2013 FORECAST: A LOOK AHEAD Puget Sound Economic Forecast       Ken Goldstein        Economist   The Conference Board
Slow Lane Now, Gets Better Later                                                                                          ...
Overview:     Domestic Economy Building Momentum Slowly     Global Economy Buffeted by Euro-zone Crises and Asia/Pacific...
Global Economy Is Coming Back                                                                  2012   ‘13-16    ‘17-25    ...
US Growth Supported by Demographics and Productivity    Percent change                                                    ...
European Growth Limited by Slow Demographics and    Low ProductivityPercent change                                        ...
Moderate Domestic Growth Ahead in a Slow Global       Environment       The Conference Board’s Leading Economic Indexes   ...
Developed World Struggling             6-month annualized percent change    25    20    15            US LEI    10     5  ...
Consumer Expectations Remain Positive as Economy    Grows Moderately            Index, 1985=100    200                    ...
Slow 1st Half, Better 2nd Half                                            2012                                       2013 ...
Price Split 14           $ per thousand cubic feet                                                                      $ ...
More Volatility in Europe                                                               ECB announces LTROs Bankia nationa...
Euro Up Now, But that’s temporary             U                                                                           ...
In A Panicky World – Flight To Safety            Y                                                                        ...
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Ken Goldstein Economic Forecast slides

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Ken Goldstein Economic Forecast slides

  1. 1. 2013 FORECAST: A LOOK AHEAD Puget Sound Economic Forecast Ken Goldstein Economist The Conference Board
  2. 2. Slow Lane Now, Gets Better Later Ken Goldstein WWW.CONFERENCE-BOARD.ORG2 © 2012 The Conference Board, Inc. | www.conferenceboard.org
  3. 3. Overview:  Domestic Economy Building Momentum Slowly  Global Economy Buffeted by Euro-zone Crises and Asia/Pacific Moderation (3.2% in 2012, 3% in 2013)  Food + Energy + Commodity + CONFIDENCE  Housing Drag finally letting up – as rental market heats up  Currency & Commodity Speculation, Given Volatility & Uncertainty in Stock, Bond, and Real Estate Markets  Energy Going Through at least Two Potentially Long-Term Structural Changes3 © 2012 The Conference Board, Inc. | www.conferenceboard.org
  4. 4. Global Economy Is Coming Back 2012 ‘13-16 ‘17-25 U.S. 2.1 2.4–1.9 2.1–1.7 Euro Area -0.3 2.4–1.3 1.9–0.9 Japan 2.0 2.1–1.4 1.6–0.9 Other Advanced Economies 2.4 3.7–2.4 2.7–1.4 Developing Asia (ex. China and India) 5.4 6.2–5.0 5.1–4.0 China 8.0 7.1–6.0 4.8–3.7 India 6.1 5.4–4.3 4.2–3.1 Latin America 3.4 4.3–2.8 3.8–2.3 Middle East 5.5 4.3–2.6 3.3–1.6 Africa 5.4 4.6–3.0 4.2–2.5 World Total 3.2 4.0–3.0 3.2–2.1 Source: IMF, The Conference Board4 © 2012 The Conference Board, Inc. | www.conferenceboard.org
  5. 5. US Growth Supported by Demographics and Productivity Percent change Change (YoY) (Thous, YoY) 5% 5,000 4% 4,000 GDP 3% 3,000 2% 2,000 1% 1,000 0% 0-1% -1,000-2% -2,000 Employment non-farm-3% -3,000 (right side)-4% -4,000-5% -5,000-6% -6,000 Q3:12 Q1:04 Q1:05 Q1:06 Q1:07 Q1:08 Q1:09 Q1:10 Q1:11 Q1:12 Source: BLS, The Conference Board5 © 2012 The Conference Board, Inc. | www.conferenceboard.org
  6. 6. European Growth Limited by Slow Demographics and Low ProductivityPercent change Change (YoY) (Thous, YoY) 5% 5,000 Employment 4% 4,000 (right side) 3% 3,000 2% 2,000 1% 1,000 0% 0-1% -1,000-2% GDP -2,000-3% -3,000-4% -4,000-5% -5,000-6% -6,000 Q1:04 Q1:05 Q1:06 Q1:07 Q1:08 Q1:09 Q1:10 Q1:11 Q1:12 Q3:12 Source: Euro stat, The Conference Board6 © 2012 The Conference Board, Inc. | www.conferenceboard.org
  7. 7. Moderate Domestic Growth Ahead in a Slow Global Environment The Conference Board’s Leading Economic Indexes Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 2011 2012 U.S.A 0.3 0.6 0.0 0.7 0.2 -0.1 0.3 -0.5 0.4 -0.4 0.4 0.3 -0.2 MEXICO 1.2 -0.2 1.3 1.0 0.0 -0.7 -0.8 -0.6 1.4 -0.2 0.2 -0.3 U.K. -1.0 -0.7 0.6 0.8 1.0 0.1 -0.8 -0.4 0.0 0.1 0.1 -0.4 GERMANY -0.2 0.9 0.8 0.5 -0.1 -0.8 -0.7 -0.5 -0.3 -0.2 -0.6 0.0 FRANCE -0.2 0.3 -0.1 0.5 0.5 -0.1 -0.2 -0.3 0.4 0.5 0.7 -0.5 SPAIN -1.1 0.3 0.5 0.0 -0.9 -1.5 -0.6 0.3 -0.5 -0.1 0.3 1.0 JAPAN 0.2 0.1 0.2 1.5 1.1 -0.1 -1.1 -1.7 -0.9 -0.6 -0.5 -0.5 KOREA -0.7 0.3 0.3 1.8 0.1 -0.2 -1.1 -0.7 -0.4 -0.6 1.1 0.8 AUSTRALIA -1.1 -0.6 0.7 -0.3 -0.2 -1.2 0.9 0.6 -0.5 -1.0 -0.4 0.2 CHINA 0.6 0.6 2.0 1.0 0.7 0.9 1.2 0.2 0.8 1.8 0.2 1.6 1.1 Source: The Conference Board7 © 2012 The Conference Board, Inc. | www.conferenceboard.org
  8. 8. Developed World Struggling 6-month annualized percent change 25 20 15 US LEI 10 5 0 -5 -10 Asia LEI -15 Euro Area LEI -20 -25 Jun.12 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Note: Shaded areas represent recessions Source: The Conference Board8 © 2012 The Conference Board, Inc. | www.conferenceboard.org
  9. 9. Consumer Expectations Remain Positive as Economy Grows Moderately Index, 1985=100 200 Present Situation 160 120 80 Expectation 40 Nov.12 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Note: Shaded areas represent recessions. Data as of November 2010 are based on surveys conducted by The Nielsen Company; data prior to that are based on surveys conducted by TNS. Source: The Nielsen Company, TNS, NBER, The Conference Board9 © 2012 The Conference Board, Inc. | www.conferenceboard.org
  10. 10. Slow 1st Half, Better 2nd Half 2012 2013 2014 2012 2013 2014 III Q* IV Q I Q II Q III Q IV Q I Q II Q ANNUAL ANNUAL ANNUAL---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------- --------------------- ----------------Real GDP 3.1 0.9 1.4 1.5 2.4 2.7 2.3 2.3 2.2 1.8 2.4---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------- --------------------- ----------------CPI Inflation 2.3 3.9 1.9 2.1 2.2 2.2 2.1 2.2 2.2 2.4 2.2---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------- --------------------- ----------------Real Consumer Spending 1.6 1.9 0.8 1.0 2.4 2.4 2.4 2.3 1.9 1.5 2.3---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------- --------------------- ----------------Real Capital Spending -1.8 3.1 2.4 4.1 5.7 8.2 5.7 6.9 7.3 3.2 6.6---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------- --------------------- ----------------Net Exports Bil. 00$ -395.2 -393.8 -385.8 -378.0 -376.9 -383.3 -388.8 -393.7 -403.0 -381.0 -397.0---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------- --------------------- ----------------Industrial Production -0.4 1.0 1.4 1.0 2.4 2.4 2.6 2.4 3.7 1.3 2.4---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------- --------------------- ----------------Unemployment Rate (%) 8.0 7.8 7.7 7.6 7.5 7.4 7.3 7.2 8.1 7.6 7.2---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------- --------------------- ----------------90 Day T-Bills (%) 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.09 0.10 0.1010 Yr Treas Bonds (%) 1.61 1.71 1.80 1.85 1.90 2.10 2.35 2.75 1.80 1.91 2.72---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------- --------------------- ----------------Exchange Rates$/EURO 1.26 1.30 1.32 1.31 1.30 1.28 1.26 1.24 1.29 1.30 1.23 Yen/$ 79 81 86 87 88 89 90 91 80 88 92---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------- --------------------- ----------------*Actual Data 10 © 2012 The Conference Board, Inc. | www.conferenceboard.org
  11. 11. Price Split 14 $ per thousand cubic feet $ per gallon Gasoline (right scale) 4Q 12 12 4 10 3 8 6 2 4 1 2 Natural Gas (left scale) 0 0 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Source: Federal Reserve Bank of St. Louis, Department of Energy, The Conference Board11 © 2012 The Conference Board, Inc. | www.conferenceboard.org
  12. 12. More Volatility in Europe ECB announces LTROs Bankia nationalized 7 Financial Instability Index for the Euro Area June EU summit 6 5 4 3 2 1 0 10/26/12 -1 -2 Jan 11 Apr 11 Jul 11 Oct 11 Jan 12 Apr 12 Jul 12 Oct 12 Source: The Conference Board12 © 2012 The Conference Board, Inc. | www.conferenceboard.org
  13. 13. Euro Up Now, But that’s temporary U Forecast USD/EUR 1.0 1.1 -Stdev 1.2 1.3 +Stdev 1.4 Trend Jan. 03 - Apr. 12 1.5 1.6 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Note: Shaded areas represent recessions Source: FRB, The Conference Board13 © 2012 The Conference Board, Inc. | www.conferenceboard.org
  14. 14. In A Panicky World – Flight To Safety Y Forecast JPY/USD 130 125 +Stdev 120 115 110 105 100 95 -Stdev 90 85 Trend Jan.03 - Apr. 12 80 75 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Note: Shaded areas represent recessions Source: FRB, The Conference Board14 © 2012 The Conference Board, Inc. | www.conferenceboard.org

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