ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
“I gotta feeling …”
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
1
A modern Tale of Two Cities
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Global and US real GDP (2000 dollars)
65,000
16,000
60,000
15,000
55,000
14,000
50,000
45,000
13,000
Global real GDP ex. the US
12,000
40,000
11,000
35,000
10,000
30,000
9,000
25,000
20,000
15,000
1990
8,000
US real GDP
7,000
1995
2000
2005
2010
Sources: US Department of Commerce; JPMorgan Chase & Co.
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
2
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
A good, good day …
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
3
We began to recover early last summer …
US real GDP (annualized percent change from the previous quarter)
8
8
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
7
7
Forecast
6
6
5
5
4
4
3
3
2
2
1
1
0
0
­1
­1
­2
­2
­3
­3
­4
­4
­5
­5
­6
­6
­7
­7
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Source: US Department of Commerce
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
4
… most did
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Real GDP in selected regions (percent change from four quarters earlier)
10
Emerging economies in Asia, Eastern
9
Europe and Latin America (blue)
8
7
6
5
4
3
2
1
0
­1
­2
US (blue­gray, dashed line is forecast)
­3
EU­11 (black)
­4
Japan (red)
­5
­6
­7
­8
Global (shaded region)
­9
­10
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
10
9
8
7
6
5
4
3
2
1
0
­1
­2
­3
­4
­5
­6
­7
­8
­9
­10
Sources: US Department of Commerce; JPMorgan Chase & Co.
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
5
We have a long history of getting back on our feet …
US real GDP (percent change from four quarters earlier)
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
20
20
Average historical growth = 3.75% annually
15
15
10
10
5
5
0
0
­5
­5
­10
­10
­15
­15
1852 1862 1872 1882 1892 1902 1912 1922 1932 1942 1952 1962 1972 1982 1992 2002
Sources: NBER recession bars; US Department of Commerce; various academic sources
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
6
Unemployment is cresting …
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Unemployment in Louisiana versus the nation (percent)
14
14
13
13
12
12
11
11
10
Louisiana
10
9
9
8
8
7
7
6
6
5
5
4
3
US
4
3
2
2
1
1
0
0
1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012
Source: US Department of Labor
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
7
Job losses are ending …
Nonfarm payroll employment in Louisiana versus the nation (percent change from 12 months earlier)
6
6
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
5
Louisiana
US
4
5
4
3
3
2
2
1
1
0
0
­1
­1
­2
­2
­3
­3
­4
­4
­5
­5
­6
­6
­7
­7
­8
­8
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Source: US Department of Labor
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
8
… and not a minute too soon
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Employment (ratio to 2000 Q4 level)
1.05
1.05
1.04
1.04
1.03
1.03
1.02
1.02
1.01
1.01
1.00
US
1.00
0.99
0.99
0.98
0.98
0.97
0.97
0.96
Louisiana
0.96
0.95
0.95
0.94
0.94
0.93
0.93
0.92
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
0.92
Source: US Department of Labor
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
9
5.3
Trends in unemployment since the March 2007 low
Percent of the civilian labor force
9.7
8.8
8.6
7.8
7.8
7.5
7.3
6.9
6.8
6.7
6.7
6.5
6.2
6.1
5.9
5.8
5.7
5.7
5.7
5.5
5.5
5.4
5.3
5.2
5.2
5.2
5.1
5.0
5.0
4.9
4.7
4.7
4.7
4.6
4.6
4.5
4.5
4.4
4.2
4.1
3.9
3.9
3.8
3.7
3.5
3.4
3.2
2.8
2.7
2.6
2.6
2.6
2.4
2.0
1.9
1.0
Change
(pct pts)
4.4
13.2
12.2
11.1
12.7
12.5
14.1
12.5
9.5
11.4
11.2
11.9
10.5
10.7
11.2
9.2
9.8
9.5
16.0
10.9
10.5
9.5
10.9
9.9
9.8
8.7
9.5
9.5
11.4
9.1
9.4
8.9
9.1
7.1
7.5
8.8
6.9
7.2
7.7
7.7
8.2
8.7
8.3
6.9
7.3
7.1
6.7
7.3
6.6
7.7
6.7
8.5
6.5
4.8
4.8
4.1
February 2010
(%)
US
4.4
3.6
3.3
4.9
5.0
6.8
5.6
2.7
4.7
4.5
5.4
4.3
4.6
5.3
3.4
4.1
3.8
10.3
5.4
5.0
4.1
5.6
4.6
4.6
3.5
4.4
4.5
6.4
4.3
4.7
4.2
4.4
2.5
2.9
4.3
2.4
2.8
3.5
3.6
4.3
4.8
4.5
3.2
3.8
3.7
3.5
4.5
3.9
5.1
4.1
5.9
4.1
2.8
2.9
3.1
March 2007
(%)
Nevada
Florida
Alabama
Rhode Island
California
Michigan
South Carolina
Idaho
Illinois
North Carolina
DC
Georgia
Tennessee
Great Lakes
Delaware
New Jersey
Arizona
Puerto Rico
Ohio
Oregon
West Virginia
Kentucky
Pacific Northwest
Indiana
New Mexico
Washington
Massachusetts
Mississippi
Tristate
Missouri
Pennsylvania
Connecticut
Utah
Wyoming
New York
Hawaii
Virginia
Maryland
Colorado
Texas
Wisconsin
Maine
Montana
Louisiana
New Hampshire
Iowa
Minnesota
Vermont
Arkansas
Oklahoma
Alaska
Kansas
Nebraska
South Dakota
North Dakota
10
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Relative state performance since March 2007 …
Trends in unemployment since the peak unemployment rate
Percent of the civilian labor force
9.7
­1.1
­1.1
­0.8
­0.7
­0.7
­0.6
­0.4
­0.3
­0.3
­0.2
­0.2
­0.2
­0.2
­0.2
­0.2
­0.2
­0.1
­0.1
­0.1
­0.1
­0.1
­0.1
­0.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
­0.4
Change
(pct pts)
10.1
7.3
10.5
9.8
6.5
6.6
7.7
14.1
4.1
9.4
9.9
10.7
8.7
6.7
4.8
9.8
16.0
7.3
8.5
11.9
6.9
8.8
7.5
9.1
11.1
9.5
12.5
9.5
4.8
12.7
12.5
8.2
11.2
9.1
10.5
11.4
10.9
7.1
11.2
10.9
8.9
7.7
6.7
6.9
8.3
12.2
9.5
13.2
8.7
9.5
7.7
9.2
7.1
7.2
9.5
11.4
February 2010
(%)
US
8.4
11.6
10.6
7.2
7.3
8.3
14.5
4.4
9.7
10.1
10.9
8.9
6.9
5.0
10.0
16.2
7.4
8.6
12.0
7.0
8.9
7.6
9.2
11.1
9.5
12.5
9.5
4.8
12.7
12.5
8.2
11.2
9.1
10.5
11.4
10.9
7.1
11.2
10.9
8.9
7.7
6.7
6.9
8.3
12.2
9.5
13.2
8.7
9.5
7.7
9.2
7.1
7.2
9.5
11.4
Peak rate
(%)
Minnesota
Oregon
Indiana
Kansas
Vermont
Colorado
Michigan
North Dakota
Missouri
Pacific Northwest
Tennessee
Wisconsin
Oklahoma
South Dakota
New Jersey
Puerto Rico
Louisiana
Alaska
DC
Hawaii
New York
Wyoming
Tristate
Alabama
Arizona
California
Massachusetts
Nebraska
Rhode Island
South Carolina
Texas
Great Lakes
Connecticut
Georgia
Illinois
Kentucky
New Hampshire
North Carolina
Ohio
Pennsylvania
Arkansas
Iowa
Montana
Maine
Florida
Idaho
Nevada
New Mexico
Washington
Maryland
Delaware
Utah
Virginia
West Virginia
Mississippi
11
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Relative state performance since unemployment’s peak …
Worst quintile in terms of unemployment’s rise …
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Change in the unemployment rate since March 2007 (percentage points)
9
Nevada
8
Florida
7
Alabama
6
Nevada
5
Rhode Island
4
California
3
Michigan
2
South Carolina
1
Idaho
0
Illinois
­1
2007
2008
2009
2010
US
Source: US Department of Labor
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
12
Second worst quintile in terms of unemployment’s rise …
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Change in the unemployment rate since March 2007 (percentage points)
9
DC
8
Georgia
Tennessee
7
Great Lakes
6
Delaware
5
New Jersey
4
Arizona
3
Puerto Rico
2
Ohio
1
Oregon
0
West Virginia
­1
2007
2008
2009
2010
US
Source: US Department of Labor
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
13
Middle quintile in terms of unemployment’s rise …
Change in the unemployment rate since March 2007 (percentage points)
US
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
9
Kentucky
8
Pacific
Northwest
Indiana
7
6
New Mexico
5
Washington
4
Massachusetts
3
Mississippi
2
Tristate
1
Missouri
Pennsylvania
0
Connecticut
­1
2007
2008
2009
2010
Utah
Source: US Department of Labor
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
14
Second best quintile in terms of unemployment’s rise …
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Change in the unemployment rate since March 2007 (percentage points)
9
US
8
Wyoming
7
New York
6
Hawaii
5
Virginia
4
Maryland
3
Colorado
2
Texas
1
Wisconsin
0
Maine
­1
2007
2008
2009
2010
Montana
Source: US Department of Labor
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
15
Best quintile in terms of unemployment’s rise …
Change in the unemployment rate since March 2007 (percentage points)
US
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
9
Louisiana
8
New
Hampshire
Iowa
7
6
Minnesota
5
Vermont
4
Arkansas
3
Oklahoma
2
Alaska
1
Kansas
Nebraska
0
South Dakota
­1
2007
2008
2009
2010
North Dakota
Source: US Department of Labor
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
16
Job losses are ending …
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Employment across Louisiana versus the nation and the state average (ratio to 2000Q4 level)
1.30
1.30
Houma
1.25
1.25
Lafayette
1.20
1.20
1.15
1.15
Baton
Rouge
Alexandria
1.10
1.10
Shreveport
1.05
1.05
1.00
1.00
Lake
Charles
Monroe
0.95
0.95
0.90
0.90
New
Orleans
US forecast
0.85
0.85
US
0.80
0.80
0.75
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
0.75
Louisiana
forecast
Louisiana
Source: US Department of Labor
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
17
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Recovery signs are for real … three cures
 The financial panic has passed (things are back to
normal in the Fed’s back yard)
 Self­correcting adjustments (inflated house prices are
a thing of the past and most business are sitting
pretty for once)
 Policy help will be there for as long as is needed (0%
policy rate, Fed asset purchases and “political will”,
fiscal stimulus)
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
18
The panic that invaded the Fed’s back yard is gone
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Selected rates in the interbank term funding markets (percent)
6
6
5
5
4
4
3
3
2
3­month dollar­based Libor
2
3­month overnight indexed swap rate (OIS)
1
1
0
0
2007
2008
2009
2010
Sources: BBA; Federal Reserve Board
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
19
The weakest links are welcomed with open arms again
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Long­term yield on non­investment grade debt less 10­year Treasury yield (basis points)
2,000
2,000
1,800
1,800
1,600
1,600
1,400
1,400
CDX.HY
1,200
1,200
1,000
1,000
800
800
600
600
400
400
200
Ibbotson Associates JPMorgan Securities Inc.
1990
1992
1994
1996
1998
2000
2002
2004
200
2006
2008
2010
Sources: JPMorgan Chase & Co.; Bloomberg
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
20
Houses are affordable once again …
Nominal gross income per household and house prices (ratio to 1970 Q1 level)
13
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
12
LoanPerformance Corporation
11
10
13
12
11
Gross nominal income per household
10
9
9
8
8
7
7
6
6
5
5
4
4
3
3
2
2
1
1
0
0
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12
Sources: Loan Performance Corporation; US Department of Commerce
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
21
Businesses are profitable again …
Selected measures of profits (percent of nominal Gross Domestic Income)
14
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
13
14
Pretax GDP profits from current production
13
12
12
11
11
10
10
9
9
8
8
7
7
6
6
5
5
4
3
2
After­tax GDP profits from current production
After­tax S&P 500 operating earnings
4
3
2
1
1
0
0
1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007
Source: US Department of Commerce
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
22
Cap X spending has a pulse …
Business investment for capital goods and software (percent change from a year earlier)
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
20
20
Shaded area denotes real business spending for equipment & software
15
15
10
10
5
5
0
0
­5
­5
­10
­10
Industrial output of business equipment
Orders for capital goods excluding civilian aircraft and defense
Nonauto capital goods imports
Shipments of nondefense capital goods
­15
­20
­15
­20
­25
2000
­25
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Sources: US Department of Commerce; Federal Reserve Board
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
23
So, where are the jobs? Four realities …
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
 GDP surging
 Payrolls are still shrinking (survey of businesses,
including guesses about small businesses)
 Unemployment is falling, employment’s rising (survey
of households)
 Layoffs are falling (unemployment insurance)
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
24
… three (GDP, household surveys, and jobless claims) …
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Real GDP (chained 2005 dollars)
Employment (thousands)
13,500
140,000
13,000
138,000
12,500
GDP (left)
136,000
12,000
134,000
11,500
132,000
11,000
130,000
10,500
Employment, payroll concept based on the Household Survey (right)
Nonfarm payrolls (right)
10,000
2000
128,000
126,000
2002
2004
2006
2008
2010
Sources: US Department of Labor; US Department of Commerce
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
25
… harmonize
Real GDP (% ch from four quarters earlier) Initial claims for unemployment benefits (thousands weekly)
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
9
Jobless claims (right, scale is reversed)
50
8
100
7
150
6
200
5
250
4
300
3
350
2
400
1
450
0
500
­1
550
­2
Real GDP growth (left)
600
­3
650
­4
700
1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Sources: US Department of Labor; US Department of Commerce
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
26
It’s just as telling that the pendulum is in motion …
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Nonfarm payrolls (monthly change in thousands)
500
400
300
200
100
0
­100
­200
­300
­400
­500
­600
­700
­800
­900
­1,000
­1,100
Average monthly change over the past 12 months (line)
Monthly change in nonfarm payrolls
500
400
300
200
100
0
­100
­200
­300
­400
­500
­600
­700
­800
­900
­1,000
­1,100
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: US Department of Labor
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
27
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Inflation … R.I.P.
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
28
“Low levels of resource utilization”, the big idea
US unemployment rate (percent of the labor force)
12
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
11
12
Note: thin line represents forecast
11
The Fed's view about the near­term and
sustainable (Nairu) unemployment level¹
10
10
9
9
8
8
7
7
6
6
5
5
4
4
3
3
2
2
1
1
0
0
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
¹ Range of FOMC members’ views
Sources: NBER recession bars; US Department of Labor; Federal Reserve Board
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
29
Unemployment … what you don’t see counts too
Ratio of selected worker status to the population
Gave up and dropped out
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
0.68
0.66
Actively looking for a job and unemployed
0.64
0.62
0.68
0.66
0.64
Working part time because
can't find full time work
0.62
0.60
0.60
0.58
0.58
0.56
0.56
0.54
0.54
0.52
Working full time or by choice,
if part time
0.50
0.52
0.50
1948 1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008
Source: US Department of Labor
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
30
Deviations from a normal economy
Status of selected people in the labor pool (thousands)
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
18,000
16,000
18,000
Gave up looking and are doing other things
16,000
Actively looking for a job and unemployed
14,000
14,000
12,000
12,000
10,000
10,000
Working part time because
can't find full­time work
8,000
8,000
6,000
6,000
4,000
4,000
2,000
2,000
0
1990
0
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Source: US Department of Labor
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
31
Remember how recessions work on inflation … slowly
Core chain PCE inflation (annualized percent change)
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
10
9
10
% change from 12 months earlier
% change at an annual rate from six months earlier (thin line)
8
7
9
8
when the recessions are believed to have ended
7
6
6
5
5
4
4
3
3
2
2
1
1
0
0
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Source: US Department of Commerce
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
32
The textbook story about money creation …
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Federal Reserve assets (billions of dollars outstanding)
2,500
2,500
2,250
2,250
2,000
2,000
1,750
1,750
1,500
1,500
1,250
1,250
1,000
1,000
750
750
500
500
Fed loans
MBS holdings
GSE holdings
Treasuries
250
0
250
0
Aug 2007 Dec 2007 Apr 2008 Aug 2008 Dec 2008 Apr 2009 Aug 2009 Dec 2009
Source: Federal Reserve Board
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
33
… doesn’t apply in today’s case …
Federal Reserve liabilities (billions of dollars outstanding)
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
2,500
2,250
2,500
All factors absorbing reserves
2,250
2,000
2,000
1,750
1,750
Deposits at the Fed other than those of
depository institutions, including the
Treasury's supplementary financing
account
Reverse RPs, Treasury cash, and other
liabilities and capital
Excess reserves
1,500
1,500
1,250
1,250
1,000
1,000
750
750
500
500
250
250
0
Required reserves (includes vault cash
used to satisfy reserve requirements)
Currency in circulation excluding surplus
vault cash held by depository institutions
monetary base
0
Aug 2007 Dec 2007 Apr 2008 Aug 2008 Dec 2008 Apr 2009 Aug 2009 Dec 2009
Source: Federal Reserve Board
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
34
… because the Fed’s reserves remain it its vaults
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Monetary base (billions of dollars)
M2 (billions of dollars)
2,200
22,000
2,000
20,000
1,800
18,000
1,600
16,000
1,400
14,000
Monetary base (left scale)
M2 (right scale)
1,200
12,000
1,000
10,000
800
8,000
600
6,000
400
4,000
200
2,000
0
1970
0
1975
1980
1985
1990
1995
2000
2005
2010
Source: Federal Reserve Board
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
35
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
America’s living standard …
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
36
The rise in the median family income has stalled …
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Real median family income (2008 dollars)
70,000
70,000
60,000
60,000
50,000
50,000
40,000
40,000
30,000
30,000
20,000
20,000
10,000
10,000
0
0
1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007
Source: US Department of Commerce
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
37
Income distribution widens …
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Share of pre­tax income going to the top 10 percent of families (percent of total pre­tax income)
Source: Piketty and Saez (2003)
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
38
… labor “attachments” weaken post 1985 …
Unemployment rate change (pct points)
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
­4
­3
Real GDP (percent change from 12 months earlier)
Change in the unemployment rate (percentage
points) over the past 12 months
15
12
­2
9
­1
6
0
3
1
0
2
­3
3
­6
4
Percent change in real GDP over the past 12 months
­9
1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007
Source: US Department of Commerce
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
39
… pay diverges from productivity …
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Labor productivity in the nonfarm business sector and private hourly compensation (1985 = 1.0)
1.8
1.8
1.6
1.6
1.4
1.4
1.2
Labor productivity
1.2
1.0
1.0
0.8
0.8
0.6
Real private sector hourly compensation
0.6
0.4
0.4
0.2
0.2
0.0
0.0
1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007
Source: US Department of Commerce
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
40
Pay trends of males and females …
Real median income of persons (2008 dollars)
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
40,000
35,000
40,000
Real median income of males (2008 dollars)
35,000
30,000
30,000
25,000
25,000
20,000
20,000
15,000
15,000
10,000
10,000
5,000
Real median income of females (2008 dollars)
0
5,000
0
1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007
Source: US Department of Commerce
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
41
Tectonic shifts in manufacturing …
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
US factory jobs (millions of jobs)
20
20
19
19
18
18
17
17
16
16
15
15
14
14
13
13
12
12
11
11
1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007
Source: US Department of Commerce
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
42
Clue #1. The education premium widens
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Real wages and salaries of those with college degrees versus high school degrees (2008 dollars)
Source: Bureau of Labor Statistics
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
43
Clue #2. A secular rise in profits since the mid­1980s
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
After­tax adjusted* business profits (percent of nominal GDP)
10
10
9
9
8
8
7
7
6
6
5
5
4
4
3
3
2
2
1
1
0
0
1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007
* GDP basis—that is, capital consumption allowances and differences in inventory valuation
Source: US Department of Commerce
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
44
We’re only in the second inning …
US real GDP per capita (ratio to 2009 level)
(chained 2000 dollars)
42,000
0.80
0.60
China's per capita real GDP
1.00
India's per capita real GDP
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
1.20
35,000
28,000
21,000
0.40
14,000
0.20
7,000
0.00
0
1877 1887 1897 1907 1917 1927 1937 1947 1957 1967 1977 1987 1997 2007
Sources: US Department of Commerce; NBER
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
45
… of a story that will reconfigure the world’s economy …
Real GDP in selected regions (percent change from four quarters earlier)
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
600,000
500,000
400,000
Other
India
China
Current developed (North America, Japan, Western
Europe)
300,000
200,000
100,000
0
1990
2000
2010
2020
2030
2040
2050
Sources: US Department of Commerce; JPMorgan Chase & Co.
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
46
… look more like the distribution of the population
Distribution of real GDP (percent of global output)
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
1.00
0.80
Other
India
0.60
China
0.40
0.20
Current developed (North America, Japan, Western Europe)
0.00
2007
2017
2027
2037
2047
Sources: NBER recession bars; US Department of Commerce; various academic sources
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
47
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Conclusion … wanted, a little imagination
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
48
Wall Street (where we discount eternity) does …
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Market value of all publicly traded stocks (Wilshire 5000 index)
18,000
18,000
16,000
16,000
14,000
14,000
12,000
12,000
10,000
10,000
8,000
8,000
6,000
6,000
4,000
4,000
2,000
2,000
0
0
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
Source: Dow Jones
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
49
… because it’s the possible that counts
US real GDP (chained 2000 dollars)
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
16,000
15,000
14,000
16,000
Estimated potential level of
real GDP (GDP level when
unemployment is 5%
15,000
14,000
13,000
13,000
12,000
If the economy grows 4.4%, 2.4%, and 3.7% in 2010, 2011, and 2012, respectively, and 4% after that
11,000
10,000
9,000
8,000
7,000
12,000
11,000
10,000
9,000
8,000
7,000
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Sources: US Department of Commerce; Macroeconomic Advisers LLC
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
50
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Appendix 1. Fiscal foxes and red herrings
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
51
Wanted … a new conversation about fiscal issues
The airwaves are full of nonsense (like global warming, it’s not about the seasonal shifts)
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Tedious … we don’t need you to repeat the front pages
Pointless … we’re not going to cut the deficit in recession
Misdirected focus … the $1.5 trillion – $1 trillion due to recession – isn’t the issue
It’s the underlying (long­term) issue
Left on auto pilot, spending doubles as a share of the economy (CBO)
Five options:
(1) Double the tax burden … not happening
(2) Deficit finance … over the market’s (and economy’s) dead body
(3) Defer to an outsider (the government) to continually whittle health care spending
(4) Incentivize the industry to find the best solution … users need to be more involved
(5) Change the conversation about economics (raise economic literacy):
* Endogenize the retirement decision
* Spur national saving (eliminate the tax on saving, consumption­based income tax)
* Eliminate the corporate income tax (people pay taxes)
* Eliminate the employer deductibility of health care expenses
* Tort reform
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
52
Bonds to pundits: it’s not about today’s red ink …
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Federal budget balance (percent of GDP)
4
3
2
1
0
­1
­2
­3
­4
­5
­6
­7
10­year Treasury yield (percent)
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
Actual federal budget balance (% of GDP) on the left scale
10­year Treasury yield on the right scale
­8
­9
­10
­11
1960
1970
1980
1990
2000
2010
Sources: NBER recession bars; Congressional Budget Office; Federal Reserve Board
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
53
The red ink, scary of course, in absolute terms …
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Federal budget balance (billions of dollars over the most recent 12 months)
400
400
200
200
0
0
­200
­200
­400
­400
­600
­600
­800
­800
­1,000
­1,000
­1,200
­1,200
­1,400
­1,400
­1,600
­1,600
1879 1889 1899 1909 1919 1929 1939 1949 1959 1969 1979 1989 1999 2009
Sources: NBER recession bars; NBER Macroeconomic database
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
54
Scaled to the economy, recessions do a number on budgets
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Federal budget balance (percent of GDP)
0.05
0.05
0.00
0.00
­0.05
­0.05
­0.10
­0.10
­0.15
­0.15
­0.20
­0.20
­0.25
­0.25
­0.30
­0.30
1879 1889 1899 1909 1919 1929 1939 1949 1959 1969 1979 1989 1999 2009
Sources: NBER recession bars; NBER Macroeconomic database
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
55
… here’s how much …
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Actual budget balance and excluding the impact of the recession (percent of GDP)
4
3
2
1
0
­1
­2
­3
­4
­5
­6
­7
­8
­9
­10
­11
1960
4
3
2
1
0
­1
­2
­3
­4
­5
­6
­7
Actual federal deficit (% of potential GDP)
Cyclically­adjusted federal deficit (% of potential GDP)
­8
­9
­10
­11
1970
1980
1990
2000
2010
Sources: NBER recession bars; Congressional Budget Office; JPMorgan Chase & Co.
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
56
… or, if you want the numbers
Cyclical (temporary) factors boosting the federal deficit (billions of dollars, fiscal year basis)
2007
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
Latest estimate of the fiscal budget (January 2010)
% of GDP
­161
­1.2%
2008
2009
2010
­459
­1,414
­1,349
­9.9%
­9.2%
­3.2%
2011
­980
­6.5%
2012
­650
­4.1%
2013
­539
­3.2%
Three cy clical (temporary ) factors boosting the deficit (cost in billions of dollars):
Financial rescues
0
0
424
106
36
26
17
GSE rescue
TARP
0
0
0
0
291
133
26
80
21
15
16
10
14
3
Fiscal initiativ es
0
158
246
399
139
40
28
158
46
200
­5
404
­11
150
­10
50
­7
35
69
113
335
446
427
407
387
29
40
73
40
295
40
406
40
387
40
367
40
347
40
Fiscal stimulus (Economic Stimulus Act of 2008)
Fiscal stimulus (ARRA of 2009)
Recession impact on the budget
CBO's estimate of the cy clical contribution
Adjustment assuming 4.5% unemploy ment
Excluding the cyclical/financial rescue costs
% of GDP
Memoranda:
Nominal GDP
Debt held by the public
% of GDP
­132
­0.9%
13896.1
5035
36.2%
­228
­1.6%
14439.1
5803
40.2%
­449
­438
­418
­217
­147
­3.2%
­3.0%
­2.8%
­1.4%
­0.9%
14236
7,544
53.0%
14595
8,893
60.9%
14992
9,873
65.9%
15730
10,523
66.9%
16676
11,062
66.3%
Sources: Congressional Budget Office; JPMorgan Chase & Co.
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
57
CBO gives you the starting point …
CBO’s government spending projections (billions of dollars, fiscal year basis)
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
90,000
80,000
90,000
Debt service
80,000
70,000
70,000
60,000
60,000
Other
50,000
50,000
40,000
40,000
30,000
20,000
Medicare and Medicaid
Social Security
10,000
0
30,000
20,000
10,000
0
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080
Source: Congressional Budget Office
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
58
… and they say spending will outstrip revenues*
Long­term projections (billions of dollars, fiscal year basis)
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
90,000
90,000
Revenues (historical
average of 18.1% of GDP
and assuming CBO's GDP
assumption)
80,000
70,000
60,000
80,000
70,000
60,000
50,000
Debt service
50,000
40,000
Other
40,000
30,000
Medicare and Medicaid
30,000
20,000
Social Security
10,000
20,000
10,000
0
0
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080
Source: Congressional Budget Office
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
59
The electorate won’t accept (1) a doubled tax burden …
Long­term projections (percent of GDP)
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
40
35
40
Revenues (historical average of 18.1%)
30
25
30
Debt service
20
15
25
20
Other
10
5
35
15
10
Medicare and Medicaid
5
Social Security
0
0
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080
Source: Congressional Budget Office
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
60
The bond market won’t accept (2) a mounting debt service …
Long­term projections (billions of dollars, fiscal year basis)
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
140,000
140,000
120,000
100,000
80,000
60,000
40,000
Debt service
Revenues (historical
average of 18.1% of GDP
and assuming CBO's 2.2%
long­run GDP growth
assumption)
Other
Medicare and Medicaid
Social Security
20,000
120,000
100,000
80,000
60,000
40,000
20,000
0
0
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080
Source: Congressional Budget Office
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
61
The (3.5%) growth* option …
Long­term projections (billions of dollars, fiscal year basis)
140,000
Revenues (if the economy
grows 3.5%, just below the
3.75% historical average)
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
130,000
120,000
140,000
130,000
120,000
110,000
110,000
100,000
100,000
90,000
90,000
80,000
Debt service
80,000
70,000
60,000
Other
70,000
60,000
50,000
Medicare and Medicaid
50,000
40,000
30,000
20,000
40,000
Social Security
10,000
0
30,000
20,000
10,000
0
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080
Source: Congressional Budget Office
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
62
… keeps the spending share in line with revenues
Long­term projections (billions of dollars, fiscal year basis)
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
40
40
35
30
Revenues
Debt service
35
30
25
25
20
20
15
Other
10
5
15
10
Medicare and Medicaid
Social Security
0
5
0
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080
Source: Congressional Budget Office
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
63
The growth* option … why it’s an issue
Long­term projections (billions of dollars, fiscal year basis)
ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
20
20
Average historical growth = 3.75% annually
15
15
10
10
5
5
0
0
­5
­5
CBO assumption
­10
­10
­15
1851
­15
1876
1901
1926
1951
1976
2001
2026
2051
2076
Source: Congressional Budget Office
JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
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ECONOMIC OUTLOOK DISCUSSION, BUSINESS OUTLOOK SUMMIT IN MONROE, LA., APRIL 9, 2010
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JAMES GLASSMAN (JGLASSMAN@JPMORGAN.COM, o212–270–0778, o212­834­5093, m609­510­3723 )
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