Bloomberg BRIEF: EconomicsU.S. Q2’ 2013 Economic Overview and Outlook                         Joseph Brusuelas | April 2013
U.S. Q2’ 2013 Economic Overview and Outlook   Email jbrusuelas3@bloomberg.net or call 212-617-7664  Executive Summary  Gro...
U.S. Q2’ 2013 Economic Overview and Outlook   Email jbrusuelas3@bloomberg.net or call 212-617-7664  Bloomberg Consensus: S...
U.S. Q2’ 2013 Economic Overview and Outlook                                                             Email jbrusuelas3@...
U.S. Q2’ 2013 Economic Overview and Outlook                                                         Email jbrusuelas3@bloo...
U.S. Q2’ 2013 Economic Overview and Outlook       Email jbrusuelas3@bloomberg.net or call 212-617-7664  Upper Income Earne...
U.S. Q2’ 2013 Economic Overview and Outlook                    Email jbrusuelas3@bloomberg.net or call 212-617-7664  Susta...
U.S. Q2’ 2013 Economic Overview and Outlook   Email jbrusuelas3@bloomberg.net or call 212-617-7664  Executive Summary  • M...
U.S. Q2’ 2013 Economic Overview and Outlook                                            Email jbrusuelas3@bloomberg.net or ...
U.S. Q2’ 2013 Economic Overview and Outlook   Email jbrusuelas3@bloomberg.net or call 212-617-7664   Growth Drivers   • Ho...
U.S. Q2’ 2013 Economic Overview and Outlook                                   Email jbrusuelas3@bloomberg.net or call 212-...
U.S. Q2’ 2013 Economic Overview and Outlook                                                 Email jbrusuelas3@bloomberg.ne...
U.S. Q2’ 2013 Economic Overview and Outlook                                     Email jbrusuelas3@bloomberg.net or call 21...
U.S. Q2’ 2013 Economic Overview and Outlook                                               Email jbrusuelas3@bloomberg.net ...
U.S. Q2’ 2013 Economic Overview and Outlook                                                       Email jbrusuelas3@bloomb...
U.S. Q2’ 2013 Economic Overview and Outlook   Email jbrusuelas3@bloomberg.net or call 212-617-7664   Financial Conditions ...
U.S. Q2’ 2013 Economic Overview and Outlook                              Email jbrusuelas3@bloomberg.net or call 212-617-7...
U.S. Q2’ 2013 Economic Overview and Outlook                                   Email jbrusuelas3@bloomberg.net or call 212-...
U.S. Q2’ 2013 Economic Overview and Outlook                                                        Email jbrusuelas3@bloom...
U.S. Q2’ 2013 Economic Overview and Outlook                Email jbrusuelas3@bloomberg.net or call 212-617-7664   Credit M...
U.S. Q2’ 2013 Economic Overview and Outlook   Email jbrusuelas3@bloomberg.net or call 212-617-7664Image page  U.S. Rates O...
U.S. Q2’ 2013 Economic Overview and Outlook                         Email jbrusuelas3@bloomberg.net or call 212-617-7664  ...
U.S. Q2’ 2013 Economic Overview and Outlook              Email jbrusuelas3@bloomberg.net or call 212-617-7664   U.S. Econo...
U.S. Q2’ 2013 Economic Overview and Outlook                     Email jbrusuelas3@bloomberg.net or call 212-617-7664   U.S...
U.S. Q2’ 2013 Economic Overview and Outlook   Email jbrusuelas3@bloomberg.net or call 212-617-7664   FX Overview   Investo...
U.S. Q2’ 2013 Economic Overview and Outlook                 Email jbrusuelas3@bloomberg.net or call 212-617-7664   Economi...
U.S. Q2’ 2013 Economic Overview and Outlook   Email jbrusuelas3@bloomberg.net or call 212-617-7664   Central Bank Policy O...
U.S. Q2’ 2013 Economic Overview and Outlook    Email jbrusuelas3@bloomberg.net or call 212-617-7664   Central Bank Policy ...
U.S. Q2’ 2013 Economic Overview and Outlook             Email jbrusuelas3@bloomberg.net or call 212-617-7664   The Long Ro...
U.S. Q2’ 2013 Economic Overview and Outlook                     Email jbrusuelas3@bloomberg.net or call 212-617-7664   Mon...
U.S. Q2’ 2013 Economic Overview and Outlook                                            Email jbrusuelas3@bloomberg.net or ...
U.S. Q2’ 2013 Economic Overview and Outlook                            Email jbrusuelas3@bloomberg.net or call 212-617-766...
U.S. Q2’ 2013 Economic Overview and Outlook                                  Email jbrusuelas3@bloomberg.net or call 212-6...
U.S. Q2’ 2013 Economic Overview and Outlook                                                     Email jbrusuelas3@bloomber...
U.S. Q2’ 2013 Economic Overview and Outlook                         Email jbrusuelas3@bloomberg.net or call 212-617-7664  ...
U.S. Q2’ 2013 Economic Overview and Outlook                              Email jbrusuelas3@bloomberg.net or call 212-617-7...
U.S. Q2’ 2013 Economic Overview and Outlook                                        Email jbrusuelas3@bloomberg.net or call...
U.S. Q2’ 2013 Economic Overview and Outlook                                                   Email jbrusuelas3@bloomberg....
U.S. Q2’ 2013 Economic Overview and Outlook                      Email jbrusuelas3@bloomberg.net or call 212-617-7664   La...
BloombergJoseph Brusuelas,Senior EconomistBloomberg, LPjbrusuelas3@bloomberg.netJoseph Brusuelas is an economist who write...
Upcoming SlideShare
Loading in...5
×

US Q2 2013 Economic Outlook

1,601

Published on

Q2 Economic Outlook - An exclusive presentation from Bloomberg Brief newsletters. For more information or a free trial - visit Bloombergbriefs.com

Published in: Economy & Finance
0 Comments
2 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
1,601
On Slideshare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
25
Comments
0
Likes
2
Embeds 0
No embeds

No notes for slide

US Q2 2013 Economic Outlook

  1. 1. Bloomberg BRIEF: EconomicsU.S. Q2’ 2013 Economic Overview and Outlook Joseph Brusuelas | April 2013
  2. 2. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Executive Summary Growth Likely to Slow Following Solid Q1’13 • Growth • Q1’13 Growth likely to accelerate above 3 percent. • Personal consumption tracking near 3 percent for Q1’13 • Capital expenditures and residential investment, manufacturing growth, trade all drivers in Q2’13 • Pace of consumption and government spending to slow in Q2’13. • Monthly job creation to slow due to sequestration. • What’s driving consumption? • Income pulled forward to avoid tax hikes • Spending by upper 2 quintile of income earners • Drawing down of savings rate by lower income cohorts>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 2 <<<<
  3. 3. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Bloomberg Consensus: Survey of Forecasters Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Real GDP 2.00% 1.75% 2.35% 2.60% 2.80% 2.90% CPI 1.70% 1.90% 2.00% 2.00% 2.10% 2.20% Core PCE 1.30% 1.40% 1.50% 1.70% 1.80% 1.80% Unemployment 7.80% 7.70% 7.60% 7.50% 7.40% 7.30% Central Bank Rate 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 2-Year Rate 0.31% 0.31% 0.34% 0.37% 0.41% 0.46% 10-Year Rate 1.85.% 1.99% 2.15% 2.31% 2.48% 2.64% EUR/USD $1.32 $1.30 $1.30 $1.29 1.27% ->>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 3 <<<<
  4. 4. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Jobs and Growth Jobs and Growth 600 8 6 400 4 Quarterly Average (Percentage) 200 Quarterly Average (Thousands) 2 0 0 -200 -2 -4 -400 -6 -600 -8 Real GDP Y/Y (RHS) Total Change in Employment (LHS) -800 -10 1996 1998 2000 2002 2004 2006 2008 2010 2012 Source: Bloomberg R2=.77>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 4 <<<<
  5. 5. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Imbalance Between Income and Spending Divergence Between Income and Spending 10 65 8 60 6 Year Over Year Percentage Change 4 55 2 50 0 -2 45 -4 Nominal Income (RHS) Nominal Spending (LHS) 40 -6 Real Disposable Personal Income(LHS) ISM Non Man (RHS) -8 35 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Bloomberg>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 5 <<<<
  6. 6. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Upper Income Earners Driving Spending 8.9 Lowest 20% 12.9 Second 20% 38.0 Third 20% Fourth 20% 17.1 Highest 20% 23.1 Source: BLS Consumer Expenditure Survey>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 6 <<<<
  7. 7. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Sustained Residential Investment Growth in 2013 Considerable Room to Grow 90 2.5 Multi-Family Starts (RHS) Single Family Starts (RHS) 80 NAHB Housing Market Index (LHS) 2 70 Millions (Annualized Pace 60 1.5 50 Index 40 1 30 20 0.5 10 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Bloomberg USHBMIDX, NHSPS1, NHSPSM INDEX<GO>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 7 <<<<
  8. 8. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Executive Summary • Monetary Policy • Pace of asset purchases to remain unchanged • Employment, not inflation primary concern of policy • Fed to remain cautions on tapering purchases due to: • Prodigious labor slack, output and consumption gaps • External headwinds • Fiscal Policy restraint and layoffs to restrain growth • What to watch? • Rising initial jobless claims • Slower pace of spending • Bloomberg economic surprise index reflects likely slowing • Risk of another spring swoon in fundamental data>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 8 <<<<
  9. 9. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Fed Balance Sheet Swells to $3.2 Trillion Fed Balance Sheet Swells To $3 Trillion 3.5 Fed Agency Debt Mortgage-Backed Securities Purchases Liquidity to Key Credit Markets 3 Lending to Financial Institutions Long Term Treasury Purchases 2.5 Traditional Security Holdings 2 Trillions ($) 1.5 1 0.5 0 2007 2008 2009 2010 2011 2012 2013 Source: Bloomberg FED<GO>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 9 <<<<
  10. 10. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Growth Drivers • Housing • Reduced supply supporting price appreciation • Shift in buyer preference toward new construction • Autos • Historically low rates and aggressive discounting by auto dealers • Age of auto fleet supports improved total vehicle sales • Manufacturing • Rebound following 2012 second half swoon • Civilian aircraft, domestic auto production and external demand • Trade • Growing U.S. energy independence>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 10 <<<<
  11. 11. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Housing Supply Dwindles Falling Supply Supporting Price Appreciation 250 1 Median Price (RHS) Homes for Sale (LHS, Inverted) 225 1.25 1.5 200 1.75 175 Units for Sale: Millions 2 Thousands 150 2.25 125 2.5 100 2.75 75 3 50 3.25 25 3.5 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Source: Bloomberg EHSLMP, EHSLHAFS INDEX<GO>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 11 <<<<
  12. 12. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Industrial Production and Growth 6.0 10.0 5.0 Y/Y Percentage Change (Quarterly Average) 4.0 5.0 3.0 Y/Y Percentage Change 2.0 0.0 1.0 0.0 -5.0 -1.0 -2.0 -10.0 -3.0 -4.0 GDP CYOY (LHS) Industrial Production (RHS) -5.0 -15.0 1996 1998 2000 2002 2004 2006 2008 2010 2012 Source: Bloomberg IP YOY, GDP CYOY INDEX<GO> R2=.76>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 12 <<<<
  13. 13. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Industrial Production and Growth Solid Manufacturing Growth Likely to Continue 30 70 25 65 Year over Year Percentage Change 20 60 15 Index 10 55 5 50 0 Durable Goods Orders (LHS) ISM New Orders (RHS) -5 45 2010 2011 2012 2013 Source: Bloomberg DGNOYOY, NAPMNEWO INDEX<GO>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 13 <<<<
  14. 14. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Less Trade Drag on Growth in 2013 Trade Balance Likely to Narrow This Year -5 90 -10 95 -15 100 -20 105 Billions ($) -25 110 Index -30 115 -35 120 -40 125 -45 130 US Trade Balance Excluding Petroleum(LHS) Trade Weighted Dollar Index 18 Month Lag(RHS) -50 135 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Source: Bloomberg>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 14 <<<<
  15. 15. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Less Trade Drag on Growth in 2013 Narrowing Gap Between Supply and Demand 0.0 -1.0 Million Barrels Per Day (3-Month Average) -2.0 -3.0 -4.0 -5.0 -6.0 -7.0 US Oil Imbalance: Supply and Demand -8.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Bloomberg DOIDCRUD, DOSUUSA INDEX<GO>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 15 <<<<
  16. 16. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Financial Conditions Overview • Global central banks asset purchase supportive of financial conditions. • Improved financial conditions supportive of U.S. • Financial easing via asset purchases appropriate and necessary in Europe>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 16 <<<<
  17. 17. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Euro Area Economy Monetary Policy E.U. Taylor Rules Suggest Aggressive Easing Appropriate 7 6 5 4 3 2 Percent 1 0 -1 -2 -3 ECB Rate Traditional Taylor Rule Estimate Aggressive Taylor Rule -4 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Source: Bloomberg TAYL<GO>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 17 <<<<
  18. 18. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Bloomberg Financial Conditions Indices 2 1 0 -1 Index(Z-Score) -2 -3 -4 -5 US Financial Conditions Index EU Financial Conditions Index -6 2010 2011 2012 2013 Source: Bloomberg BFCIUS, BFCIEU INDEX<GO>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 18 <<<<
  19. 19. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Private Credit Creation Improving Private Credit Creation & Nominal Growth 20% Nominal GDP Total Credit Creation Private Financial Instiutions 15% Year Over Year Percentage Change 10% 5% 0% Adjusted R2=.64 -5% 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 Source: Federal Reserve, Bloomberg>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 19 <<<<
  20. 20. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Credit Markets Healing, Not Translating to Rising Velocity Velocity of Money 2.2 M2 2.1 2 1.9 1.8 1.7 1.6 1.5 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 Source: Bloomberg VELOM2 INDEX<GO>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 20 <<<<
  21. 21. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664Image page U.S. Rates Overview Bloomberg consensus forecast indicates higher 10- and 30-year rates. Current Rates: • 2-Year: .25 percent • 10-year: 1.85 percent • 30-year: 3.17 percent Fourth Quarter Consensus Survey Rate Forecast: Rising Appetite for Risk Assets • 2-Year: .46 percent • 10-year: 2.31 percent • 30-year: 3.46 percent>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 21 <<<<
  22. 22. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Projected Path of Long- and Short-Term Rates 4.50 4.00 3.50 3.00 2.50 Percent 2.00 1.50 1.00 0.50 US 10-Year (LHS) 3-Month, 2-Year Forward (RHS) 0.00 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Source: Bloomberg USGG10YR INDEX, G0025 2Y3M BLC2CURNCY<GO>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 22 <<<<
  23. 23. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 U.S. Economic Surprise Index & 10-Year Treasury Yields 1.2 2.0 1.5 0.8 1.0 0.4 0.5 0.0 0.0 -0.5 -0.4 -1.0 -1.5 -0.8 -2.0 U.S. Economic Surprise Index US 10-Yr Yield (6-Mo. Basis Point Chg.) -1.2 -2.5 2010 2011 2012 Source: Bloomberg ECSURPUS, USGG10YR Index<GO>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 23 <<<<
  24. 24. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 U.S. Economic Surprise Index & U.S. Equity Markets U.S. Economic Surprise Index & the U.S. Equity Market 1.2 60% 0.8 40% Index (Percentage Change) 0.4 20% Z Score 0.0 0% -0.4 -20% -0.8 -40% U.S. Economic Surprise Index S&P 500 (6-mo. % chg.) -1.2 -60% 2010 2011 2012 Source: Bloomberg ECSURPUS, SPX INDEX<GO>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 24 <<<<
  25. 25. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 FX Overview Investors Likely to Favor Risk Assets in Q2’13 • Flight to quality likely to dominate given EU economic and financial issues. • Favors USD and CAD • Yen to benefit from flight to quality in short-term and times of Euro stress • Further depreciation ahead contingent on BOJ policy • Short term rally in Euro likely to fade as fundamentals to asset themselves. • Contraction in real economy • Rising unemployment • Country risk>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 25 <<<<
  26. 26. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Economic Fundamentals Favor EUR/USD Depreciation 100 1.4 Citigroup European Economic Surprise Index EUR/USD 80 60 1.35 40 20 1.3 EUR/USD Index 0 -20 1.25 -40 -60 1.2 -80 -100 1.15 2012 2013 Source: Bloomberg EUR Curncy, CESIER INDEX<GO>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 26 <<<<
  27. 27. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Central Bank Policy Outlook and Overview Fed will likely remain on hold throughout 2013 • Forward guidance to remain unchanged. • Aggressive action to unclog monetary transmission mechanism to remain in place through 2013, then slow 2014. • Balance sheet likely to expand to $4 trillion by end early 2014. .>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 27 <<<<
  28. 28. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Central Bank Policy Outlook and Overview Fed will likely remain on hold throughout 2013 • Policy made for economy stuck in liquidity trap • Labor slack, consumption and employment gaps drive Fed policy • If policy does not gain traction, Fed will begin to create conditions for targeting of nominal GDP. .>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 28 <<<<
  29. 29. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 The Long Road Ahead Slow Grind Back To Full Employment Scenario 1: Structural Break Scenario 2: Cyclical Recovery 6.5% NAIRU 6.5% NAIRU 5.5% NAIRU 5.5% NAIRU 200,000 200,000 200,000 200,000 Monthly Job Gains 63.50% 63.50% 63.50% 63.50% Labor Force Participation Rate 0.92% 0.50% 0.92% 0.50% Average Annual Population Growth 2 Years 1 Years 4 Years 2 Years Years to Full Employment>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 29 <<<<
  30. 30. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Monetary Policy at the Zero Bound Taylor Rule & Evans Rule Estimates of the Fed Funds Rates 8 6 Taylor Rule Estimates Fed Funds Rate 4 2 Percentage 0 Evans Rule -2 Estimates -4 -6 -8 -10 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Bloomberg USFEDL01, PCE CYOY, USURTOT INDEX<GO>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 30 <<<<
  31. 31. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Significant Output Gap Remains US Retains Substantial Output Gap 15 Real GDP Real Potential Output 14 13 Trillions (2005 Chained $) 12 11 10 9 8 7 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Source: Bloomberg>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 31 <<<<
  32. 32. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Labor Market Slack Persists 58 11 Employment to Population Ratio (LHS) Unemployment Rate (RHS, Inverted) 10 59 9 60 8 61 Percent Percent 7 62 6 63 5 64 4 65 3 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Source: Bloomberg USERTOT , USURTOT INDEX<GO>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 32 <<<<
  33. 33. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Real Consumption on Lower Trend 11000 10500 Real PCE Trend Prior to Recession Billions (Chained 2005 $) 10000 9500 9000 8500 8000 2005 2006 2007 2008 2009 2010 2011 2012 Source: Bloomberg US.HHSPNR BEA INDEX<GO>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 33 <<<<
  34. 34. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Negative and Near Negative Equity Still A Policy Challenge First Mortgages in Negative and Near Negative Equity Positions 32 Near Negative Near Negative Equity Negative Equity Equity 4.8% 30 Percent: First Mortgages 28 26 24 22 Negative Equity 22% 20 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Source: Bloomberg NESHNATI, NNSHNATI INDEX<GO>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 34 <<<<
  35. 35. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Low Wage Bias in Hiring 150 125 100 75 Thousands 50 25 0 -25 Leisure and Hospitality Health Care and Social Assistance Temp Retail Trade -50 2010 2011 2012 Source: Bloomberg USRTTOT, USESTEMP, USEETOTS, USEHTOTS INDEX<GO>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 35 <<<<
  36. 36. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Labor Slack Sustained Jobs Lost in the Recession and Gained in the Recovery 19% of Job Losses Higher-Wage Occupations during Recession 60% of Job Losses 22% of Job Growth Mid-Wage Occupations during Recession during Recovery 21% of Job Losses 58% of Job Growth Lower-Wage Occupations during Recession during Recovery -4 -3 -2 -1 0 1 2 3 4 Net Change in Occupational Employment (millions) Source: National Employment Law Project analysis of CPS data Recession (Q1 2008 - Q1 2010) Recovery (Q1 2010 - Q1 2012)>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 36 <<<<
  37. 37. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Mortgage Backed Primary Secondary Spread Mortgage Backed Primary-Secondary Spread 160 140 QE 1 Start Dates of Fed MBS QE 3 Purchase Programs 120 Basis Points: 30 Day Moving Average 100 80 60 40 20 0 -20 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Bloomberg>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 37 <<<<
  38. 38. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Labor Slack Sustained Occupational Growth Rates since 2001 10% Lower-Wage 8% 6% Occupational Growth Rate 4% Higher-Wage 2% 0% -2% -4% -6% Mid-Wage -8% -10% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Lower-Wage Occupations Mid-Wage Occupations Higher-Wage Occupations Source: National Employment Law Project analysis of CPS>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 38 <<<<
  39. 39. U.S. Q2’ 2013 Economic Overview and Outlook Email jbrusuelas3@bloomberg.net or call 212-617-7664 Labor Slack Sustained Net Employment Growth of Low-Wage Occupations Construction Laborers Lower-Wage Customer Service Representatives Miscellaneous Assemblers and Fabricators Higher-Wage Office Clerks Laborers and Freight, Stock & Material Movers Grounds Maintenance Workers Retail Salespersons Personal and Home Care Aides Mid-Wage Food Preparations Workers Waiters and Waitresses 0 50 100 150 200 250 300 350 400 Occupational Growth Rate Source: National Employment Law Project analysis of CPS>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SUBSCRIBE @BRIEF<GO> | 39 <<<<
  40. 40. BloombergJoseph Brusuelas,Senior EconomistBloomberg, LPjbrusuelas3@bloomberg.netJoseph Brusuelas is an economist who writes for the Bloomberg Economic Brief. The observations he makesare his own. Bloomberg is a leading source of data, news, and analytics for financial and legal professionals,corporations, media organizations and private individuals around the globe. The BLOOMBERGPROFESSIONAL® service and Bloomberg’s media services provide real-time and historical pricing, indicativedata, reporting, research, estimates, analytics, portfolio management tools, electronic trading and ordermanagement systems, multimedia events and electronic communications to Bloomberg clients in morethan 150 countries, 24 hours a day.bloomberg.comFrankfurt London San Francisco Singapore Tokyo+49 69 9204 1210 +44 20 7330 7500 +1 415 912 2960 +65 6212 1000 +81 3 3201 8900Hong Kong New York São Paulo Sydney+852 2977 6000 +1 212 318 2000 +55 11 3048 4500 +61 2 9777 8600The BLOOMBERG PROFESSIONAL service, BLOOMBERG Data and BLOOMBERG Order Management Systems (the "Services") are owned and distributed locally by Bloomberg Finance L.P. ("BFLP") and itssubsidiaries in all jurisdictions other than Argentina, Bermuda, China, India, Japan and Korea (the "BLP Countries"). BFLP is a wholly-owned subsidiary of Bloomberg L.P. ("BLP"). BLP provides BFLP with allglobal marketing and operational support and service for the Services and distributes the Services either directly or through a non-BFLP subsidiary in the BLP Countries. The Services include electronic tradingand order-routing services, which are available only to sophisticated institutional investors and only where the necessary legal clearances have been obtained. BFLP, BLP and their affiliates do not provideinvestment advice or guarantee the accuracy of prices or information in the Services. Nothing on the Services shall constitute an offering of financial instruments by BFLP, BLP or their affiliates. BLOOMBERG,BLOOMBERG PROFESSIONAL, BLOOMBERG MARKETS, BLOOMBERG NEWS, BLOOMBERG ANYWHERE, BLOOMBERG TRADEBOOK, BLOOMBERG BONDTRADER, BLOOMBERG TELEVISION,BLOOMBERG RADIO, BLOOMBERG PRESS and BLOOMBERG.COM are trademarks and service marks of BFLP, a Delaware limited partnership, or its subsidiaries.
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×