pay our bills.40,00030,00020,00010,000 0
    • We areyoung!
    • Top 25 Countries based on 2010 GDP 16,000,000 14,000,000 12,000,000 HUGE ECONOMICMillions of PPP Dollars 10,000,000 8,000,000 ENGINE 6,000,000 4,000,000 2,000,000 0World Bank
    • Producer of World Reserve Currency We print money, and the world takes it!
    • Alas, there are some problems.
    • Federal Deficit, 1960-2011 Millions $400,000 $200,000 $0 -$200,000 -$400,000 -$600,000 -$800,000-$1,000,000-$1,200,000-$1,400,000-$1,600,000
    • -6.0 -4.0 -2.0 -10.0 -8.0-12.0 2.0 4.0 0.0 1970 1971 1972 1973 1974 1975 1976 TQ 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1970-2017 est. 1996 1997 1998 1999 2000 2001 Since 1970, four years with a surplus. 2002 Total Federal Deficit as Percent of GDP, 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 estimate 2013 estimate 2014 estimate 2015 estimate 2016 estimate 2017 estimate
    • 22
    • -5 5 0 10 15 20 25 1970-01 1971-02 1972-03 1973-04 1974-05 1975-06 1976-07 1977-08 1978-09 1979-10 1980-11 1981-12 1983-01 1984-02 1985-03 1986-04 1987-05 1988-06 1989-07 1990-08 1991-09 1992-10 1993-11Unemployment Rate 1994-12 1996-01 1997-02 1998-03 1999-04 2000-05 2001-06Inflation Rate 2002-07 2003-08 U.S. Misery Index, 1970-2011 2004-09 2005-10 2006-11 2007-12 2009-01 2010-02 2011-03
    • 0 500 1000 1500 2000 2500 1990M1 1990M61990M11 1991M4 1991M9 1992M2 1992M71992M12 1993M51993M10 1994M3 1994M8 1995M1 1995M61995M11 1996M4 1996M9 1997M2 1997M71997M12 1998M51998M10 1999M3 1999M8 2000M1 2000M62000M11 2001M4 2001M9 2002M2 (Thousands, SA) 2002M72002M12 2003M52003M10 2004M3 2004M8 2005M1 2005M6 U.S. Housing Starts, 1/1990 - 1/20122005M11 2006M4 2006M9 2007M2 2007M72007M12 2008M52008M10 2009M3 2009M8 2010M1 2010M62010M11 2011M4 2011M9
    • U.S. Nonagricultural Employment, 1/2001 – 1/2012Down 6.29 million from January 2008 peak.
    • Construction Employment, 2002 - 2012Down 2.4 million from April 2006 peak.
    • U.S. Nonagricultural Employment, 1/2001 – 11/2011Down 6.29 million from January 2008 peak. 2013 2014 2015
    • UnemploymentRates, 2/2012, 25 and older.12.9% Less than H.S.8.3% High School Diploma7.3% Associate Degree4.2% Bachelors and higher.
    • Unemployment Rate & Educational Attainment June, 2001 - 2011 18 16 14 12Unemployment Rate 10 8 6 4 2 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Less than H.S. Diploma Bachelor Degree or Higher
    • How are we doing in manufacturing? Okay, if I could just find qualified workers!
    • Job Openings versus Unemployed, 1/2000 - 12/2011 18000 (thousands, s.a.) 16000 14000 12000Unemployed 10000 8000 6000 4000 2000 0 0 1000 2000 3000 4000 5000 6000 Job Openings
    • TOP 10 Manufacturing Economies: 1980 - 2010 Billions
    • 60 65 75 80 85 90 95 70 100 1052000-01-012000-05-012000-09-012001-01-012001-05-012001-09-012002-01-012002-05-012002-09-012003-01-012003-05-012003-09-012004-01-012004-05-012004-09-012005-01-012005-05-012005-09-012006-01-012006-05-012006-09-01 1/2000 - 12/20112007-01-012007-05-01 U.S. Industrial Production,2007-09-012008-01-012008-05-012008-09-012009-01-012009-05-012009-09-012010-01-012010-05-012010-09-012011-01-012011-05-012011-09-01 2013
    • U.S. Employment in Manufacturing 1939 - 2011 (thousands) Employment peaked in 1978.20500 Disintegration took off after that.1850016500 Reduction14500 accelerates in recessions.1250010500 8500 6500 4500 1969 1971 1973 1975 1939 1941 1943 1945 1947 1949 1951 1953 1955 1957 1959 1961 1963 1965 1967 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
    • 0 20 40 60 80 100 1202000M12000M52000M92001M12001M52001M92002M12002M52002M92003M12003M52003M92004M12004M52004M92005M12005M52005M92006M12006M52006M9 2000 - 20112007M12007M52007M92008M12008M52008M9 Auto and Light Vehicle Production2009M12009M52009M92010M12010M52010M92011M12011M52011M9
    • Millions, SA 250000 300000 350000 400000 200000 4500002000M12000M62000M112001M42001M92002M22002M72002M122003M52003M102004M32004M82005M12005M62005M112006M42006M92007M22007M72007M122008M52008M10 U.S. Retail Sales & Food Service2009M32009M82010M12010M62010M112011M42011M9
    • TWO KEY U.S. INDICATORS… A Year Ago!
    • 42
    • The Two ISM Indicators Now!
    • How about the 50states, sweetheart?
    • It’s a mixed bag!????
    • State Per Capita Real GDP Growth: 2007 - 2010
    • Real Annual Growth Real GDP Growth: 1Q2007 - 4Q2012 Growth Rate 4 2 0 2011Q1 2011Q3 2007Q1 2007Q3 2008Q1 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3 2012Q1 2012Q3 -2 -4 2011: 1.70% 2012: 2.30% 2013: 3.00% -6 -8 -10
    • 2011-12 Outlook• GDP growth will range from 2.2% to 2.5% across 2012.• The U.S. unemployment rate will stay in 8.2% to 8.9% range.• Inflation will rise to 2.0%-3.0%, compared to 2011’s 2.5%.• Interest rates will rise, with a 100 basis point increase at the long end of the yield curve by the end of 2012. There are six hazards or ghosts from the past that may disturb the outlook.• Fear-driven increases in personal savings, which means rebuilding consumer net worth but further reductions in retail sales.• Rising energy prices.• A potential for massive inflation or credit market manipulation by the Fed to avoid it.• Government entanglement in the economy that regulates and otherwise limits economic freedom.• A huge deficit that must be dealt with. Taxes? Cut spending? Print money?• Gradual loss of reserve currency status• Election year craziness.