Ahmad Ijaz
Center for Business and Economic Research
The University of Alabama
Alabama Economics Club
February 6, 2015
Center for Business and Economic Research
Serving Alabama Since 1930
•
Third quarter real GDP growth was revised up from 3.9 percent to 5.0
percent because of increase in business and consumer spending.
Growth in fourth quarter was 2.6 percent. For the year, the rate of
growth is estimated to be around 2.4 percent, followed by 3.1 percent in
2015.
•
Stronger consumer spending driven by lower gasoline prices and
generally better economic conditions is currently driving economic
growth and is expected to remain strong at least during the first half of
2015.
•
Slowest economic recovery since WWII. Economic growth in the next
few quarters will depend on pace of improvement in labor markets and
a relatively smooth transfer to a tighter monetary policy.
•
Median family income flat for two years, in 2013 it was 8% below 2007.
Weakness in wage gains and falling labor force participation rate will
continue to keep consumers cautious about their spending (lowest
participation rate since 1978).
2
•
Despite a pickup in employment growth in the second half of 2014,
there is still a considerable slack in the labor market, one factor
hindering increase in wages. Most of the job growth in recent years (3040 percent) has been in low wages sectors of the economy or were parttime/temporary.
•
Both consumers and businesses still continue to remain cautious about
their spending. Business inventories added 1.4 percent to the growth
(4.6 percent) in the 2nd quarter, and third quarter growth was also
influenced by a one time increase in defense spending.
•
Facing lack of wage and income growth, consumers taking on more
debt, household nonmortgage debt increasing from $3.1 trillion in 2013
to $3.4 trillion in 2014.
•
Slow job growth and high level of college related student debt is also
resulting in low household formation (only about 0.5 million in late 2013
and early 2014).
3
1.5
1
0.5
0
-0.5
-1
-1.5
-2
-2.5
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2008
2009
2010
2011
2012
2013
2014
2015
Source: Bureau of Economic Analysis, Bureau of Labor Statistics, and IHS Global Insight.
4
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
15
10
5
0
-5
-10
Total
Durables
Nondurables
Source: Bureau of Economic Analysis and IHS Global Insight.
5
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1997
1998
1996
1995
1994
1993
1992
1991
110
100
90
80
70
60
50
Source: University of Michigan and IHS Global Insight.
6
10
5
0
-5
-10
-15
Manufacturing
Construction
Leisure & Hospitality
Financial Activity
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
-20
Source: Bureau of Labor Statistics and IHS Global Insight.
7
20
15
Nonresidential
10
5
0
-5
Residential
-10
-15
-20
-25
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
-30
Source: Bureau of Economic Analysis and IHS Global Insight.
8
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
8
6
4
-6
State and Local
2
0
-2
-4
Federal
-8
Source: Bureau of Economic Analysis and IHS Global Insight.
9
10
11
12
13
14
15
16
(Percent change unless otherwise noted)
2012
2013
2014
2015
2016
Real GDP
2.3
2.2
2.4
3.1
2.7
Consumption
1.8
2.4
2.5
3.4
3.0
13.5
11.9
1.6
11.1
11.3
Commercial, Healthcare Structures
8.5
3.4
7.3
10.9
15.4
Nonresidential Fixed Investment
7.2
3.0
6.2
6.2
5.5
Federal Government
-1.8
-5.7
-2.0
-0.3
-0.4
State & Local Government
-1.2
0.5
0.9
1.2
0.9
Exports
3.3
3.0
3.2
3.9
3.3
Imports
2.3
1.1
3.8
5.3
5.6
Payroll Employment
1.7
1.7
1.8
2.0
1.8
Unemployment Rate
8.1
7.4
6.2
5.5
5.3
CPI Inflation
2.1
1.5
1.6
0.1
2.3
14.43
15.52
16.41
16.89
17.24
Residential Investment
Light Vehicle Sales (Millions)
4
18
100%
90%
80%
22.69
39.08
All Other
70%
19.85
Government
60%
50%
40%
30%
16.80
9.43
Leisure and
Hospitality
2.86
11.65
Education and
Healthcare Service
11.49
Professional and
Business Services
7.40
9.18
Retail Trade
20%
10%
6.91
11.81
17.77
Manufacturing
13.09
0%
1
Share of Alabama
GDP
2 Employment
Share of Alabama Non-farm
Source: Bureau of Economic Analysis, Bureau of Labor Statistics.
19
Not Seasonally
Adjusted
Seasonally
Adjusted
Civilian Labor Force
Percent Change from Year Ago Level
Absolute Change from Year Ago Level
2,098,563
-0.7%
-14,697
2,102,201
-0.6%
-11,696
Employed
Percent Change from Year Ago Level
Absolute Change from Year Ago Level
1,986,929
-0.3%
-6,109
1,982,424
0.0%
-1,840
Unemployed
Percent Change from Year Ago Level
Absolute Change from Year Ago Level
111,634
-7.1%
-8,588
119,777
-7.6%
-9,856
Alabama Unemployment Rate
Alabama Unemployment Rate (Dec. 2013)
U.S. Unemployment Rate
U.S. Unemployment Rate (Dec. 2013)
5.3%
5.7%
5.4%
6.5%
5.7%
6.1%
5.6%
6.7%
Source: Alabama Department of Labor, Labor Market Information Division.
20
Total Nonagricultural
Natural Resources and Mining
Construction
Manufacturing
Durable Goods Manufacturing
Nondurable Goods Manufacturing
Trade, Transportation and Utilities
Wholesale Trade
Retail Trade
Transportation, Warehousing and Utilities
Information
Financial Activities
Professional and Business Services
Educational and Health Services
Leisure and Hospitality
Other Services
Government
Federal Government
State Government
Local Government
December 2012 to
December 2013
16,700
-600
-2,400
3,000
2,400
600
5,400
1,100
2,300
2,000
0
1,500
1,500
3,300
7,900
-400
-2,500
-2,100
1,700
-2,100
December 2013 to
December 2014
31,800
100
7,200
7,100
6,700
400
-2,600
-200
-2,500
100
-400
-1,200
7,000
2,100
8,800
1,100
2,600
0
2,300
300
Source: Alabama Department of Labor, Labor Market Information Division.
21
2,100
12
2,000
10
Employment
1,900
8
1,800
6
1,700
4
Unemployment Rate
Nonfarm Employment
Employment (Thousands), Unemployment Rate (Percent), 1990-2014
Unemployment Rate
1,600
2
1,500
0
Source: Alabama Department of Labor.
22
102
1980
1981
1990
2001
2007
100
98
96
94
92
90
1
5
9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77 81 85
Number of months
23
69
67
United States
65
63
Alabama
61
59
57
55
Source: Bureau of Labor Statistics.
24
• 4th in U.S. in vehicle exports
• 4 OEMs in the state (Original Equipment Manufacturers)
• 5th in U.S. in vehicles manufactured
• Alabama’s three assembly plants produced 918,172
vehicles in 2013 and the number is expected to climb in
the coming years
• $6.5 billion in vehicles shipped to 99 countries in 2013
• Since 2011, Alabama has attracted more than 200 autorelated projects involving $4 billion in investment and
17,000 new jobs
Source: Economic Development Partnership of Alabama (EDPA) and Alabama Department of Commerce.
25
$5,000
$4,997
All
Merchandise
$3,991
$4,000
Transportation
Equipment
Chemicals
$3,000
$2,000
$1,000
Primary Metal
Manufacturing
$1,731
$817
$631
$517
$236
$0
U.S.
$121
$301 $286
Minerals and
Ores
Alabama
Source: International Trade Administration, U.S. Department of Commerce and U.S. Census Bureau.
26
Biosciencerelated
distribution,
34% (4,353)
Research,
testing &
med. labs,
30% (3,844)
Drugs &
pharmaceuticals,
10% (1,284)
Ag. feedstock &
chemicals, 13%
(1,651)
Med. devices & equip.,
13% (1,662)
Note: Number of employees in parenthesis.
Source: U.S. Bureau of Labor Statistics data from Batelle/BIO report.
27
$73,583
Drugs & pharmaceuticals
$72,338
Ag. feedstock & chemicals
Bioscience-related distr.
$66,255
Medical devices & equip.
$55,958
Research, test. & med. labs
$46,939
Bioscience industries average
$65,727
All private sector industries
$41,074
$0
$40,000
$80,000
Source: U.S. Bureau of Labor Statistics data from Batelle/BIO report.
28
Tax
Total Collection
Percent
Change
From
Year Ago
Total
$3,221,137,142
5.7%
$174,981,887
Income (Individual)
$1,069,145,493
4.4%
$45,019,105
$721,659,281
3.7%
$25,728,195
Sales
Change in
Revenue
from Year
Ago Level
Source: Alabama Department of Revenue.
29
Annual Percent Change
6
4
Alabama
GDP
2
0
-2
Nonfarm
Employment
-4
-6
2000
2004
2008
2012
2016
Source: U.S. Bureau of Economic Analysis, Alabama Department of Labor, and
Center for Business and Economic Research, The University of Alabama.
30
Annual Percent Change
10
5
0
-5
-10
-15
Total
-20
2000
Nondurable Goods
2004
2008
Durable Goods
2012
2016
Source: Alabama Department of Labor and Center for Business and Economic Research,
The University of Alabama
31
This Alabama GDP and employment forecast
summary is the CBER January 2014 forecast
Probability: Forecast (60 Percent) and Range (90 percent)
(Percent change)
Real GDP
2012
2013
2014
2015
2.3
2.0
2.0
2.4
1.0 to 2.5
2.0 to 3.5
0.7
1.7
0.3 to 1.7
0.8 to 2.0
1.3
2.5
range
Employment
0.8
1.0
range
Total Tax Receipts, FY
range
3.8
4.0
1.5 to 4.0
32
100
90
80
70
Index
60
50
45.4
47.7
52.9 51.9 51.2
55.6 55.5 54.2
57.4
40
30
20
10
0
Q1
Q2 Q3
2013
Q4
Q1
Q2 Q3
2014
Q4
Q1
2015
33
60
57.4
56.4
55
Alabama
50
45
United
States
40
35
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2012
2013
2014
2015
34
65
60
Sales
60.6
57.8
55
50
Profits
45
40
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2012
2013
2014
2015
35
58
56
54
Hiring
56.3
55.9
52
50
48
46
44
Capital Expenditures
42
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2012
2013
2014
2015
36
70
68.7
65
60
57.4
55
50
45
40
35
30
31.5
Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
37
100%
Non-Metro Areas
90%
22.31
23.02
5.16
5.07
70%
8.14
8.84
60%
8.85
50%
11.45
40%
1.41
2.26
2.45
2.66
80%
Montgomery
9.09
Huntsville
11.22
1.92
2.91
2.98
2.85
Florence-Muscle Shoals
Dothan
Decatur
31.12
26.65
10%
0%
Mobile
Gadsden
30%
20%
Tuscaloosa
Birmingham-Hoover
Auburn-Opelika
2.20
1.99
GDP
3.03
2.43
Anniston-Oxford-Jacksonville
Employment
Source: Alabama Department of Labor and U.S. Bureau for Economic Analysis.
38
All Industry Total
(Millions of chained 2009 dollars)
Alabama
Anniston-Oxford
Auburn-Opelika
Birmingham-Hoover
Daphne-Fairhope-Foley
Decatur
Dothan
Florence-Muscle Shoals
Gadsden
Huntsville
Mobile
Montgomery
Tuscaloosa
2013
180,727
3,518
4,293
55,913
5,909
5,063
4,583
4,255
2,518
21,645
17,085
15,489
9,437
Percent Change
2004 to
2012 to
2013
2013
7.5
0.8
-3.1
-3.0
28.9
3.4
3.0
-0.8
23.3
4.1
0.5
0.6
-1.4
1.7
12.1
3.9
-5.0
-3.1
21.9
0.6
18.2
2.9
1.2
0.3
20.5
0.4
Source: U.S. Bureau of Economic Analysis.
39
Metro Area
Alabama
Anniston-Oxford
Auburn-Opelika
Birmingham-Hoover
Daphne-Fairhope-Foley
Decatur
Dothan
Florence-Muscle Shoals
Gadsden
Huntsville
Mobile
Montgomery
Tuscaloosa
Total Merchandise
Exports
$19.3 billion
$192.7 million
$395.4 million
$1.9 billion
$515.3 million
$673.1 million
$374.7 million
$229.7 million
$54.6 million
$1.5 billion
$1.5 billion
$1.7 billion
NA
Source: International Trade Administration, U.S. Department of Commerce.
40
Alabama
Anniston-Oxford
Auburn-Opelika
Birmingham-Hoover
Daphne-Fairhope-Foley
Decatur
Dothan
Florence-Muscle Shoals
Gadsden
Huntsville
Mobile
Montgomery
Tuscaloosa
2013
100.0
1.1
2.4
11.1
3.1
4.0
2.2
1.4
0.3
9.0
9.2
9.9
NA
2012
100.0
1.2
2.6
11.4
NA
3.8
1.6
0.8
0.2
8.8
11.2
10.4
NA
Source: International Trade Administration, U.S. Department of Commerce.
41
5.4
United States
Alabama
Anniston-Oxford
Auburn-Opelika
Birmingham-Hooover
Decatur
Dothan
Florence-Muscle Shoals
Gadsden
Huntsville
5.3
5.7
5.8
6.3
Dec-14
Dec-13
4.1
4.5
4.6
4.9
5.3
5.6
5.4
5.6
5.6
5.1
5.6
4.7
4.9
6.3
6.2
6.6
Mobile
5.5
5.9
Montgomery
Tuscaloosa
6.5
4.8
5.4
42
United States
Alabama
Anniston-Oxford
Auburn-Opelika
Birmingham-Hoover
Daphne-Fairhope-Foley
Decatur
Dothan
Florence-Muscle Shoals
Gadsden
Huntsville
Mobile
Montgomery
Tuscaloosa
$63,900
$54,100
$51,600
$59,700
$61,000
$68,800
$53,500
$51,700
$52,100
$46,900
$69,700
$53,900
$59,600
$54,400
Note: Chilton and Walker counties are not included in the estimate for the BirminghamHoover metro, Henry County is not included in the Dothan, and Pickens County
in the Tuscaloosa metro estimate.
Source: U.S. Department of Housing and Urban Development, Office of Economic Affairs,
Economic and Market Analysis Division.
43
7/1/2013
Alabama
Anniston-Oxford
Auburn-Opelika
Birmingham-Hoover
Daphne-Fairhope-Foley
Decatur
Dothan
Florence-Muscle Shoals
Gadsden
Huntsville
Mobile
Montgomery
Tuscaloosa
4,833,722
116,736
150,933
1,140,300
195,540
153,374
147,691
147,317
103,931
435,737
414,079
373,510
235,628
7/1/2010 to 7/1/2013
Number
Percent
Change
Change
48,152
-1,712
10,083
11,204
12,317
-488
1,815
88
-567
16,306
789
-1,698
5,154
1.0
-1.4
7.2
1.0
6.7
-0.3
1.2
0.1
-0.5
3.9
0.2
-0.5
2.2
Source: U.S. Census Bureau.
44
Nonfarm Employment
Alabama
Anniston-Oxford
Auburn-Opelika
Birmingham-Hoover
Decatur
Dothan
Florence-Muscle Shoals
Gadsden*
Huntsville*
Mobile*
Montgomery
Tuscaloosa
Net Jobs in Metropolitan Areas
Net Jobs in Nonmetro Counties
2007 or 2008
Peak Year
2,005,700
53,400
54,800
533,400
58,600
63,100
57,300
38,000
214,300
184,600
178,000
98,500
Job Loss to 2014
Number
Percent
54,000
2.69%
8,100
15.17%
-6,300
-11.50%
13,500
2.53%
4,400
7.51%
5,300
8.40%
0
0.00%
900
2.37%
-2,700
-1.26%
11,600
6.28%
7,500
4.21%
-3,300
-3.35%
39,000
15,000
* Gadsden, Huntsville and Mobile employment peaked in 2008; all others saw peaks in 2007.
Note: Nonfarm employment (jobs) is by place of work.
Source: Alabama Department of Labor and U.S. Bureau of Labor Statistics.
45
Total Nonfarm
Natural Resources and Mining
Construction
Manufacturing
Durable Goods Manufacturing
Nondurable Goods Manufacturing
Trade, Transportation and Utilities
Wholesale Trade
Retail Trade
Transportation, Warehousing and Utilities
Information
Financial Activities
Professional and Business Services
Educational and Health Services
Leisure and Hospitality
Other Services
Government
Federal Government
State Government
Local Government
December 2012 to
December 2013
7,900
-200
-300
1,300
1,100
200
3,100
500
1,500
1,100
-100
1,100
-600
1,000
3,400
500
-1,300
-200
300
-1,400
December 2013 to
December 2014
5,000
0
600
1,900
1,700
200
-1,900
-600
-1,600
300
0
700
3,500
1,200
-200
100
-900
600
-1,200
-300
Source: Alabama Department of Labor, Labor Market Information Division.
46
102
100
98
96
94
92
90
1990
88
2001
86
2007
84
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85
47
Alabama
57.4
Birmingham-Hoover
58.1
Huntsville
54.9
Mobile
58.2
Montgomery
59.4
52.0
54.0
56.0
58.0
60.0
49
100
90
80
Index
70
60
54.4 53.3 53.2
50.7 52.7
57.0 56.9
53.9
58.1
50
40
30
20
10
0
Q1 Q2
2013
Q3
Q4 Q1
Q2 Q3
2014
Q4 Q1
2015
50
National Economic Outlook
Better
42.3
Remain the Same
36.5
Worse
21.2
0
10
20
30
40
50
Alabama Economic Outlook
Better
44.2
Remain the Same
38.5
Worse
17.3
0
10
20
30
40
50
51
Sales
Increase
59.6
No Change
19.2
Decrease
21.2
0
10
20
30
40
50
60
Profits
Increase
51.9
No Change
30.8
Decrease
17.3
0
10
20
30
40
50
60
52
Hiring Plans
Increase
34.6
No Change
51.9
Decrease
13.5
0
10
20
30
40
50
60
Capital Expenditures
Increase
34.6
No Change
51.9
Decrease
13.5
0
10
20
30
40
50
60
53
Anniston-Oxford
Auburn-Opelika
Birmingham-Hoover
Daphne-Fairhope-Foley
Decatur
Dothan
Florence-Muscle Shoals
Gadsden
Huntsville
Mobile
Montgomery
Tuscaloosa
Nonfarm Employment
Real GDP
Forecast, Percent Forecast, Percent
0.3
1.3
2.5
3.7
1.0
1.5
1.2
3.0
0.4
1.0
1.4
1.8
1.0
3.5
1.1
1.4
2.0
3.8
1.2
3.2
0.9
1.4
2.2
3.8
Source: U.S. Department of Commerce, Alabama Department of Labor, and Center for
Business and Economic Research, The University of Alabama, December 2014.
53
Source: Center for Business and Economic Research, ABCI Panelists’ Poll, Nov. 2014.
1
Education/Training
(Quality of education; workforce development)
2
Government
(Federal, state & local government; tax reform; prison
reform; state constitution)
3/4
Economy/Businesses
(Economic & business growth; small businesses)
3/4
Jobs
(Job growth; better paying jobs)
5
Healthcare
(Healthcare cost; Affordable Healthcare Act; Medicaid,
Medicare)
6
Infrastructure
(Infrastructure; roads and bridges)
Source: Center for Business and Economic Research, ABCI Panelists’ Poll, Nov. 2014.
54
1
Company Finances
& Development
(Profitability; business costs; availability of credit; business
growth; competition; concern about customers)
2
Government
(Federal, state & local government; taxation; regulations;
uncertainty)
3
Workforce
(Lack of skilled workers; retaining qualified employees)
4
Economy
(Economic recovery & growth; consumer spending)
5
Healthcare
(Healthcare cost; Affordable Healthcare Act)
Note: Companies facing no issues was mentioned by 1.0% of respondents.
Source: Center for Business and Economic Research, ABCI Panelists’ Poll, Nov. 2014.
55
Center for Business and Economic Research
Culverhouse College of Commerce
The University of Alabama
Box 870221
Tuscaloosa, Alabama 35487-0221
205.348.6191
http://cber.cba.ua.edu
Serving Alabama Since 1930
56