US and Global Economic Review & Forecast 2010

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e-forecasting.com's review of the US and global economic environment, using our real-time indicators, leading indicators and long term forecast projections to give a comprehensive review of conditions.

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US and Global Economic Review & Forecast 2010

  1. Client-tailored solutions for what’s next Economic Review and Forecast Summary presentation of e-forecasting.com’s outlook for US and global economic conditions Friday, October 15th , 2010
  2. Client-tailored solutions for what’s next 01/30/15 2 Presentation Agenda  Overview of recession/rebound  Snapshot of current economic climate: stagnation?  Future outlook  Q&A
  3. Client-tailored solutions for what’s next 01/30/15 3
  4. Client-tailored solutions for what’s next 01/30/15 4 Stagnation Nation?  European style high unemployment  Where is US economic dynamism?  Good, Bad & Ugly Policies?  Major Risks
  5. Client-tailored solutions for what’s next 01/30/15 5 Personal Income from Working Declines
  6. Client-tailored solutions for what’s next 01/30/15 6 Policy-Makers, Advisers & the Economy  The British Keynesian Recipes • Business is the problem, Government is the solution  The American “School” (Monetarism) – Government is the problem, private sector is inherently stable
  7. Client-tailored solutions for what’s next 01/30/15 7 Policy-Makers, Advisers & the Economy  Effectiveness of Policies  Peoples reaction & behavior  Permanent Policies vs. Transitory (Las Vegas style) policies  Income or Wealth (assets) drives behavior
  8. Client-tailored solutions for what’s next 01/30/15 8 Current Risks  Ineffectiveness of low interest rates  Deficits, Debts and Fear – The Greek experience  Running out of “others money”  Free fall of the Dollar, panic, high interest rates, a “real” depression  Inflate the economy, fooling workers and fixing the budget
  9. Client-tailored solutions for what’s next 01/30/15 9
  10. Client-tailored solutions for what’s next 01/30/15 10 Free Falling: US Dollar Decline
  11. Client-tailored solutions for what’s next 01/30/15 11 Fed in a printing mode again
  12. Client-tailored solutions for what’s next 01/30/15 12 Real-Time Look @ Economy NOW  What is happening RIGHT now with the economy – US monthly GDP, current macro components, policies, etc
  13. Client-tailored solutions for what’s next 01/30/15 13 Real Time Monthly GDP • e-forecasting estimates US monthly GDP increased 0.8% in September to $13,243B, after going up 2.4% in August • Annual growth rate in the third quarter is estimated to be 1% • Six-month growth rate, which signals confirmation of turning points, went up 1.8% in September, after going up 2.1% in August $12,900 $13,000 $13,100 $13,200 $13,300 J F M Q1 A M J Q2 J A S Q3 Monthly GDP Up in September BEA, Quarterly e-forecasting, Monthly
  14. Client-tailored solutions for what’s next Growth in Monthly GDP  Looking @ growth rate, can see depth of previous recession, upswing, and now stalling of economy  When negative, recession; when positive, expansion 14 -8.0 -4.0 0.0 4.0 8.0 12.0 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 % Growth in U.S. MonthlyGDP NBER-Defined U.S. Recessions Six-Month Growth Rate Smoothed, Annualized Long-Term Growth Rate: 3.3%
  15. Client-tailored solutions for what’s next Historical View Taking the current recession in context over a long history, we can see how deep the recession was as well as the length (solid fill) $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 Billions Monthly GDP & the Business Cycle NBER-Defined U.S. Recessions Real GDP, at Seasonally Adjusted Annual Rates (SAAR)
  16. Client-tailored solutions for what’s next Q3 will be slower than Q2 Looking @ table, we see Q3 has slower growth which will be the new trend Chained $2005 annual % change annual % change annual % change MA3 SAAR*, Billions from quarter ago from month ago from 3 months ago** 2009 September $12,860.8 1.6% $12,907.1 ▲ 4.6% 1.6% 2009 October $12,944.0 ▲ 3.5% 3.1% 2009 November $13,040.0 ▲ 9.3% 4.7% 2009 December $13,019.0 5.0% $13,073.0 ▲ 3.1% 5.0% 2010 January $13,138.6 ▲ 6.2% 5.7% 2010 February $13,125.7 ▼ -1.2% 4.7% 2010 March $13,139.0 3.7% $13,152.9 ▲ 2.5% 3.7% 2010 April $13,178.1 ▲ 2.3% 2.1% 2010 May $13,219.0 ▲ 3.8% 2.2% 2010 June $13,194.9 1.7% $13,187.7 ▼ -2.8% 1.7% 2010 July $13,207.6 ▲ 1.8% 1.6% 2010 August $13,233.8 ▲ 2.4% 0.8% 2010 September $13,228.2 1.0% $13,243.0 ▲ 0.8% 1.0% *SAAR: Seasonally Adjusted Annual Rate. Year Quarterly GDP Table 1: U.S. Monthly GDP, Latest Estimates **MA3: 3-month moving average monthly GDP. End-month of quarter growth rate is the same as the annual quarterly growth rate. Monthly GDP Chained $2005 SAAR*, Billions Month
  17. Client-tailored solutions for what’s next 01/30/15 17 What’s Ahead?  Focus on manufacturing, inflation, other major factors  Global overview  Exports/imports outlook
  18. Client-tailored solutions for what’s next 01/30/15 18 Short-Term Outlook: US Lead  Using leading indicator helps with short-term forecast and turning point identification  US leading indicator has been slowing down last few months  Six month growth rate was negative for first time since May 09 in last report 0 20 40 60 80 100 120 59 63 67 71 75 79 83 87 91 95 99 03 07 © 2010 e-forecasting.com e-forecastingLeadingEconomicIndex U.S. Recessions* eLEI, 2000=100
  19. Client-tailored solutions for what’s next 01/30/15 19 Short-Term Outlook: US Lead  Six month growth rate was negative for first time since May 09 in last report -20 -10 0 10 20 59 63 67 71 75 79 83 87 91 95 99 03 07 Expansionand Recession Signalsfrom Growth in eLEI Six-Month GrowthRate Smoothed, Annualized, in eLEI U.S. Long-Term Growth Rate: 3.3%
  20. Client-tailored solutions for what’s next 01/30/15 20 US Leading indicator shows double dip probabilities 4% 3% 3% 1% 19% 2% 1% 3% 32% 61% 52% 44% 0% 25% 50% 75% 100% Oct- 09 Nov- 09 Dec- 09 Jan- 10 Feb- 10 Mar- 10 Apr- 10 May- 10 Jun- 10 Jul- 10 Aug- 10 Sep- 10 RecessionProbabilities
  21. Client-tailored solutions for what’s next 01/30/15 21 Short-Term Outlook: US  Looking at growth in the US economy, we see a small peak then growth to stabilize between 2% and 3% through 2013-8 -6 -4 -2 0 2 4 6 8 Annual % change from three months ago1 Forecast of Growth in Monthly GDP Actual Forecast
  22. Client-tailored solutions for what’s next 01/30/15 22 US Manufacturing Manufacturing recovery will slow then continue, yet not reach peak of 06 80 85 90 95 100 105 00:Sep 02:Sep 04:Sep 06:Sep 08:Sep 10:Sep 12:Sep Index, 2007=100 Manufacturing Production
  23. Client-tailored solutions for what’s next 01/30/15 23 US Consumer Prices  Look for inflation due to major increases in money supply 160 170 180 190 200 210 220 230 240 00:Sep 02:Sep 04:Sep 06:Sep 08:Sep 10:Sep 12:Sep Index, 1982-84=100 , SA Consumer Price Index (CPI)
  24. Client-tailored solutions for what’s next 01/30/15 24 US Durable Goods  Consumer expenditures on durable goods will continue to recover nearing $1,300 trillion at 2005 constant prices$700 $800 $900 $1,000 $1,100 $1,200 $1,300 00:Sep 02:Sep 04:Sep 06:Sep 08:Sep 10:Sep 12:Sep In Billions, SAAR Consumer Expenditures on Durables
  25. Client-tailored solutions for what’s next 01/30/15 25 Trade Outlook  Exports have recovered and will near peak levels  Real imports will continue rebound and reach new peak near $1,500 billion $500 $600 $700 $800 $900 00:Sep 02:Sep 04:Sep 06:Sep 08:Sep 10:Sep 12:Sep In Billions, SAAR Real Exports of Manufactures $800 $1,000 $1,200 $1,400 $1,600 00:Sep 02:Sep 04:Sep 06:Sep 08:Sep 10:Sep 12:Sep In Billions, SAAR Real Imports of Manufactures
  26. Client-tailored solutions for what’s next 01/30/15 26 Trade Balance Outlook  Trade balance of manufactures as percent of GDP will increase through forecast horizon -8 -6 -4 -2 0 2 00:Sep 02:Sep 04:Sep 06:Sep 08:Sep 10:Sep 12:Sep Forecast Percent Percent of Trade Balance of Manufactures to GDP
  27. Client-tailored solutions for what’s next 01/30/15 27 Monetary Policy on the Horizon  Look for the Fed Funds rate held long at extreme lows, will now start to go up; can’t last forever at near- zero! -2 0 2 4 6 8 00:Sep 02:Sep 04:Sep 06:Sep 08:Sep 10:Sep 12:Sep Percent Monetary Policy: Federal Funds Rate
  28. Client-tailored solutions for what’s next 01/30/15 28 Global Future Outlook  Looking @ major economic blocs and their leading indicators helps give an idea of turning points, which areas suffered more than others and which will come out of recession faster and stronger…
  29. Client-tailored solutions for what’s next 01/30/15 29 World vs. US  The US moves with the world economy, usually the timing of recessions and peaks are the same Dynamics of the Global Business Cycle USA Leading Index Moves Up or Down Ahead of the Rest of the World -20 -15 -10 -5 0 5 10 15 20 00 01 02 03 04 05 06 07 08 09 Leading Indicators: Six-Month Smoothed Growth Rate, Annualized (percent) World, excluding USA United States Consecutive negative values (below x-axis) predict recessions
  30. Client-tailored solutions for what’s next 01/30/15 30 BRIC Attack  BRIC HAD been continually outperforming the world and USED TO move out of recession much faster  BRIC is now slowing down at same time and pace as the rest of the world Early Warning Signals for Booms and Busts in BRIC Area -20 -15 -10 -5 0 5 10 15 20 00 01 02 03 04 05 06 07 08 09 Leading Indicators: Six-Month Smoothed Growth Rate, Annualized (percent) World BRIC Area Consecutive negative values (below x-axis) predict recessions
  31. Client-tailored solutions for what’s next 01/30/15 31 Latin America’s Bumpy Ride  Latin America’s economy fluctuates much greater than rest of world, is now starting to improve before the rest of the world Early Warning Signals for Booms and Busts in Latin America -40 -30 -20 -10 0 10 20 30 40 50 00 01 02 03 04 05 06 07 08 09 Leading Indicators: Six-Month Smoothed Growth Rate, Annualized (percent) World Latin America Consecutive negative values (below x-axis) predict recessions -30 -20 -10 0 10 20 30 00 01 02 03 04 05 06 07 08 09 10 Leading Indicators:Six-Month Smoothed Growth Rate, Annualized (percent) Early Warning Signals for Booms and Busts in LatinAmerica World Latin America Consecutive negative values (below x-axis) predict recessions
  32. Client-tailored solutions for what’s next 01/30/15 32 Euro Area Early Warning Signals for Booms and Busts in Euro Area -20 -15 -10 -5 0 5 10 15 20 00 01 02 03 04 05 06 07 08 09 Leading Indicators: Six-Month Smoothed Growth Rate, Annualized (percent) World Euro Area Consecutive negative values (below x-axis) predict recessions  Euro area usually mirrors global economy, this time around slowing down faster than rest of world -20 -15 -10 -5 0 5 10 15 20 00 01 02 03 04 05 06 07 08 09 10 Leading Indicators:Six-Month Smoothed Growth Rate, Annualized (percent) Early Warning Signals for Booms and Busts in Euro Area World Euro Area Consecutive negative values (below x-axis) predictrecessions
  33. Client-tailored solutions for what’s next 01/30/15 33 Non-Euro Area  Non-Euro area is faring much better than Euro area, still slowing down but at higher overall levels Early Warning Signals for Booms and Busts in Non-Euro Area -20 -15 -10 -5 0 5 10 15 20 00 01 02 03 04 05 06 07 08 09 Leading Indicators: Six-Month Smoothed Growth Rate, Annualized (percent) World Non-Euro Area Consecutive negative values (below x-axis) predict recessions -20 -15 -10 -5 0 5 10 15 20 00 01 02 03 04 05 06 07 08 09 10 Leading Indicators:Six-Month Smoothed Growth Rate, Annualized (percent) Early Warning Signals for Booms and Busts in Non-EuroArea World Non-Euro Area Consecutivenegative values (belowx-axis) predictrecessions
  34. Client-tailored solutions for what’s next 01/30/15 34 Africa & Middle East  Africa and Middle East moving along with world economy and slowing at the same rates Early Warning Signals for Booms and Busts in Africa & Middle East -20 -10 0 10 20 00 01 02 03 04 05 06 07 08 09 Leading Indicators: Six-Month Smoothed Growth Rate, Annualized (percent) World Africa & Middle East Consecutive negative values (below x-axis) predict recessions -20 -10 0 10 20 00 01 02 03 04 05 06 07 08 09 10 Leading Indicators:Six-Month Smoothed Growth Rate, Annualized (percent) Early Warning Signals forBooms and Busts inAfrica & Middle East World Africa & Middle East Consecutive negative values (below x-axis) predict recessions
  35. Client-tailored solutions for what’s next 01/30/15 35 Asia Pacific  Asia Pacific showed a lot of strength coming out of recession but is also victim to the recent and upcoming slowdown Early Warning Signals for Booms and Busts in Asia & Pacific Area -24 -18 -12 -6 0 6 12 18 24 00 01 02 03 04 05 06 07 08 09 Leading Indicators: Six-Month Smoothed Growth Rate, Annualized (percent) World Asia & Pacific Area Consecutive negative values (below x-axis) predict recessions -20 -10 0 10 20 30 00 01 02 03 04 05 06 07 08 09 10 Leading Indicators: Six-Month Smoothed Growth Rate, Annualized (percent) Early Warning Signals for Booms and Busts in Asia & Pacific Area World Asia & Pacific Area Consecutivenegative values (belowx-axis) predictrecessions
  36. Client-tailored solutions for what’s next 01/30/15 36 Emerging Asia will carry global economy 2009 2010 2011 2012 2009 2010 2011 2012 -0.97 0.27 0.36 0.44 -129.7 7.1 10.2 11.3 -0.68 0.17 0.20 0.24 -90.9 4.5 5.8 6.3 -0.29 0.10 0.15 0.19 -38.7 2.6 4.3 5.0 -0.43 0.21 0.22 0.21 -57.2 5.6 6.3 5.6 -0.79 0.48 0.36 0.49 -104.8 12.6 10.1 12.7 -0.58 0.33 0.22 0.34 -77.4 8.6 6.2 8.9 -0.01 0.35 0.25 0.24 -1.6 9.0 7.1 6.2 -0.32 0.35 0.26 0.26 -42.9 9.2 7.3 6.9 1.54 1.96 1.87 1.99 205.5 51.2 53.4 51.8 1.50 1.60 1.57 1.67 199.9 41.7 44.8 43.4 0.05 0.14 0.14 0.16 6.1 3.6 3.9 4.1 -0.7 3.8 3.5 3.8 100.0 100.0 100.0 100.0 ASIA & PACIFIC INDUSTRIAL EMERGING ASIA China & India MIDDLE EAST & AFRICA WORLD GROWTH 1 1 Sum of Regional Contributions Source: www.e-forecasting.com Euro Area (euro16) Non-Euro Members (11) OTHER EUROPE NORTH AMERICA United States SOUTH AMERICA TABLE 2 CONTRIBUTION OF REGIONS TO GLOBAL GROWTH REGION Percentage Points Contribution Relative Contribution, Percent EUROPEAN UNION (EU27)
  37. Client-tailored solutions for what’s next 01/30/15 37 Market size
  38. Client-tailored solutions for what’s next 01/30/15 38
  39. Client-tailored solutions for what’s next 01/30/15 39 Long term global forecast
  40. Client-tailored solutions for what’s next 01/30/15 40 Wrap Up  Find us on the web: http://www.e-forecasting.com  Fan us on Facebook: http://www.facebook.com/eforecasting  Follow CEO Maria on twitter: http://www.twitter.com/mesimos  Information taken from our forecast and reports, for subscription queries, please contact: Maria mesimos@e-forecasting.com Thank you!

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