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US & Global Economy: Review and forecast 2012


Published on's overview of the US and global economic climate, with short and long term projections

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US & Global Economy: Review and forecast 2012

  1. 1. Economic Review and Forecast: You Might Need These’s outlook for US and global economic conditions Friday, February 10 th , 2012
  2. 2. Presentation Agenda <ul><li>New stylized facts in global trends </li></ul><ul><li>Snapshot of current economic climate: from stagnation to stagflation </li></ul><ul><li>Future outlook </li></ul><ul><li>Q&A </li></ul>
  3. 3. State Capitalism & Global Competition <ul><li>state-backed companies account for 80% of the value of China’s stock market and 62% of Russia’s </li></ul><ul><li>Not a road to liberal capitalism </li></ul><ul><li>A sustainable model </li></ul><ul><li>New view: redesign capitalism to make it work better </li></ul>
  4. 4. The Rich is the Problem <ul><li>99% vs. 1% </li></ul><ul><li>Take their money </li></ul><ul><li>Global anarchy </li></ul><ul><li>Instability </li></ul><ul><li>Uncertainty </li></ul><ul><li>Lack of investment </li></ul><ul><li>No job creation </li></ul><ul><li>Erosion of wealth </li></ul><ul><li>Decline in incomes </li></ul>
  5. 5. Jobs: Cooking The Numbers
  6. 6. FED, ECB, BoE, BoJ…. & IMF <ul><li>Experiments with monetary policy </li></ul><ul><li>Took over fiscal policy from inept political leaderships </li></ul><ul><li>New asset bubbles? </li></ul><ul><li>Do they rule? </li></ul><ul><li>Are they doctors or patients </li></ul>
  7. 7. Fifty Years of the European Socialist Experiment <ul><li>Spend other peoples money </li></ul><ul><li>Hire the unemployed </li></ul><ul><li>Does government create wealth? </li></ul><ul><li>The end of the social state? </li></ul>
  8. 8. Current Risks <ul><li>Ineffectiveness of low interest rates </li></ul><ul><li>Capping inflation at 2% </li></ul><ul><li>Negative saving rates </li></ul><ul><li>Deficits, Debts and Fear – The European experience </li></ul><ul><li>Free Fall of dollar, panic, policy reversal, high interest rates, a “real” depression </li></ul><ul><li>Geopolitical factors, Iran conflict & oil prices </li></ul>
  9. 9. Fed in a printing mode again
  10. 10. Employment: Where is the New Peak
  11. 11. Real-Time Look @ Economy NOW <ul><li>What is happening RIGHT now with the economy </li></ul><ul><ul><li>US monthly GDP, current macro components, policies, etc </li></ul></ul>
  12. 12. Real Time Monthly GDP <ul><li>e-forecasting estimates US monthly GDP increased 2.8% in January to $13,487.6B, after jumping 3.4% in December </li></ul><ul><li>Current annual growth rate in first quarter is estimated to be 2.9% (Nov, Dec, Jan average) </li></ul><ul><li>Six-month growth rate, which signals confirmation of turning points, went up 2.4% in January, after going up 2.2% in December </li></ul>
  13. 13. Growth in Monthly GDP <ul><li>Looking @ growth rate, can see depth of previous recession, upswing, and now slow recovery in economy </li></ul><ul><li>When negative, recession; when positive, expansion </li></ul>
  14. 14. Historical View <ul><li>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) and current recovery </li></ul>
  15. 15. Q4 was fastest quarter last year <ul><li>Looking @ table, we see growth rates incrementally increasing over the last 12 months </li></ul>Year Month Quarterly GDP Monthly GDP Chained $2005 annual % change Chained $2005 annual % change annual % change MA3 SAAR*, Billions from quarter ago SAAR*, Billions from month ago from 3 months ago** 2011 January     $13,225.0 ▼ -1.4% 1.9% 2011 February     $13,224.5 ▬ 0.0% 1.2% 2011 March $13,227.9 0.4% $13,234.1 ▲ 0.9% 0.4% 2011 April     $13,259.8 ▲ 2.4% 0.4% 2011 May     $13,266.9 ▲ 0.6% 0.7% 2011 June $13,273.3 1.4% $13,293.1 ▲ 2.4% 1.4% 2011 July     $13,308.9 ▲ 1.4% 1.5% 2011 August     $13,326.8 ▲ 1.6% 1.7% 2011 September $13,331.6 1.8% $13,359.1 ▲ 3.0% 1.8% 2011 October     $13,391.0 ▲ 2.9% 2.1% 2011 November     $13,419.3 ▲ 2.6% 2.4% 2011 December $13,422.4 2.8% $13,456.9 ▲ 3.4% 2.8% 2012 January     $13,487.6 ▲ 2.8% 2.9% *SAAR: Seasonally Adjusted Annual Rate. **MA3: 3-month moving average monthly GDP. End-month of quarter growth rate is the same as the annual quarterly growth rate.
  16. 16. Short-Term Outlook: US Lead <ul><li>Using leading indicator helps with short-term forecast and turning point identification </li></ul><ul><li>US leading indicator has been slowly picking up steam the last few months </li></ul>
  17. 17. Short-Term Outlook: US Lead <ul><li>Six month growth rate at highest level since May 2010 </li></ul><ul><li>Currently at 5.9% </li></ul><ul><li>Has increased last 3 months in a row </li></ul>
  18. 18. eLEI shows recession probability next 3-4 months at nearly zero
  19. 19. Short-Term Outlook: US <ul><li>Looking at growth in the US economy, we see slow recovery with growth to hit 3% by 2014 </li></ul>
  20. 20. US Manufacturing <ul><li>Manufacturing recovery will continue and near peak of 06 by 2014 </li></ul>
  21. 21. US Consumer Prices <ul><li>Look for sharp increase in inflation due to QE </li></ul>
  22. 22. US Durable Goods <ul><li>Consumer expenditures on durable goods will continue to recover nearing $1,500 trillion at 2005 constant prices </li></ul>
  23. 23. Exports Outlook <ul><li>Exports will remain on a very low growth path </li></ul>
  24. 24. Imports Outlook <ul><li>Real imports will sharply increase and reach new peak near $1,700 billion </li></ul>
  25. 25. Trade Balance Outlook <ul><li>Trade balance of manufactures as percent of GDP will sharply increase through forecast horizon </li></ul>
  26. 26. Monetary Policy on the Horizon <ul><li>Look for the Fed Funds rate to remain near zero through forecast horizon </li></ul><ul><li>Bernanke’s ‘pledge’ to hold rates thru 2014 </li></ul>
  27. 27. Global Future Outlook <ul><li>Looking @ major economic blocs and their leading indicators helps give an idea of turning points, which areas suffered more than others and which are recovering… </li></ul>
  28. 28. World vs. US <ul><li>The US moves with the world economy, usually the timing of recessions and peaks are the same </li></ul><ul><li>While US growth is slowly picking up, world continues to decline </li></ul>
  29. 29. BRIC: Showing Resilience <ul><li>BRIC HAD been continually outperforming the world and USED TO move out of recession much faster </li></ul><ul><li>BRIC recently faced a slowdown but is now turning the corner again </li></ul>
  30. 30. Latin America’s Bumpy Ride <ul><li>Latin America’s economy fluctuates much greater than rest of world </li></ul><ul><li>Economy is turning out of a slowdown in growth before the world resumes growth </li></ul>
  31. 31. Euro Area <ul><li>Euro area usually mirrors global economy </li></ul><ul><li>This changed last year and was in a free falls, looks to be bottoming out barring any more debt crises </li></ul>
  32. 32. Non-Euro Area <ul><li>Non-Euro area continues to fare much better than Euro area </li></ul><ul><li>Slowdown has stalled </li></ul>
  33. 33. Africa & Middle East <ul><li>Africa and Middle East moving along with world economy </li></ul><ul><li>Economies turning slightly quicker than world </li></ul>
  34. 34. Asia Pacific <ul><li>Asia Pacific showed a lot of strength coming out of recession </li></ul><ul><li>However, now growth has cooled off and at pre-precession levels </li></ul>
  35. 35. Emerging Asia once again will carry global economy
  36. 36. Market Size Measured by GDP in $PPP Billion: 2009 vs 2010 <ul><li>Pieces of pie remain similar, with following changes: </li></ul><ul><ul><li>Emerging Asia (+2%) </li></ul></ul><ul><ul><li>North America (-1%) </li></ul></ul><ul><ul><li>Non-Euro (-1%) </li></ul></ul>
  37. 37. Short term global forecast
  38. 38. Long term global forecast
  39. 39. Global Opportunities
  40. 40. Q&A
  41. 41. Wrap Up <ul><li>Find us on the web: </li></ul><ul><ul><li> </li></ul></ul><ul><li>Fan us on Facebook: </li></ul><ul><ul><li> </li></ul></ul><ul><li>Follow CEO Maria on twitter: </li></ul><ul><li>Information taken from our forecast and reports, for subscription queries, please contact: </li></ul><ul><li>Maria [email_address] </li></ul><ul><li>Thank you! </li></ul>