Seminars At Steamboat: Robert Reischauer

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  • On August 12th I heard this Seminar on KUNC and was enthralled. Dr Reischauer's clear description of the economic forces coalescing around our ineptitude is as terrifying as it is exciting - terrifying from the perspective of our past follies and indulgences - yet exciting if we were to grasp the nettle in tackling our issues in a sensible, non-partisan manner.
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Seminars At Steamboat: Robert Reischauer

  1. 1. Adjusting to America’s New Fiscal Reality Why This Time It Really is Different Robert D. Reischauer Seminars at Steamboat July 26, 2012
  2. 2. Largest Post-Depression Dip in GDP Source: ―Chart Book: The Legacy of the Great Recession.‖ Center on Budget and Policy Priorities. July 6, 2012.
  3. 3. Source: ―Chart Book: The Legacy of theGreat Recession.‖ Center on Budget and Policy Priorities. July 6, 2012.
  4. 4. Source: ―Chart Book: The Legacy of theGreat Recession.‖ Center on Budget and Policy Priorities. July 6, 2012.
  5. 5. Source: MichaelGreenstone and Adam Looney. ―The Role ofFiscal Stimulus in the Ongoing Recovery.‖The Hamilton Project. July 6, 2012.
  6. 6. Federal Deficits 1950-2012 % of GDP 4 2 0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 -2 -4 -6 -8-10-12Source: ―White House Historical Tables.‖ Table 1.2. Office of Management and the Budget. (Updated July 2012.)Note: Years with positive numbers are surpluses rather than deficits; 2012 is an estimate.
  7. 7. Growth of Deficit 2009-19 Testimony of Chad Stone, Chief Economist, Before the Joint Economic Committee United States Congress Hearing on ―Spend Less, Owe Less, Grow the Economy.‖ Center for Budget and Policy Priorities. June 21, 2011.
  8. 8. Growth of Debt 2001-19Testimony of Chad Stone, Chief Economist, Before the Joint Economic Committee United States Congress Hearing on ―Spend Less, OweLess, Grow the Economy.‖ Center for Budget and Policy Priorities. June 21, 2011.
  9. 9. Roots of the Long-Run Budget Problem Demography: The baby boom retires Sectoral: The inexorable rise of health care costs Political: Americans aversion to taxes
  10. 10. Growth of Medicare Beneficiaries 1980-2040 1980-1990 1.9 1990-2000 1.5 2000-2010 1.8 2010-2020 3.0 2020-2030 2.4 2030-2040 0.9
  11. 11. Source: Douglas W. Elmendorf. ―Choices for Federal Spending and Taxes.‖ Presentation at Harvard University. Congressional Budget Office. February 24, 2012.
  12. 12. 100,000 Median Family Income 90,000 80,000 70,000 Married-coupleConstant 2009 dollars families (Total) 60,000 50,000 40,000 30,000 20,000 10,000 0 1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 Source: U.S. Census Bureau, The National Data Book: The 2012 Statistical Abstract, Table 699; taken from the U.S. Census Bureau, Income, Poverty and Health Insurance Coverage in the United States: 2009, Current Population Reports, P60-238, and Historical Tables -- Table F-7, September 2010.
  13. 13. Labor Force Participation Rate of Married Women 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 1960 1970 1980 1990 2000 2010Source: U.S. Bureau of Labor Statistics, Women in the Labor Force: A Databook, Report 1018 and 1026, September 2009 and December2010, and Basic Tabulations, Table 12
  14. 14. Median Family Income 100,000 90,000 80,000 Married-couple 70,000Constant 2009 dollars families (Total) 60,000 Wife in paid labor force 50,000 Wife not in paid labor 40,000 force 30,000 20,000 10,000 0 1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 Source: U.S. Census Bureau, The National Data Book: The 2012 Statistical Abstract, Table 699; taken from the U.S. Census Bureau, Income, Poverty and Health Insurance Coverage in the United States: 2009, Current Population Reports, P60-238, and Historical Tables -- Table F-7, September 2010.
  15. 15. Household Size and Number of Children3.5 3 Persons per household2.5 2 Number of children in families with own1.5 children 1 1970 1975 1980 1985 1990 1995 2000 2005 2010Source: U.S. Census Bureau, Current Population Survey (CPS) Reports, Table HH-4 and FM-3
  16. 16. Bigger Slice of the Same Sized Pie
  17. 17. Total Consumer Credit Outstanding as a Percent of Disposable Personal Income26%24%22%20%18%16%14%12%10% 1980 1985 1990 1995 2000 2005 2010Source: Federal Reserve Bank of St. Louis, Federal Reserve Economic Data, U.S. Department of Commerce: Bureau of Economic Analysis andBoard of Governors of the Federal Reserve System, July 2012
  18. 18. Personal Saving Rate 12 10 8Percent 6 4 2 0 1980 1985 1990 1995 2000 2005 2010 Source: Federal Reserve Bank of St. Louis, Federal Reserve Economic Data, U.S. Department of Commerce: Bureau of Economic Analysis, July 2012
  19. 19. New Home Mortgage Yields16.0014.0012.0010.00 8.00 6.00 4.00 2.00 0.00 1963 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 Source: 2012 Economic Report of the President, Council of Economic Advisers, February 2012.
  20. 20. House as a Piggy Bank
  21. 21. House as an ATM: Equity Extracted from Homes 350 Home equity 300 loans net of unscheduled payments 250Billions of Dollars 200 Cash out refinancings 150 100 50 0 1991 1993 1995 1997 1999 2001 2003 2005 Source: Alan Greenspan and James Kennedy. ―Sources and Uses of Equity Extracted from Homes.‖ Finance and Economics Discussion Series, Divisions of Research & Statistics and Monetary Affairs, Federal Reserve Board, Washington, D.C. March 2007.
  22. 22. Decline in Home Value Case-Shiller reported a peak decline in house prices nationwide of almost 34% at the end of 2011 (relative to 2006)* According to CoreLogic, 24.6% of US properties with a mortgage were underwater in 2011 (23.7% in the first quarter of 2012)** Worst Cases (Q1 2012):  Nevada: 61% of homeowners with negative equity; Florida 45%, Arizona 43%; Georgia 37%; Michigan 35% *The Standard & Poors Case–Shiller Home Price Indices, July 2012 ** CoreLogic. ―CoreLogic Reports Negative Equity Decreases in the First Quarter of 2012.‖ July 12, 2012. <http://www.corelogic.com/About- Us/ResearchTrends/Negative-Equity- Report.aspx>.
  23. 23. U.S. Housing Market Circa 2012
  24. 24. Value of US Dollar140.00120.00100.00 Nominal: Broad index (January 1997=100) 80.00 60.00 Real: Broad index (March 1973=100) 40.00 20.00 0.00 1992 1995 1998 2001 2004 2007 2010 Source: 2012 Economic Report of the President, Council of Economic Advisers, February 2012.
  25. 25. Increasing Deficits Deficits allowed Americans to enjoy more public services without paying for them with taxes Failure to maintain physical capital created an infrastructure deficit that will have to be corrected Unfunded liabilities—public sector pensions and retiree health benefits.
  26. 26. The Share of the Population with a Job Fell to Levels Not Seen Since the Mid-1980s
  27. 27. Long-Term Unemployment Rose to Historic Highs
  28. 28. End

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