The document provides an overview of Tulare County's economic situation. It discusses how Bill Watkins will provide context on the county's economy and challenges it faces. It then outlines topics to cover, including the state of the US and California economies and how real estate values will be slow to recover. In the final section, it will analyze specifically Tulare County's economic indicators and situation.

1. Tulare County’s
Economic
Situation
Bill Watkins
October 2011

2. www.clucerf.org

3. A little about
CLU-CERF & MS Econ
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4. Greg Mankiw
“One thing we cannot do very well
Is forecast the economy.”

5. Kierkegaard Sartre
Existentialism and Economic
Nietzsche Growth Camus
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6. Bill Says:
“Effective policy cannot be
made without a clear
understanding of the
situation and the challenges
that the situation imposes.”
www.clucerf.org

7. Outline
• Europe
• Is the consumer ready?
• How Are Our Indicators Doing?
• United States
• Why Real Estate Won‟t
Recover Soon
• California
• Tulare County
www.clucerf.org

8. Europe

9. Optimal Currency Zone
• Inflation rates
• Openness to trade
• Diversification
• Integrated financial sectors &
policy
• Mobile labor and capital
www.clucerf.org

10. Fundamental Trilemma of
International Finance
1. Make the country‟s economy
open to international flows of
capital
2. Use monetary policy as a tool to
help stabilize the economy
3. Maintain stability in the currency
exchange rate
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11. Bill Says:
“The Eurozone will come
apart, and it will be ugly”
www.clucerf.org

12. Is the consumer ready to
bring us outwww.clucerf.org
of recession?

13. Total Consumer Debt is Probably Too High
United States
Household Consumer Debt: Total
Thousands of dollars per household
25.0
20.0
15.0
10.0
5.0
0.0
Jan-80 Jan-85 Jan-90 Jan-95 Jan-00 Jan-05 Jan-10

14. Mortgage Debt is Probably Too High
United States
Household Debt Share: Mortgages
Percent of Current Income
100.0
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
1980Q1 1986Q1 1992Q1 1998Q1 2004Q1 2010Q1

15. We‟re Still Down Over 6 Million Jobs
United States Non-Farm Jobs
Millions of Jobs
Seasonally Adjusted Data
140
138
136
134
132
130
128
126
124
Jan-07 Jun-07 Nov-07Apr-08 Sep-08 Feb-09 Jul-09 Dec-09May-10Oct-10Mar-11
www.clucerf.org

16. Rising Food Prices
United States
600 1800
1600
500
1400
400 1200
1000
300
800
200 600
400
100
200
0 0
Jan-47
Jan-59
Jan-71
Jan-79
Jan-83
Jan-91
Jan-03
Jan-51
Jan-55
Jan-63
Jan-67
Jan-75
Jan-87
Jan-95
Jan-99
Jan-07
Jan-11
Real: Spot Market Foodstuffs Price Index
Nominal: Spot Market Foodstuffs Price Index

17. Home Prices are Still Falling
www.clucerf.org

18. Wealth is at 1998 Levels
thousands $ per person United States
250.0
200.0
150.0
100.0
50.0
0.0
1945
1948
1957
1960
1963
1972
1975
1984
1987
1996
1999
1951
1954
1966
1969
1978
1981
1990
1993
2002
2005
2008
Net Household Sector Wealth per Capita Real (2010 $)
www.clucerf.org

19. Structural unemployment,
factor price equalization,
and the consumer.

20. How are our
indicators
doing?
www.clucerf.org

21. Bank Charge-offs Still Too High
Billions of Dollars United States
60.0
50.0
40.0
30.0
20.0
10.0
0.0
1984Q1 1986Q4 1989Q3 1992Q2 1995Q1 1997Q4 2000Q3 2003Q2 2006Q12008 Q4
U.S. Total Bank Charge-Offs

22. Home Ownership Still Too High
United States
Home Ownership Rate, NSA
Percent of Households
70.0
69.0
68.0
67.0
66.0
65.0
64.0
63.0
62.0
61.0
60.0
59.0
1965Q1 1971Q1 1977Q1 1983Q1 1989Q1 1995Q1 2001Q1 2007Q1

23. Capacity Utilization Still Too Low
United States
90
85
80
75
70
65
60
Jan-67 Jan-71 Jan-75 Jan-79 Jan-83 Jan-87 Jan-91 Jan-95 Jan-99 Jan-03 Jan-07 Jan-11
Capacity Utilization: Total index, (% Capacity, SA)

24. Risk Premiums are Going Crazy Again
Ted Spread normalized by 3
month Treasury
1980Q1 1983Q4 1987Q3 1991Q2 1995Q1 1998Q4 2002Q3 2006Q2 2010Q1
Annual Yield as a percent of 3-mo. Treasury

25. United States

26. Jobs and Productivity
Data
www.clucerf.org

27. Problems with the
forecast
www.clucerf.org

28. United States Forecast
www.clucerf.org

29. Slow Economic Growth
Real Gross Domestic Product
3.6 3.8 3.9 3.8
3.0 2.7 2.9
2.5 2.3 2.4 2.5
1.7 1.7 1.9
1.3 1.0 1.2
0.5 0.4 0.5 0.8
-0.7
-1.8
-3.7
-6.7
-8.9
2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1
Center for Economic Research and Forecasting
United States - (saar q-o-q percent change)
www.clucerf.org

30. Really Slow Job Growth
Average Monthly Non-Farm Job Change
170 181
139 166 136
96 101 97 105 109 124
44 22 67 85
39
-2
-47 -46
-135
-199
-256
-311
-516
-643
-781
2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1
Center for Economic Research and Forecasting
United States - (thousands of jobs)
www.clucerf.org

31. No Job Recovery Soon
Non-Farm Jobs-SA
140.0
138.0
136.0
134.0
132.0
130.0
128.0
126.0
124.0
2000Q1 2002Q2 2004Q3 2006Q4 2009Q1 2011Q2
Center for Economic Research and Forecasting
United States - (millions of jobs)
www.clucerf.org

32. Persistent High Unemployment
Unemployment Rate - SA
10.0
9.7 9.7 9.6 9.6 9.6
9.3 9.2 9.0
8.9 9.1 9.1 8.8 8.6
8.5 8.3
8.2 8.1
6.9
6.0
5.3
4.8 5.0
4.5 4.5 4.7
2007Q1 2007Q4 2008Q3 2009Q2 2010Q1 2010Q4 2011Q3 2012Q2 2013Q1
Center for Economic Research and Forecasting
United States - (Percent of labor force)
www.clucerf.org

33. Uncomfortable Facts
• Any unemployment decline will
come from discouraged workers
• The difference between zero and
negative is really small
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34. Risk to the National Forecast
• Middle East
• Euro Zone
www.clucerf.org

35. What about the deficit?
www.clucerf.org

36. Department Overlay as %GDP 2010
10.2
8.0
5.8
5.2
4.5
Total Government Dept. of Defense Dept. of Health and Social Security Other spending
Deficit Human Services Administration

37. Why isn’t small
business
participating in
the recovery?
www.clucerf.org

38. Small business and real estate

39. Banks, lending, and small business
growth

40. How to Change the
Forecast
www.clucerf.org

41. Milton Friedman
“"The role of the economist in discussions of
public policy seems to me to be to prescribe
what should be done in light of what can be
done, politics aside, and not to predict what
is „politically feasible' and
then to recommend it.".”

42. How to Change the Forecast
• Immigration
www.clucerf.org

43. Foreign Immigration
1.68
1.611.60 1.621.59
1.521.511.55
1.51
1.36
1.26
1.12 1.08
1.030.991.05
0.92 0.94
0.87
0.70
0.66
0.50 0.53 0.520.53
0.440.450.44 0.48
1982 1986 1990 1994 1998 2002 2006 2010
Center for Economic Research and Forecasting
United States - (millions of persons)

44. How to Change the Forecast
• Immigration
• Taxes
• Energy
• Regulation
www.clucerf.org

45. Why Real Estate Won’t Recover Soon

46. Could home prices fall
20 percent?
www.clucerf.org

47. For residential, it’s all
about home ownership
www.clucerf.org

48. Prerequisites for a Housing
Recovery
• Home Ownership
• Foreclosures
• Delinquencies
www.clucerf.org

49. Housing’s recovery will not be even.

50. What about
commercial property?
www.clucerf.org

51. For retail, it’s all about
Amazon.com
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52. For office, it’s all about
telecommuting.
www.clucerf.org

53. For industrial, it’s all about 3D
printing.
http://www.youtube.com/watch?
v=ZboxMsSz5Aw
www.clucerf.org

54. California

55. Does California have a
Problem?
www.clucerf.org

56. Just the Facts
• 12 percent
• 8 of 58
• 4 out of 6
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57. Just the Facts
• 16.1 percent to 15.1 percent
• from 15 to 26 percent in 2007
• 34 percent and 80 percent
• 150,000 and 50,000
www.clucerf.org

58. Other Signs of Decline
• Beaches
• Los Angeles water lines
• Freeways
• Electrical cutbacks
• Water supply
• Education
www.clucerf.org

59. California Nonfarm Jobs as a
11.6%
share of United States
11.4%
11.2%
11.0%
10.8%
10.6%
10.4%
10.2%
10.0%
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Center for Economic Research and Forecasting
California - (percent of U.S.)

60. Non-Farm Jobs
15.1 15.2 15.0
14.5 14.6 14.5 14.4 14.5 14.8
14.0 14.1 13.9
13.6
13.1
12.7
12.2 12.0 12.2 12.4
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Center for Economic Research and Forecasting
California - (millions of persons)

61. California Forecast
www.clucerf.org

62. Bill Says:
California is moving toward a
future of contrasts: wealth,
without economic growth;
consumption, without investment;
the wealthy and the poor living
side by side, without a middle
class; young adults and old
people, without families and
children.
www.clucerf.org

63. Really Slow Economic Growth
Real Gross Domestic Product
Growth
3.2 2.9 3.2
2.7
1.7 2.1 2.0 2.0 2.2 2.2 2.3
1.2 1.5 1.5
0.7 0.7
0.2 0.5 0.2 0.2
-0.1
-1.5 -1.8
-4.1
-8.9
-9.7
2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1
Center for Economic Research and Forecasting
California - (saar q-o-q percent change)
www.clucerf.org

64. Really Slow job Growth
Non-Farm Jobs-SA
2.7
1.7 1.8
1.3 1.1
0.8 0.6 0.7
0.3 0.2 0.4
-0.2 -0.1 -0.1 -0.2 -0.1
-0.5
-1.0 -0.8
-1.4 -1.4
-3.1
-6.1
-6.7
-7.4
-8.5
2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1
Center for Economic Research and Forecasting
California - (saar q-o-q percent change)
www.clucerf.org

65. Really High Unemployment
Unemployment Rate-SA
12.5
12.212.412.412.4 12.2 12.112.212.212.111.9
11.9 11.8 11.811.6
11.2 11.4
10.1
8.6
7.5
6.6
6.0
5.5 5.7
5.0 5.2
2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1
Center for Economic Research and Forecasting
California - (percent of labor force)
www.clucerf.org

66. Really Slow Retail Sales Growth
Real Retail Sales Growth
9.8
6.8 7.6
4.4
3.0 3.3 3.0 3.1
1.4
0.2 0.3 0.4 0.6 0.8 1.0 1.1 1.3
-1.0 -0.7 -0.2
-1.6
-5.3
-9.0 -9.6
-10.6
-27.6
2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1
Center for Economic Research and Forecasting
California - (saar q-o-q percent change)
www.clucerf.org

67. Some of California’s
regions are doing
better than others.
www.clucerf.org

68. Tulare County

69. Unemployment is Rising?
Tulare County: Unemployment Rate-SA
20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul-
07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11
CLU Center for Economic Research and Forecasting: percent of labor force California

70. 25.0%
50.0%
10.0%
15.0%
20.0%
30.0%
35.0%
40.0%
45.0%
0.0%
5.0%
Tulare County
Alpaugh CDP
Cutler CDP
Dinuba city
Ducor CDP
Earlimart CDP
East Orosi CDP
East Porterville CDP
Exeter city
Farmersville city
Goshen CDP
Ivanhoe CDP
Lemon Cove CDP
Lindsay city
London CDP
Orosi CDP
August 2011
Pixley CDP
www.clucerf.org
Poplar Cotton Cntr CDP
Porterville city
Richgrove CDP
Springville CDP
Strathmore CDP
Terra Bella CDP
Three Rivers CDP
Tipton CDP
Tulare County Unemployment Rates:
Traver CDP
Tulare city
Visalia city
Woodlake city
Some Communities Have Amazing Unemployment
Woodville CDP

71. Persistent Negative Domestic Migration
Tulare County
5,000
4,000
3,000
2,000
1,000
0
-1,000
-2,000
-3,000
-4,000
-5,000
-6,000
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
Net domestic Migration

72. Slow Domestic Migration
Tulare County
3,500
3,000
2,500
2,000
1,500
1,000
500
0
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
Net Foreign Immigration

73. Some Other Indicators of
Economic Stress
Teen Percent on Percent on
Pregnancy Food Stamps School Meals
2011 1/11/2011 October 2010
Tulare 72 % 22.7 % 77.62 %
California 41 % 9.55 % 55.9 %
United States 34 % 14.10 %
www.clucerf.org

74. The job front has not
been all bad.
www.clucerf.org

75. Tulare County Total: All Industries Jobs
165,000
160,000
155,000
150,000
145,000
140,000
135,000
130,000
125,000
120,000

76. Tulare County - Total: All Industries: year-on
year job growth
6.0
4.0
2.0
0.0
-2.0
-4.0
-6.0
-8.0

77. Some sectors are growing.
www.clucerf.org

78. Tulare County Agriculture, Forestry, Fishing
and Hunting Jobs
60,000
50,000
40,000
30,000
20,000
10,000
0

79. Tulare County Leisure and Hospitality Jobs
9,600
9,400
9,200
9,000
8,800
8,600
8,400
8,200
8,000

80. Tulare County Manufacturing Non Durables
Jobs
9,000
8,900
8,800
8,700
8,600
8,500
8,400
8,300
8,200
8,100
8,000

81. Tulare County Wholesale Trade Jobs
4,300
4,200
4,100
4,000
3,900
3,800
3,700
3,600
3,500
3,400

82. Tulare County Educational and Health Services
Jobs
11,800
11,600
11,400
11,200
11,000
10,800
10,600
10,400
10,200
10,000
9,800

83. Tulare County Financial Activities Jobs
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0

84. Tulare County Transportation and
Warehousing Jobs
5,000
4,800
4,600
4,400
4,200
4,000
3,800
3,600

85. Tulare County Personal, Repair, and
Maintenance Services Jobs
3,400
3,300
3,200
3,100
3,000
2,900
2,800
2,700
2,600
2,500

86. Some sectors appear to have
stopped declining.
www.clucerf.org

87. Tulare County Real Estate Jobs
1,600
1,400
1,200
1,000
800
600
400
200
0

88. Tulare County Professional, Scientific, and
Technical Services Jobs
12,000
10,000
8,000
6,000
4,000
2,000
0

89. Tulare County Construction Jobs
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0

90. Tulare County Manufacturing Durables Jobs
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0

91. Tulare County Retail Trade Jobs
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0

92. Tulare County Information Jobs
1,600
1,400
1,200
1,000
800
600
400
200
0

93. Tulare County Finance & Insurance Jobs
3,500
3,000
2,500
2,000
1,500
1,000
500
0

94. Government is still declining.
www.clucerf.org

95. Tulare County Government Jobs
33,000
32,000
31,000
30,000
29,000
28,000
27,000

96. Tulare County‟s Situation
• Absent change, economic
prospects are grim.
• No inertia will come from the
outside.
• The task is not impossible, but you
have your work cut out for you.
www.clucerf.org

97. The Myth of Sisyphus
www.clucerf.org

98. Thank you!
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