21st Annual Legal & Accounting Institute: 2014 Economic Outlook

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  • Formatting Header: Arial (Headings) 24All charts can be found under Keith’s Presentations/Data/Core Presentation Charts unless noted otherwise
  • Formatting >> Home Construction Header: Arial 28 Charts for olga >> ch 22 First Line: Arial 24 Updated: 11/11/13 Second Line: Arial 20 Through: 2012Q4 (blue) and 01:2013 (red) Third Line: Arial 18Formatting Curves: Width 3 pt. Axis: Bold Arial 18 Text Boxes: Arial 14 (bold if titles and not bold if other) Source: Bold Arial 12
  • Formatting >> Home Prices Header: Arial 28 Charts for olga >> ch 22 First Line: Arial 24 Updated: 11/11/13 Second Line: Arial 20 Through: 2012Q4 Third Line: Arial 18
  • Formatting Header: Arial 28 First Line: Arial 24 Updated: 11/20/2013 Second Line: Arial 20 Through: 2013Q3 Third Line: Arial 18FormattingCurves: Width 3 pt. Axis: Bold Arial 18 Text Boxes: Arial 14 (bold if titles and not bold if other) Source: Bold Arial 12http://www.nahb.org/reference_list.aspx?sectionID=135 : The NAHB/Wells Fargo Housing Opportunity Index: Complete History by Metropolitan Area (1991-Current)
  • Keith gets this from Anil, updated with Q2 2013 info also Melissa Lopalo.
  • Formatting >> Employment Header: Arial 28 FOMC Charts April 2008 >> ch11 First Line: Arial 24 Updated: 11/11/13 Second Line: Arial 20 Through: 07:2013 Third Line: Arial 18FormattingCurves: Width 3 pt. Axis: Bold Arial 18 Text Boxes: Arial 14 (bold if titles and not bold if other) Source: Bold Arial 12
  • Updated from Core Presentation Charts on 12/02/13.
  • Formatting >> Blue Chip Header: Arial 28 FOMC Apr 2008 >> ch 22 First Line: Arial 24 Updated: 11/11/13 Second Line: Arial 20 Third Line: Arial 18FormattingCurves: Width 3 pt. Axis: Bold Arial 18 Text Boxes: Arial 14 (bold if titles and not bold if other) Source: Bold Arial 12
  • Formatting Header: Arial 28 First Line: Arial 24 Second Line: Arial 20 Third Line: Arial 18
  • Formatting >> TX Coincident Index Header: Arial 28 First Line: Arial 24 Updated: 12/2/13 Second Line: Arial 20 Through: 07:2013 Third Line: Arial 18FormattingCurves: Width 3 pt. Axis: Bold Arial 18 Text Boxes: Arial 14 (bold if titles and not bold if other) Source: Bold Arial 12Recession ended Nov 09
  • Updated 10/16/13
  • Formatting >> TX Jobs Header: Arial 28 Txpressslides >> job growth (% is december/december) First Line: Arial 24 Updated: 10/16/13 Second Line: Arial 20 Through: 12:2012 (red) 12:2012 (purple) – red data available through 12:2012 Third Line: Arial 18FormattingCurves: Width 3 pt. Axis: Bold Arial 18 Text Boxes: Arial 14 (bold if titles and not bold if other) Source: Bold Arial 12
  • In SWE charts in folder for dec 2012 briefing, also data/state and local government jobsUpdated 11/20/13
  • >> TX UnemploymentUpdated 11/11/13
  • This is in keith presentations/data/regional_charts Jun 2011 Final Updated 9/15/13
  • Formatting >> TX Retail Sales Header: Arial 28 First Line: Arial 24 Updated: 11/11/13 Second Line: Arial 20 Through: 12:2012 (red) and 12:2012 (purple) Third Line: Arial 18FormattingCurves: Width 3 pt. Axis: Bold Arial 18 Text Boxes: Arial 14 (bold if titles and not bold if other) Source: Bold Arial 12Note: Checked the Haver links on 12/01/10, they still work. This data must take a long time to make available.
  • Formatting >> TX Construction Header: Arial 28 First Line: Arial 24 Updated: 10/16/13 Second Line: Arial 20 Through: 01:2013 Third Line: Arial 18FormattingCurves: Width 3 pt. Axis: Bold Arial 18 Text Boxes: Arial 14 (bold if titles and not bold if other) Source: Bold Arial 12
  • Formatting >> TX Home Inventories Header: Arial 28 First Line: Arial 24 Updated: 11/11/13 Second Line: Arial 20 Through: 01:2013 Third Line: Arial 18FormattingCurves: Width 3 pt. Axis: Bold Arial 18 Text Boxes: Arial 14 (bold if titles and not bold if other) Source: Bold Arial 12
  • Formatting >> TX Mortgage Delinquency Header: Arial 28 First Line: Arial 24 Updated: 11/11/13 Second Line: Arial 20 Through: 2013Q2 Third Line: Arial 18FormattingCurves: Width 3 pt. Axis: Bold Arial 18 Text Boxes: Arial 14 (bold if titles and not bold if other) Source: Bold Arial 12
  • This is in keith presentations/data/copy of regionalBrief_Jan’12_all1 – under tab labeled “mortgage”Updated 10/16/13
  • Updated 12/2/13 We get office vacancy rates from the CBRE website: http://bsr.sf.frb.org/re/commercial/commercial.html If you look in the middle of the page (CBRE Econometric Advisors – History and Forecast Data), under the green Office Market tab on the left, we use the Quarterly History & Forecasts report.  Thanks!Melissa
  • Formatting >> Manufacturing Output Header: Arial 28 First Line: Arial 24 Updated: 12/2/13 Second Line: Arial 20 *Through*:12:2012 Third Line: Arial 18FormattingCurves: Width 3 pt. Axis: Bold Arial 18 Text Boxes: Arial 14 (bold if titles and not bold if other) Source: Bold Arial 12Source: Phillips_Nov’10BDShow_final c10Updated 12/07/10 Through 10:2010
  • Formatting >> TX Exports Header: Arial 28 First Line: Arial 24 Updated: 11/11/13 Second Line: Arial 20 Through: 0:2013 Third Line: Arial 18FormattingCurves: Width 3 pt. Axis: Bold Arial 18 Text Boxes: Arial 14 (bold if titles and not bold if other) Source: Bold Arial 12Source: Regional Briefing final 2010 Chart 13 Exports Updated: 12/07/10 Through: 09:2010
  • Jobs up by 11 percent and rigs up by 63 percentFormatting >> TX Energy Header: Arial 28 First Line: Arial 24 Updated: 11/11/13 Second Line: Arial 20 Through: 8/23/2013 Third Line: Arial 18FormattingCurves: Width 3 pt. Axis: Bold Arial 18 Text Boxes: Arial 14 (bold if titles and not bold if other) Source: Bold Arial 12
  • Formatting >>TX Business Cycle Header: Arial 28 First Line: Arial 24 Updated: 10/16/13 Second Line: Arial 20 Through: 01:2013 Third Line: Arial 18FormattingCurves: Width 3 pt. Axis: Bold Arial 18 Text Boxes: Arial 14 (bold if titles and not bold if other) Source: Bold Arial 12Source: Too much time spent on description?Phillips_Nov’10BSShow_final C7Updated: 12/07/10 Through: 10/2010
  • >>All Outlook Presentation Charts/”c”Updated 11/11/13
  • Formatting Header: Arial 28 First Line: Arial 24 Second Line: Arial 20 Third Line: Arial 18FormattingCurves: Width 3 pt. Axis: Bold Arial 18 Text Boxes: Arial 14 (bold if titles and not bold if other) Source: Bold Arial 12Source: M:\regional\charts\TXLI_components
  • Updated 12/2/13First go to U/TXLIdata for updated forecast dataFormatting >> TX Employment Forecast Header: Arial 28 First Line: Arial 24 Updated: 11/14/2012 Second Line: Arial 20 Through: 9:2012 Third Line: Arial 18FormattingCurves: Width 3 pt. Axis: Bold Arial 18 Text Boxes: Arial 14 (bold if titles and not bold if other) Source: Bold Arial 12
  • Formatting Header: Arial 28 First Line: Arial 24 Second Line: Arial 20 Third Line: Arial 18Note: For you

Transcript

  • 1. 2014 Economic Outlook: S t i l l G o o d t o b e i n Te x a s Keith Phillips, Sr. Economist and Advisor
  • 2. National Economy Still Growing at a Modest Pace • International weakness slowing US exports • Uncertainty surrounding federal government spending, Furloughs, Debt Ceiling, Affordable Care Act restraining growth • Meantime housing sector, consumer finances, and state and local government improving • 2013 another year of moderate growth with some improvement likely in 2014
  • 3. Home Construction Picking Up Millions, units 2.00 Billions, $2000 450 400 Real single-family construction 1.75 350 1.50 300 1.25 250 1.00 200 150 Single-family building permits 0.75 100 0.50 0.25 50 1970 1974 1978 1982 1986 1990 1994 1998 Source: Bureau of Economic Analysis, U.S. Census Bureau and author’s calculations. 2002 2006 2010 0
  • 4. 270 FHFA House Price Index, 2000=100 Home Prices Increasing 250 U.S. Texas 230 California Florida Nevada 210 190 170 150 130 110 90 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
  • 5. Lower Prices and Interest Rates Helping Housing Affordability – No Bubble Now (Percent of homes sold for which the median family income could qualify) United States 1999:Q4 64 2013:Q3 65 Los Angeles New York Miami Austin Dallas Houston San Antonio 43 55 59 56 64 66 64 21 23 55 63 60 62 66 Date of Low Low Point Point 40 2006 : Q3 2006 : 2 Q1/Q2/Q3 5 2006 : Q3/Q4 10 2007 : Q1 50 2000 : Q4 54 2007 : Q3 47 2007 : Q3 47 2006 : Q3 Source: NAHB - Wells Fargo Housing Opportunity Index
  • 6. Household Balance Sheets in Better Shape Ratio, personal debt per Student loan Other capita/personal income per capita 9% 3% U.S. Credit card 1.4 6% 1.3 1.2 1.35 U.S. Auto loan 7% HE revolving 5% 1.19 Mortgage 70.1% 1.1 Texas loan Student Other 4% Texas 11% 1 1.00 Credit card 7% 0.9 Auto loan 13% 0.8 0.96 Mortgage 63.6% HE revolving 1% Note: Data are through second quarter, 2013. 2… 2… 2… 2… 2… 2… 0.6 2… 0.7
  • 7. 600 Job Growth Persistently Positive but not as Strong as Typical Rebound Thousands (SA) 400 200 0 -200 -400 -600 -800 -1000 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
  • 8. U.S. Leading Index Suggests Moderate Pick Up Over Next 6 Months Annualized % change 20 15 6-month 12-month 10 5 0 -5 -10 -15 -20 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
  • 9. November Blue Chip Survey Projects RGDP Growth of SAAR, Percent 2.1% in 2013, 2.8% in 2014 8.0 6.0 2012 2.0% Q4/Q4 4.9 3.9 4.0 3.9 3.7 2013 2.1% 2014 2.8% Q4/Q4 Q4/Q4 3.2 2.82.8 2.0 1.3 1.6 2.8 1.4 1.2 2.8 2.5 1.1 0.1 0.0 -0.4 -1.3 -2.0 -4.0 -5.4 -6.0 -8.0 -8.3 -10.0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
  • 10. Past Several Years Texas Economy Has Grown above Trend and Stronger than Nation • In past three years growth in energy, high-tech and exports provided a stimulus to Texas. Housing market better shape than nationally • This year manufacturing, energy and Fed. Govt. have slowed while residential construction continues to grow strongly • This year I expect job growth of about 2.5% - slightly weaker than 2012 (3.3%) • In 2014 Texas growth will be very similar to 2013
  • 11. M/M SAAR 12 Texas Economy Growing Above Trend (Texas Business Cycle Index) 10 8 6 4 2 2.5% trend 0 -2 -4 -6 -8 NOTE: Shaded areas represent Texas recession.
  • 12. Texas was Third Fastest Growing Job Growth State in 2012 Y/Y Percent Change, December 2012 7 6 5 4 TX 3 U.S. 2 1 0 ND UT TX NV CO MT AZ CA NC SC HI TN ID FL IN LA GA NJ US KS WA MN MA OK KY IA MD AK MS NY IL VA SD VT OR NH MI MO WI NE OH RI DE PA AL NM CT DC AR WV ME WY Source: Bureau of Labor Statistics -1
  • 13. Texas 4th Fastest this Year 2013 YTD Annualized Change 4 3 TX 2 US 1 0 -1 ND FL ID TX DE MI GA WA UT OR MS CO NE US NC SC WV MN CA WI MA ME AZ IN WY LA SD NY MO IL KS RI AR NJ HI NV MD CT TN MT NH OK VA OH IA VT PA DC NM AL KY AK Source: Bureau of Labor Statistics, Data through August -2
  • 14. Texas Jobs Growing Faster Than Nation’s 5 Job Growth Y/Y, Percent U.S. 4 3.3 Texas 3 2.4 2.2 2.3 2 1.6 1.7 1.7 0.8 1 0 -1 -2 -3 -3.4 -4 -3.8 -5 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
  • 15. Index, Jan 2000 = 100 Texas State and Local Government Jobs Growing after 2011 Fiscal Cliff 125 Texas State and Local share of Total Nonfarm Jobs - 14.3% U.S. 120 Texas 115 110 105 100 95 U.S. State and Local Share of Total Nonfarm Jobs- 14.0%
  • 16. Texas Unemployment Rate Falling After Uptick Earlier in the Year Percent, SA 10.5 9.5 US unemployment rate 8.5 7.3 7.5 6.5 Texas unemployment rate 6.2 5.5 4.5 3.5 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
  • 17. Most Industries Adding Jobs – Manufacturing, Construction Weakening Q/Q, SAAR 16 14 Texas Industry Employment 2012 Q3 : 2013 Q3 Mining 12 10 Construction 6 4 2 0 -2 Leisure and Hospitality Business Serv. 8 Trans., Trade , Utilities Finance , Insurance, Real Estate Manufacturing Health and Education Information Services Govt.
  • 18. Texas Real Retail Sales Growing Moderately Index, SA, Real $ Jan. 2000=100 160 150 Texas 140 130 120 U.S. 110 100 90 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
  • 19. Texas Construction Contract Values Picking Up Real $, Mil 5MMA, SA 7000 6000 Total 5000 4000 3000 Residential Non Residential 2000 1000 Non Building 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
  • 20. Months Home Inventories in TX Have Fallen to Historically Low Levels 18 Texas 16 3.8 14 U.S. 4.9 12 10 8 6 4 2 0 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
  • 21. 5 Mortgage Foreclosures Sliding, Delinquency Rates High but Falling, TX Better than US TX Delinquencies US Delinquencies 4.5 TX Foreclosures Started US Foreclosures Started 4 3.5 3 2.6 2.5 2.3 2 1.5 0.60 1 0.5 .35 0.45 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
  • 22. Texas Mortgages Less at Risk of Default Percent 70 Percent of Mortgages "Under Water" Q2 2012 - Q2 2013 60 50 40 36.4 31.5 30 24.7 22.5 20 15.4 14.5 11.6 10 4.3 0 Nevada Arizona Florida Michigan California Idaho Texas U.S.
  • 23. Declining TX Office Vacancy Rate Suggests Office Construction May Continue to Pick Up Real, Millions $, 5MMA 450 Percent 35 400 Office and Bank Buildings Contract Value 350 30 Office Vacancy Rate 300 25 250 20 200 150 15 100 10 50 0 5 '89 '96 '03 '10
  • 24. Index 100 TX Manufacturing Production and Orders Growing at Mixed Pace 80 60 40 Nov.-13 20 0 -20 -40 -60 -80 Production Volume of New Orders -100 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13
  • 25. Index, SA Real Jan. 2000=100 Texas Exports Picking Up 240 110.0 105.0 Texas Value of the Dollar 220 100.0 200 95.0 180 90.0 Texas 160 85.0 80.0 140 75.0 120 70.0 U.S. minus Texas 100 65.0 80 60.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
  • 26. 1000 Oil Prices Falling, Drilling Rig Count Stable 160.000 Rig Count 900 140.000 800 120.000 700 100.000 600 80.000 500 60.000 400 40.000 Oil price Gas price(*10) 300 20.000 200 0.000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
  • 27. All Texas Metros Moved From Recovery to Nonfarm Employment Index Expansion Aug. 2008=100 112 Austin 110 Houston Ft. Worth Corpus TX Christi 108 106 Dallas 104 San Antonio El Paso 102 100 98 96 94 92 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13
  • 28. Metros with Big Presence of Fed. Govt. and Health Care Slowing Index, Nov. 2009=100, SA 116 114 Austin 112 Houston 110 DFW Border 108 106 San Antonio 104 El Paso 102 Border, SA, El Paso Rest of Texas Federal Govt. 3.6% 1.5% Educ. & Health Svc. 16.9% 12.1% 100 NOTE: Figures are shares of total nonfarm employment. SOURCE: Texas Workforce Commission. 98 July '10 July '11 July '12 July '13
  • 29. Mixed Growth in TLI Components Texas Leading Index Components, 3 month change August -October Net Change in Texas Leading Index 0.80 Texas Value of the Dollar 0.14 U.S. Leading Index 0.59 Real Oil Price -0.11 Well Permits -0.12 New Unemployment Claims -0.16 Texas Stock Index 0.23 Help Wanted Index 0.07 Average Weekly Hours 0.17 -0.40 -0.20 0.00 0.20 0.40 0.60 0.80 1.00
  • 30. Job Growth Likely to Increase Remain About 2.5% in 2014 Millions Index 12.0 135 130 11.5 Leading Index 125 11.0 120 10.5 10.0 115 Texas Nonfarm Employment and TLI Forecast (with 80% confidence band) 110 105 9.5 100 9.0 Jan-00 95 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14
  • 31. Summary • U.S. economy continues to grow at a moderate, disappointing pace • Texas has faced similar headwinds (weak consumer spending, housing) but has grown faster due to strong growth in energy and exports and fewer problems in housing. • 2013 TX job growth slower, as energy, exports and federal government slow and construction remains strong. • In 2014 residential construction growth will likely dampen while manufacturing activity picks up – overall job growth will be close to this year or slightly better. • Risks to the outlook include political and international uncertainty and continued uncertainty with US fiscal spending.