Outlook January 2013
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Outlook January 2013

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Outlook January 2013 Outlook January 2013 Presentation Transcript

  • Economic Outlook January 2013 Economic Policy Division
  • Real GDP OutlookPercent Change, Annual Rate 20 15 10 5 0 -5-10 1970 1975 1980 1985 1990 1995 2000 2005 2010
  • U.S. GDP Actual and Potential Quarterly, Q1 1970 to Q4 2011Real GDP Trillion 2005 Dollars Log Scale$14.0- Forecast$11.5- $9.4- $7.7- Actual $6.3- Potential $5.2- $4.2- 1970 1975 1980 1985 1990 1995 2000 2005 2010 Potential GDP estimated by Congressional Budget Office
  • Comparing Recessions GDP GDP GDP Average monthly GDP Growth in Growth in Growth in payroll employment Months from end Loss the the the growth in 3 years of recession until (Peak to Duration of following following following 3 following trough we reached priorTrough Trough) Recession year 2 years years (thous.) employment peakMay 1954 (II) -2.5 (%) 10 (months) 7.9 (%) 5.0 (%) 4.0 116 13April 1958 (II) -3.1 8 9.6 5.7 4.2 72 12February 1961 (I) -0.5 10 7.5 5.6 5.8 117 10November 1970 (IV) -0.2 11 4.5 5.7 5.2 103 6March 1975 (I) -3.2 16 6.2 4.7 4.5 245 9November 1982 (IV) -2.6 16 7.7 6.7 5.8 268 12March 1991(I) -1.4 8 2.6 3.0 3.2 128 23November 2001 (IV) +0.7 8 1.9 2.9 2.9 36 39June 2009 (II) -4.7 18 2.5 2.2 2.2 74 N/A
  • Personal Consumption Outlook Percent Change, Annual Rate 9 6 3 0 -3 Real Personal Consumption -6 Expenditures -9 1980 1985 1990 1995 2000 2005 2010 Trillion $Percent Change 3 70 60 1.5 50 Household Wealth 0 40 30-1.5 Real Disposable Income Per Capita 20 -3 10 1980 1985 1990 1995 2000 2005 2010 1980 1985 1990 1995 2000 2005 2010
  • Household Balance Sheet Trillion $ Household Assets Trillion $ 60 20 50 Nonfinancial Assets Household Liabilities 15 40 Financial Assets 30 10 20 5 10 0 0 1980 1985 1990 1995 2000 2005 2010 1980 1985 1990 1995 2000 2005 2010Percent of Disposable Personal Income 15 14 Consumer Debt Service 13 12 11 10 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
  • Housing Market TrendsThous. of Units, SAAR Thous. of Units, SAAR Home Sales2500 1400 7500 1200 65002000 10001500 5500 8001000 Housing Starts 600 New Home Sales (left axis) 4500500 400 Existing Home 3500 Sales (right axis) 0 200 2500 1999 2001 2003 2005 2007 2009 2011 1999 2001 2003 2005 2007 2009 2011Sales Price, Thous. $ Median Home Prices280 220 Housing Affordability 200 240 180 Index 200 160 160 140 Existing Homes 120 120 New Homes 100 80 80 1999 2001 2003 2005 2007 2009 2011 1998 2000 2002 2004 2006 2008 2010 2012
  • Housing Market Trends Thous. of Units, SAAR 700 Housing InventoryMillions New Homes (left axis)120 4500 Existing Homes (right axis)115 500 3500110 Households 300 2500105100 100 1500 1998 2000 2002 2004 2006 2008 2010 1999 2001 2003 2005 2007 2009 2011 Mortgage Delinquency Percent and Foreclosure Rates 30 35 Foreclosures: All 25 30 Foreclosures: Subprime 20 Delinquencies: Prime 25 Delinquencies: Subprime 20 15 15 10 Home Mortgages with Negative Equity 10 5 5 0 0 1998 2000 2002 2004 2006 2008 2010 2012
  • InvestmentPercent Change, Annual Rate40302010 0-10 Real Private Investment in Equipment & Software-20-30-40 1980 1985 1990 1995 2000 2005 2010 Percent Change, Annual Rate Billion Chained 2000$, Annual Rate 45 150 35 120 25 90 15 60 5 30 0 -5 -30-15 -60 Real Change in-25 Real Private -90 Private Inventories-35 -120-45 Investment - Structures -150 1980 1985 1990 1995 2000 2005 2010 1980 1985 1990 1995 2000 2005 2010
  • Sector IndicatorsSA, 2000=100 6 month moving average; thous. tons125 1,400 1,200100 1,000 75 800 50 ATA Truck Tonnage Index Boxboard Production 600 25 400 200 0 0 2006 2007 2008 2009 2010 2011 2012 2006 2007 2008 2009 2010 2011 2012 thous, 6-month moving average $ Billions Monthly Leasing and600 12 Finance Index 10500 8 6400 Total Rail Carloadings 4 2300 0 2006 2007 2008 2009 2010 2011 2012 2006 2007 2008 2009 2010 2011 2012
  • U.S. TradeSAAR, Bil. Chn. 2000$ 0 -100 -200 -300 -400 -500 -600 Real Net Exports of Goods -700 and Services -800 2006 2007 2008 2009 2010 2011 2012 2013Exchange Rate (Major Currencies/US$) 115 105 95 85 75 U.S. Nominal Trade Weighted Exchange Rate 65 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
  • Labor MarketMillion Million140 150 Total Nonfarm Jobs Household Employment130 140 130120 120110 110100 100 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011SA, Thousands, 4-week Moving Average Percent700 18 16 Unemployment Rate600 December: 7.8 percent Initial Unemployment 14500 Claims 12 10400 8 6300 4 2 Unemployment Rate U-6200 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
  • Labor MarketThousands Thousands 10,000 Part-time for Economic Reasons30002500 Marginally 8,000 Attached2000 6,0001500 4,0001000 Discouraged Workers 500 2,000 0 0 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 1980 1985 1990 1995 2000 2005 2010 SA, percent Median Weeks Unemployed, SA 30 68 25 Duration of Unemployment 66 20 Civilian Participation 15 64 Rate 10 5 62 0 1980 1985 1990 1995 2000 2005 2010 1980 1985 1990 1995 2000 2005 2010
  • Interest Rates & SpreadsPercent8.07.0 10-Year Treasury Note Yield6.05.04.03.02.0 3-Month Treasury Note Yield1.00.0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 4 Percent 3.5 Risk Spread TED Spread 3.0 Moodys Seasoned Baa Corporate Bond Yield Minus Moodys 3 3-Month LIBOR Minus 3- 2.5 Seasoned Aaa Corporate Bond Month Treasury 2 2.0 Yield 1.5 1 1.0 0 0.5 2003 2004 2005 2006 2007 2008 2009 2010 2011 1997 1998 2000 2002 2004 2007 2009 2011
  • Fed PolicyBillions $3,000 Bank Assets and Liabilities2,5002,0001,5001,000 500 0 Jan Apr. July Oct. Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct 2008 2009 2010 2011 2012 Excess Required Federal Reserve Assets Money Supply (M1)
  • Domestic Bank Lending Billions $ Billions $ 900 C&I Loans at Commercial Banks 600 800 500 Home Equity Loans 700 600 400 500 300 Large 400 300 200 Small Large 200 100 100 Small 0 0 2005 2006 2007 2008 2009 2010 2011 2012 2005 2006 2007 2008 2009 2010 2011 2012Billions $2,000 Consumer Credit Outstanding Percent Delinquency Rates at Commercial Banks 121,800 C&I Loans1,600 101,400 Credit Cards 8 Residential Real Estate1,2001,000 6 Commercial Real Estate 800 600 Revolving 4 400 2 Nonrevolving 200 0 0 2005 2006 2007 2008 2009 2010 2011 2012 2005 2006 2007 2008 2009 2010 2011 2012
  • EuropePercent Change, Annual Rate 10.0 8.0 Real GDP UK France 6.0 4.0 Germany Eurozone 2.0 0.0 -2.0 -4.0 2009 2010 2011 Source: Oxford Economics
  • EuropePercent 12 Unemployment Rates 10 8 6 4 UK France Germany Eurozone 2 0 2009 2010 2010 2011 2011 2012 Source: Oxford Economics
  • Emerging MarketsPercent Change, Year to Year 14.0 Real GDP 12.0 10.0 8.0 6.0 4.0 2.0 0.0 -2.0 -4.0 -6.0 Mexico China India -8.0 2009 2010 2010 2011 2011 2012 Percent 9 Unemployment Rates 8 7 6 5 4 3 2 Mexico China India 1 0 2009 2010 2010 2011 2011 2012 Source: Oxford Economics
  • The Fiscal Cliff• Expiring 2001/2003 Tax Cuts – Impacts marginal tax rates, dividends, capital gains, the estate tax, PEP/Pease, the marriage penalty, and the child tax credit. ($108 billion – CBO)• Health Care Tax Increases – A provision of ObamaCare slaps a 3.8% surtax on all forms of investment income, including capital gains and dividends income, resulting in a total tax rate of 23.8% of capital gains and a total top rate of 43.8% on dividends income. ($836 billion/10 years – CBO & JCT)• The End of AMT Patches – Congress generally “patches” the Alternative Minimum Tax (AMT) every year to help it keep pace with inflation. As a result, just over four million tax returns currently pay the AMT. If a new patch is not enacted retroactively for 2012, that number will increase to above 30 million for that year and would exceed 40 million by the end of the decade. ($103 billion – CBO)• The End of Jobs Measures – Both the two percent payroll tax holiday and extended unemployment benefit will disappear at year’s end. ($89 billion – JCT)• The End of Doc Fixes –At the end of the year, the current doc fix will end, leading to a nearly 30 percent immediate reduction in Medicare physician payment. ($10 billion – CBO)• The Expiration of Various “Tax Extenders” – various normal “extenders,” such as the research and experimentation tax credit and the state and local sales tax deduction, expired at the end of 2011. Others, such as the production tax credit, will expire at the end of 2012. Some of these extenders are likely to be reinstated retroactively at the end of this year, but will disappear under current law. ($84 billion - CBO)• Activation of the Sequestration – Owing to the failure of the Super Committee to find suitable spending cuts, the Congress adopted a sequestration process that would cut $1.2 trillion over 10 years from government spending. The cuts would begin on January 15, 2013. ($97 billion)• Debt Ceiling – Given the current level of government spending and allowing the Treasury some leeway in financing expenditures, it is likely that the government debt issuance will once again bump up against the debt limit between November 2012 and February 2013.
  • CBO’s Baseline Deficit (August 2012) Billions $ Budget Deficit 500 0 -500-1,000-1,500-2,000 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 Percent of GDP Deficit to GDP 5 0 -5 -10 -15 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
  • Alternative Deficit Forecasts Billions $ 400 Budget Deficit Forecast 200 0 -200 -400 -600 -800 CBO Baseline-1,000-1,200 CBO Alternative Fiscal Scenario-1,400 Presidents Budget-1,600 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 Percent of GDP 4 Forecast 2 Deficit to GDP 0 -2 -4 -6 CBO Baseline -8 CBO Alternative Fiscal Scenario -10 Presidents Budget -12 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
  • Government Baseline Debt (CBO’s Baseline – August 2012) Billions $20,000 Debt15,00010,000 5,000 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 Percent of GDP 100 Debt to GDP 80 60 40 20 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
  • Alternative Debt Forecasts Billions $25,000 CBO Baseline Forecast20,000 Debt CBO Alternative Fiscal15,000 Scenario Presidents Budget10,000 5,000 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 Percent Forecast 100 90 80 70 Debt to GDP 60 50 CBOs Baseline 40 Projection 30 Alternative Fiscal 20 Scenario 10 Presidents budget 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
  • Government Revenues and Outlays ( percent of GDP) 30 Forecast 25 20 15 Revenues (%GDP) Outlays (%GDP) 10 5 0 1980 1985 1990 1995 2000 2005 2010 2015 2020Source: CBO Baseline (August 2012)