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Markets, He Wrote

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Learn all about the economic outlook from Sage Policy Group, Inc.'s presentation for Citrin Cooperman's October 19 event, Economic Summit: Planning Your Business for Tomorrow's Economy.

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Markets, He Wrote

  1. 1. By: Anirban Basu Sage Policy Group, Inc. October 19th, 2017 Markets, He Wrote On Behalf of Economic Summit Planning Your Business for Tomorrow’s Economy
  2. 2. Macro P.I. (Just How Hairy is the Global Situation?) Photo: Flixter.com
  3. 3. 0.7% 2.1% 1.2% 2.6% 6.7% 6.8% 6.5% 1.8% 4.5% 2.6% 4.6% 2.2% 2.2% 3.0% 1.7% 1.5% 3.1% 1.5% 2.1% 1.6% 2.1% 2.2% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% Brazil Mexico Latin America & the Caribbean Middle East, North Africa, Afghanistan, & Pakistan India (3) China Emerging & Developing Asia Russia Emerging & Developing Europe Sub-Saharan Africa Emerging Market & Developing Economies United States Australia Canada United Kingdom Japan Spain Italy Germany France Euro Area Advanced Economies Annual % Change Estimated Growth in Output by Select Global Areas 2017 Projected Source: International Monetary Fund: World Economic Outlook Database, October 2017 2017 Proj. Global Output Growth: 3.6% 2016 Growth (Estimate) World: 3.2% Euro Area: 1.8% United States: 1.5% Japan: 1.0%
  4. 4. International Population Dynamics, 16 Largest Nations Nation Population (Millions) % Change 2017 2050 Net Change Nigeria 190.9 410.6 219.8 115.1% Ethiopia 105.0 190.9 85.9 81.9% Egypt 97.6 153.4 55.9 57.3% Pakistan 197.0 306.9 109.9 55.8% Philippines 104.9 151.3 46.4 44.2% Mexico 129.2 164.3 35.1 27.2% India 1,339.2 1,659.0 319.8 23.9% Bangladesh 164.7 201.9 37.3 22.6% Indonesia 264.0 321.6 57.6 21.8% United States 324.5 389.6 65.1 20.1% Vietnam 95.5 114.6 19.1 20.0% Brazil 209.3 232.7 23.4 11.2% China 1,409.5 1,364.5 -45.1 -3.2% Germany 82.1 79.2 -2.9 -3.5% Russian Federation 144.0 132.7 -11.3 -7.8% Japan 127.5 108.8 -18.7 -14.7% World 7.6 billion 9.8 billion 2.2 billion 29.4% Source: United Nations, Department of Economic and Social Affairs (DESA)/Population Division. World Population Prospects: The 2017 Revision. *For statistical purposes, the data for China do not include Hong Kong and Macao, Special Administrative Regions (SAR) of China, and Taiwan Province of China.
  5. 5. Top 15 Bottom 15 Rank* Country Fertility Rate Rank* Country Fertility Rate 1 Niger 7.29 187 Malta 1.42 2 Somalia 6.37 188 Italy 1.37 3 Dem. Rep. of the Congo 6.20 188 Slovak Republic 1.37 4 Mali 6.15 190 Mauritius 1.36 5 Chad 6.05 191 Cyprus 1.35 6 Burundi 5.78 192 Bosnia and Herzegovina 1.35 7 Angola 5.77 193 Poland 1.32 8 Uganda 5.68 193 Spain 1.32 9 Timor-Leste 5.62 195 Greece 1.30 10 Nigeria 5.59 196 Macao SAR, China 1.28 11 Gambia, The 5.49 197 Moldova 1.25 12 Burkina Faso 5.44 198 Singapore 1.24 13 Mozambique 5.31 199 Korea, Rep. 1.24 14 Tanzania 5.08 200 Portugal 1.23 15 Benin 5.05 201 Hong Kong SAR, China 1.20 Niamey Vice (Fertility Rates by Country, 2015) Source: World Bank, World Development Indicators *Rank among 201 countries for which data are available for the most recent year (2015) **Total fertility rate represents the number of children that would be born to a woman if she were to live to the end of her childbearing years and bear children in accordance with age-specific fertility rates of the specified year.
  6. 6. Global Debt to Exacerbate Slow Growth? Sources: 1. International Monetary Fund. October 2016. “World Economic Outlook: Subdued Demand: Symptoms and Remedies.” 2. International Monetary Fund (IMF). October 2016. “Fiscal Monitor: Debt—Use It Wisely.” • According to the IMF, global debt reached an all-time high in 2015; • At $152 trillion, global gross debt of the nonfinancial sector now represents 225% of global GDP; • About 2/3 of this debt is in the private sector; • Current low nominal-growth environment is making adjustment difficult, setting the stage for a “vicious feedback loop” in which lower growth hampers deleveraging and the debt overhang exacerbates the slowdown.2 Note: The nonfinancial sector comprises the general government, nonfinancial firms, and households. Gross debt represents the unconsolidated liabilities of the three.
  7. 7. Global Debt Reaches All Time Highs (IIF) Sources: 1. Institute of International Finance (IFF), Global Debt Monitor. 2. Business Insider. 3. The Telegraph. 4. Reuters. • According to the International Institute of Finance (IIF), global debt has reached an all-time high in 2016; • At $215 trillion, global debt—including household, government, and corporate—now represents 325% of global GDP; • Last year the IMF warned of risks to the global economy: • “sheer size of debt could set the stage for an unprecedented private deleveraging process that could thwart the fragile economic recovery”
  8. 8. $0 $20 $40 $60 $80 $100 $120 $140 Sep-01 Jan-02 May-02 Sep-02 Jan-03 May-03 Sep-03 Jan-04 May-04 Sep-04 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 $/Barrel September 2017: $49.88 /Barrel NYMEX Crude Oil Future Prices in U.S. Dollars September 2001 through September 2017 *Month of September = average of daily prices from 9/1-9/29 Source: U.S. Energy Information Administration
  9. 9. US$ Nominal Base metals include aluminum, copper, lead, nickel, tin and zinc. Precious metals include gold, platinum, and silver. Base Metals Iron Ore Precious Metals 25 45 65 85 105 125 145 165 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 2010=100 Metal Price Indices September 2007 through September 2017 Source: The World Bank
  10. 10. 0 1,000 2,000 3,000 4,000 5,000 Oct-09 Feb-10 Jun-10 Oct-10 Feb-11 Jun-11 Oct-11 Feb-12 Jun-12 Oct-12 Feb-13 Jun-13 Oct-13 Feb-14 Jun-14 Oct-14 Feb-15 Jun-15 Oct-15 Feb-16 Jun-16 Oct-16 Feb-17 Jun-17 Oct-17 Jan. 4, 1985: 1,000 October 13th 1,485 The Baltic Dry Index (BDI) is a measure of the price of shipping major raw materials such as metals, grains, and fossil fuels by sea. The BDI is a composite of 3 sub-indices, each covering a different carrier size: Capesize, Panamax, and Supramax. Baltic Dry Index October 2009 through October 2017 Source: Quandl.com
  11. 11. USA CSI Photo: AMCNetworks.com (Commercial Situation Investigation)
  12. 12. Gross Domestic Product 1990Q2 through 2017Q2* Source: Bureau of Economic Analysis -10% -8% -6% -4% -2% 0% 2% 4% 6% 8% 1990Q2 1991Q1 1991Q4 1992Q3 1993Q2 1994Q1 1994Q4 1995Q3 1996Q2 1997Q1 1997Q4 1998Q3 1999Q2 2000Q1 2000Q4 2001Q3 2002Q2 2003Q1 2003Q4 2004Q3 2005Q2 2006Q1 2006Q4 2007Q3 2008Q2 2009Q1 2009Q4 2010Q3 2011Q2 2012Q1 2012Q4 2013Q3 2014Q2 2015Q1 2015Q4 2016Q3 2017Q2 %ChangefromPrecedingPeriod(SAAR) 2017Q2: +3.1% *3rd(final) Estimate
  13. 13. Contributions to GDP Growth by Component 2016Q3 – 2017Q2* Source: Bureau of Economic Analysis -3.0 -2.0 -1.0 0.0 1.0 2.0 3.0 Personal Consumption Government Spending Net Exports Gross Investment 1.92 0.09 0.36 0.40 1.99 0.03 -1.61 1.341.32 -0.11 0.22 -0.20 2.24 -0.03 0.21 0.64 SAAR(%) 2016Q3 2016Q4 2017Q1 2017Q2 2.8 1.8 1.2 3.1 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 GDP PercentChangefromPrecedingPeriod(SAAR) 2017Q2: +3.1% *3rd(final) Estimate
  14. 14. Net Change in U.S. Jobs, BLS September 2002 through September 2017 Source: U.S. Bureau of Labor Statistics -1000 -800 -600 -400 -200 0 200 400 600 Sep-02 Jan-03 May-03 Sep-03 Jan-04 May-04 Sep-04 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Thousands September 2017: -33K
  15. 15. National Nonfarm Employment by Industry Sector September 2016 v. September 2017 Source: U.S. Bureau of Labor Statistics -79 21 53 60 83 117 149 184 189 472 528 -100 0 100 200 300 400 500 600 Information Government Other Services Mining and Logging Trade, Transportation, and Utilities Manufacturing Financial Activities Construction Leisure and Hospitality Education and Health Services Professional and Business Services Thousands, SA All told 1,777K jobs gained
  16. 16. U.S. Employment to Population Ratio September 2000 – September 2017 Source: U.S. Bureau of Labor Statistics Note: Civilian employment-population ratio, population 16 years and over, seasonally adjusted (SA). 58.0 59.0 60.0 61.0 62.0 63.0 64.0 65.0 Sep-00 Mar-01 Sep-01 Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 September 2017: 60.4%
  17. 17. Connecticut Nonfarm Employment by Industry Sector Groups (SA) August 2016 v. August 2017 Absolute Change Source: U.S. Bureau of Labor Statistics -3,000 -1,400 -1,200 -900 -300 -100 800 2,400 2,800 3,300 3,600 -4,000 -2,000 0 2,000 4,000 Government Professional & Business Services Construction Information Trade, Transportation & Utilities Mining and Logging Manufacturing Financial Activities Education & Health Services Leisure & Hospitality Other Services CT Total: +6.0K; +0.4% US Total (SA): +2,059K; +1.4% *According to the Local Area Unemployment Statistics (LAUS) series CT added 32,801 jobs between August 2016 and August 2017.
  18. 18. Massachusetts Nonfarm Employment by Industry Sector Groups (SA) August 2016 v. August 2017 Absolute Change Source: U.S. Bureau of Labor Statistics -1,300 -900 100 400 1,000 2,200 3,400 5,500 7,600 16,800 22,600 -5,000 0 5,000 10,000 15,000 20,000 25,000 Leisure and Hospitality Manufacturing Mining and Logging Information Trade, Transportation, and Utilities Government Construction Financial Activities Other Services Professional and Business Services Education and Health Services MA Total: +57.4K; +1.6% US Total (SA): +2,059K; +1.4% *According to the Local Area Unemployment Statistics (LAUS) series MA added 62,584 jobs between August 2016 and August 2017.
  19. 19. -400 -300 2,400 2,600 2,600 3,800 6,700 8,800 14,000 23,200 -5,000 0 5,000 10,000 15,000 20,000 25,000 Information Manufacturing Mining, Logging, and Construction Trade, Transportation & Utilities Government Financial Activities Leisure & Hospitality Other Services Professional & Business Services Education & Health Services Boston NECTA Total: +63.4K; +2.3% MA Total (SA): +57.4K; +1.6% US Total (SA): +2,059K; +1.4% Boston-Cambridge-Quincy MA-NH NECTA Nonfarm Employment by Industry Sector Groups (NSA) August 2016 v. August 2017 Absolute Change Source: U.S. Bureau of Labor Statistics
  20. 20. New Hampshire Nonfarm Employment by Industry Sector Groups (SA) August 2016 v. August 2017, Absolute Change Source: U.S. Bureau of Labor Statistics -600 -200 0 400 900 900 1,500 2,500 2,500 3,100 3,300 -1,000 0 1,000 2,000 3,000 4,000 Trade, Transportation, and Utilities Information Mining and Logging Manufacturing Financial Activities Government Other Services Professional and Business Services Education and Health Services Construction Leisure and Hospitality NH Total: +14.3K; +2.1% US Total (SA): +2,059K; +1.4% *According to the Local Area Unemployment Statistics (LAUS) series NH added 3,514 jobs between August 2016 and August 2017.
  21. 21. Rhode Island Nonfarm Employment by Industry Sector Groups (SA) August 2016 v. August 2017, Absolute Change Source: U.S. Bureau of Labor Statistics -600 -500 -500 -400 0 100 400 800 2,600 3,200 4,200 -1,000 0 1,000 2,000 3,000 4,000 5,000 Government Information (NSA) Financial Activities Professional and Business Services Mining and Logging Other Services Trade, Transportation, and Utilities Manufacturing Education and Health Services Construction Leisure and Hospitality RI Total: +9.3K; +1.9% US Total (SA): +2,059K; +1.4% *According to the Local Area Unemployment Statistics (LAUS) series RI added 9,700 jobs between August 2016 and August 2017. **Employment figures for Rhode Island’s Information sector not available on a seasonally adjusted basis
  22. 22. RANK STATE % RANK STATE % RANK STATE % 1 NEVADA 3.0 18 CALIFORNIA 1.6 35 INDIANA 1.0 2 GEORGIA 2.7 18 KENTUCKY 1.6 35 OHIO 1.0 3 FLORIDA 2.6 18 MASSACHUSETTS 1.6 35 PENNSYLVANIA 1.0 3 UTAH 2.6 18 MONTANA 1.6 38 NEW JERSEY 0.9 5 TEXAS 2.5 18 NORTH CAROLINA 1.6 39 SOUTH DAKOTA 0.8 6 MARYLAND 2.3 23 MINNESOTA 1.5 40 DELAWARE 0.6 6 OREGON 2.3 23 VIRGINIA 1.5 40 HAWAII 0.6 8 IDAHO 2.2 25 ALABAMA 1.4 40 MISSISSIPPI 0.6 9 NEW HAMPSHIRE 2.1 25 MICHIGAN 1.4 40 VERMONT 0.6 9 WASHINGTON 2.1 25 NEW YORK 1.4 40 WISCONSIN 0.6 11 ARKANSAS 1.9 28 ARIZONA 1.3 45 CONNECTICUT 0.4 11 RHODE ISLAND 1.9 28 NEBRASKA 1.3 45 ILLINOIS 0.4 13 COLORADO 1.8 28 NORTH DAKOTA 1.3 45 MAINE 0.4 13 MISSOURI 1.8 31 LOUISIANA 1.2 48 ALASKA 0.1 13 TENNESSEE 1.8 31 OKLAHOMA 1.2 48 WEST VIRGINIA 0.1 16 DISTRICT OF COLUMBIA 1.7 33 IOWA 1.1 50 KANSAS -0.6 16 SOUTH CAROLINA 1.7 33 NEW MEXICO 1.1 51 WYOMING -0.9 Employment Growth, U.S. States (SA) August 2016 v. August 2017 Percent Change Source: U.S. Bureau of Labor Statistics U.S. Year-over-year Percent Change Aug: +1.4% Sept: +1.2%
  23. 23. Rank MSA % Rank MSA % 1 Orlando-Kissimmee-Sanford, FL MSA 3.3 13 Washington-Arlington-Alexandria, DC-VA- MD-WV MSA 2.1 2 Atlanta-Sandy Springs-Roswell, GA MSA 3.2 14 Denver-Aurora-Lakewood, CO MSA 2.0 3 Tampa-St. Petersburg-Clearwater, FL MSA 3.1 15 Houston-The Woodlands-Sugar Land, TX MSA 1.8 4 Dallas-Fort Worth-Arlington, TX MSA 2.8 15 Philadelphia-Camden-Wilmington, PA-NJ- DE-MD MSA 1.8 5 Seattle-Tacoma-Bellevue, WA MSA 2.7 15 Phoenix-Mesa-Scottsdale, AZ MSA 1.8 6 Charlotte-Concord-Gastonia, NC-SC MSA 2.6 18 San Francisco-Oakland-Hayward, CA MSA 1.7 7 Portland-Vancouver-Hillsboro, OR-WA MSA 2.5 19 New York-Newark-Jersey City, NY-NJ-PA MSA 1.5 7 Riverside-San Bernardino-Ontario, CA MSA 2.5 20 Baltimore-Columbia-Towson, MD MSA 1.4 9 Miami-Fort Lauderdale-West Palm Beach, FL MSA 2.4 21 San Diego-Carlsbad, CA MSA 1.3 10 Boston-Cambridge-Nashua, MA-NH Metro NECTA 2.3 22 St. Louis, MO-IL MSA 1.1 10 Detroit-Warren-Dearborn, MI MSA 2.3 23 Los Angeles-Long Beach-Anaheim, CA MSA 0.6 10 Minneapolis-St. Paul-Bloomington, MN-WI MSA 2.3 24 Chicago-Naperville-Elgin, IL-IN-WI MSA 0.5 Employment Growth, 24 Largest Metros (NSA) August 2016 v. August 2017 Percent Change Source: U.S. Bureau of Labor Statistics, Current Employment Statistics (CES) Survey
  24. 24. Rank MSA UR Rank MSA UR 1 Denver-Aurora-Lakewood, CO MSA 2.2 10 Seattle-Tacoma-Bellevue, WA MSA 4.2 2 Minneapolis-St. Paul-Bloomington, MN-WI MSA 3.4 14 Phoenix-Mesa-Scottsdale, AZ MSA 4.3 3 Boston-Cambridge-Nashua, MA-NH Metro NECTA 3.5 15 Detroit-Warren-Dearborn, MI MSA 4.4 4 Washington-Arlington-Alexandria, DC-VA- MD-WV MSA 3.7 16 Miami-Fort Lauderdale-West Palm Beach, FL MSA 4.5 5 Orlando-Kissimmee-Sanford, FL MSA 3.8 17 Atlanta-Sandy Springs-Roswell, GA MSA 4.6 6 Dallas-Fort Worth-Arlington, TX MSA 3.9 18 San Diego-Carlsbad, CA MSA 4.7 6 San Francisco-Oakland-Hayward, CA MSA 3.9 19 New York-Newark-Jersey City, NY-NJ-PA MSA 4.8 8 Tampa-St. Petersburg-Clearwater, FL MSA 4.0 20 Los Angeles-Long Beach-Anaheim, CA MSA 5.1 9 St. Louis, MO-IL MSA (1) 4.1 20 Philadelphia-Camden-Wilmington, PA-NJ- DE-MD MSA 5.1 10 Baltimore-Columbia-Towson, MD MSA 4.2 22 Houston-The Woodlands-Sugar Land, TX MSA 5.2 10 Charlotte-Concord-Gastonia, NC-SC MSA 4.2 23 Chicago-Naperville-Elgin, IL-IN-WI MSA 5.3 10 Portland-Vancouver-Hillsboro, OR-WA MSA 4.2 24 Riverside-San Bernardino-Ontario, CA MSA 6.2 Unemployment Rates, 24 Largest Metros (NSA) August 2017 Source: U.S. Bureau of Labor Statistics 1. Area boundaries do not reflect official OMB definitions. U.S. Unemployment Rate Aug: 4.4% Sept: 4.2%
  25. 25. 21 Jump Street (And Other Addresses of Interest) Photo: TheMoveDatabase.org
  26. 26. 15-Year & 30-Year Fixed Mortgage Rates October 1995 through October 2017* Source: Freddie Mac *Week ending 10/12/2017 3.21% 3.91% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% Oct-95 Apr-96 Oct-96 Apr-97 Oct-97 Apr-98 Oct-98 Apr-99 Oct-99 Apr-00 Oct-00 Apr-01 Oct-01 Apr-02 Oct-02 Apr-03 Oct-03 Apr-04 Oct-04 Apr-05 Oct-05 Apr-06 Oct-06 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17 Oct-17 Rate 15-yr 30-yr
  27. 27. *NSA: not seasonally adjusted U.S. Homeownership (NSA) 1980Q2-2017Q2 Source: U.S. Census Bureau 58% 60% 62% 64% 66% 68% 70% 1980Q2 1981Q2 1982Q2 1983Q2 1984Q2 1985Q2 1986Q2 1987Q2 1988Q2 1989Q2 1990Q2 1991Q2 1992Q2 1993Q2 1994Q2 1995Q2 1996Q2 1997Q2 1998Q2 1999Q2 2000Q2 2001Q2 2002Q2 2003Q2 2004Q2 2005Q2 2006Q2 2007Q2 2008Q2 2009Q2 2010Q2 2011Q2 2012Q2 2013Q2 2014Q2 2015Q2 2016Q2 2017Q2 2017Q2: 63.7%
  28. 28. $0 $10 $20 $30 $40 $50 $60 $70 Aug-93 Aug-94 Aug-95 Aug-96 Aug-97 Aug-98 Aug-99 Aug-00 Aug-01 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14 Aug-15 Aug-16 Aug-17 $Billions(SAAR) U.S. Private New Multifamily Construction August 1993 through August 2017 Source: U.S. Census Bureau
  29. 29. S&P/Case-Shiller Home Price Indices for Select Metros July 2017, 12-Month Percentage Change Source: Standard & Poor’s 0% 1% 2% 3% 4% 5% 6% 7% 8% 3.3% 3.3% 3.9% 5.1% 5.3% 5.8% 6.1% 6.7% 6.8% 7.2% 7.3% 7.3% 7.4% 12-Month%Change
  30. 30. U.S. Single-Family Housing Starts August 1999 through August 2017 Source: U.S. Census Bureau 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 Aug-99 Feb-00 Aug-00 Feb-01 Aug-01 Feb-02 Aug-02 Feb-03 Aug-03 Feb-04 Aug-04 Feb-05 Aug-05 Feb-06 Aug-06 Feb-07 Aug-07 Feb-08 Aug-08 Feb-09 Aug-09 Feb-10 Aug-10 Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 Feb-17 Aug-17 Thousands,SAAR August 2017: 851K
  31. 31. National Nonresidential Construction Spending by Subsector August 2014 v. August 2017 Source: U.S. Census Bureau -23.7% -20.9% -16.8% -10.3% -8.4% -4.5% -3.3% 1.7% 4.4% 5.5% 5.9% 32.1% 36.7% 37.9% 52.5% 70.2% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70% 80% Sewage and waste disposal Conservation and development Water supply Public safety Power Religious Highway and street Transportation Manufacturing Health care Educational Commercial Communication Amusement and recreation Office Lodging 3-year % Change Total Nonresidential Construction: +$57.16B; +9.0%
  32. 32. $0 $10 $20 $30 $40 $50 $60 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Billionsof$US Foreign investment increases 85.1% in 2015 Cross-border investment remained elevated in 2016: Although down relative to a record 2015, offshore investment levels still exceeded the pre-2015 high in 2007. Note: Among transactions larger than $5.0 million Commercial/Multifamily Offshore Investment Sales Volumes Reach New Heights in 2015/16 Source: Jones Lang LaSalle; Real Capital Analytics
  33. 33. 14.9% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016YTD Foreign Participation as a % of Total Office Volume 1.1% 1.1% 1.4% 1.6% 1.9% 2.1% 2.8% 4.8% 4.8% 5.6% 6.8% 7.1% 8.4% 45.5% 0% 10% 20% 30% 40% 50% San Diego Philadelphia Austin Atlanta Chicago Northern New Jersey Miami Seattle-Bellevue Los Angeles Dallas-Fort Worth Washington, DC Boston San Francisco New York Foreign Office Investment by Destination Market (as a % of Total, 2016YTD) Note: Among transactions larger than $5.0 million; includes all office markets which received > 1.0% of offshore capital. Primary markets continue to capture the lion’s share of inbound capital, receiving 78.2% of this capital YTD. Foreign Office Investment Activity, as of 2016Q3 Source: Jones Lang LaSalle; Real Capital Analytics
  34. 34. Down to “The Wire” Photo: RecapGuide.com
  35. 35. Sales Growth by Type of Business September 2016 v. September 2017* Source: U.S. Census Bureau -5.5% -4.4% 0.1% 0.4% 1.1% 1.7% 2.7% 3.0% 4.0% 4.0% 9.2% 10.7% 11.4% -10% -5% 0% 5% 10% 15% Sporting Goods, Hobby, Book & Music Stores Electronics & Appliance Stores Miscellaneous Store Retailers Health & Personal Care Stores Clothing & Clothing Accessories Stores Furniture & Home Furn. Stores Food Services & Drinking Places Food & Beverage Stores Motor Vehicle & Parts Dealers General Merchandise Stores Internet, etc. Retailers Building Material & Garden Supplies Dealers Gasoline Stations 12-month % change *September 2017 advanced estimate Total Retail Sales: +4.4% YOY
  36. 36. U.S. Saving Rate, August 2005 – August 2017 (Savings as Percentage of Personal Disposable Income) Source: Bureau of Economic Analysis 0.0 2.0 4.0 6.0 8.0 10.0 12.0 Aug-05 Dec-05 Apr-06 Aug-06 Dec-06 Apr-07 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13 Apr-14 Aug-14 Dec-14 Apr-15 Aug-15 Dec-15 Apr-16 Aug-16 Dec-16 Apr-17 Aug-17 SavingsRate(%) August 2017: 3.6%
  37. 37. U.S. Gross Private Domestic Investment (SAAR) % Change from Previous Quarter, 2000Q2 – 2017Q2* Source: Bureau of Economic Analysis -40.0 -30.0 -20.0 -10.0 0.0 10.0 20.0 30.0 40.0 2000Q2 2000Q4 2001Q2 2001Q4 2002Q2 2002Q4 2003Q2 2003Q4 2004Q2 2004Q4 2005Q2 2005Q4 2006Q2 2006Q4 2007Q2 2007Q4 2008Q2 2008Q4 2009Q2 2009Q4 2010Q2 2010Q4 2011Q2 2011Q4 2012Q2 2012Q4 2013Q2 2013Q4 2014Q2 2014Q4 2015Q2 2015Q4 2016Q2 2016Q4 2017Q2 2017Q2: +3.9% *3rd(final) Estimate
  38. 38. Conference Board Leading Economic Indicators Index August 2007 through August 2017 Source: Conference Board -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% Aug-07 Feb-08 Aug-08 Feb-09 Aug-09 Feb-10 Aug-10 Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 Feb-17 Aug-17 One-monthPercentChange August 2017: 128.8 where 2010: 100
  39. 39. The Closer Photo: Google • There are indications of mini-bubbles forming in commercial real estate, particularly in office, lodging and multifamily segments; • There are also longer-term structural considerations, including the national debt and pending insolvencies of Medicare and Social Security – the longer-term outlook may be deteriorating even as the short-run improves; • Momentum should see us through 2017, but tighter monetary policy combined with a heavy dose of political intrigue could render 2018 different. By this time in 2019/20, the economy could be in a far different place and likely will be. *Kyra Sedgwick as Brenda Leigh Johnson • Global economy remains weak, and correspondingly . . . ; • Global money has continued to pour into America in search of yield and safety, including into commercial real estate – that was particularly true in 2015, only a bit less true in 2016; • Inflationary pressures are on the rise – so, too, are interest rates – eventually -- that could begin to squeeze asset prices in 2017/18, triggering negative wealth effects and sentiment in the process;
  40. 40. Thank You  Follow us on Twitter @SagePolicyGroup  You can always reach me at abasu@sagepolicy.com  Please look for updates of information at www.sagepolicy.com.  Also, if you need us in a hurry, we are at 410.522.7243 (410.522.SAGE)  Please contact us when you require economic research & policy analysis.

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