Babson Capital/UNC Charlotte
Economic Forecast
March 11, 2014
Outline for Today
•
•
•
•
•
•
•
Review of 2013
Positive Economic Signs
Negative Economic Signs
North Carolina Outlook for 2014
The Employment Picture
Regional Perspective
Housing Trends
Current
Expansion
• Began July 2009
• 56 months
• 7th longest of 33 total expansions since
December 1854
North Carolina in 2013
Quarterly
Growth Rates in
Forecasted RGSP
4.1
3.6
4
3
2.3
2
1
-0.1
0
2013 I
2013 II
2013 III
2013 IV
2013
Sector Analysis
0.8
0.0
3.7
3.2
Total Real GSP Growth 2.5 %
9.1
Durables 0.7
10.7
Percent of Total Real GSP
Agriculture 22.7
Mining 1.2
TWU 4.3
Construction 1.9
Nondurables -0.5
5.0
Wholesale Trade 3.6
5.8
Retail Trade 1.8
3.6
Information 2.0
21.7
FIRE 2.9
10.6
B&P Services 4.1
7.3
E&H Services 4.9
3.2
2.0
H&L Services 2.1
Other Services 2.9
Government 1.7
13.3
Percent of Real Sector Growth
Percent of Total Employment
Total Employment Growth 1.6%
0.1
3.1
4.1
5.8
Mining 0.0
TWU 3.8
Construction -2.2
5.1
Nondurables 0.2
11.5
Retail Trade 2.7
2013Year-End
Employment
Trends
Durables 0.4
Wholesale Trade 1.1
Information 7.6
FIRE 1.3
4.3
1.8
5.0
13.8
B&P Services 4.1
13.8
E&H Services 1.4
10.6
L&H Services 2.1
3.5
Other Services 1.0
17.5
Government -0.1
Percent of Employment Growth
64,500 Net
Jobs
2013
North Carolina
Unemployment Rate
10
9.5
9
8.5
December Rate 6.9%
8
7.5
7
6.5
6
JAN
FEB
MAR
APR
MAY
JUN
JUL
NC Seasonally Adjusted
AUG
SEP
OCT
NC Seasonally Adjusted Forecast
NOV
DEC
US Seasonally Adjusted
Positive Indicators
•
•
•
•
•
•
•
•
Housing Stock/Prices
Interest Rates
Inflation
Consumer Credit
Consumer Confidence
Dollar
Gas Prices
Budget Deficit
0
Jan
Oct
Jul
Apr
Jan-13
Oct
Jul
Apr
12
Jan-12
Oct
Jul
Apr
Jan-11
Oct
Jul
Apr
Jan-10
Oct
Jul
Apr
Jan-09
Oct
Jul
Apr
Jan-08
Oct
Jul
Apr
Jan-07
14
Oct
Jul
Apr
Jan-06
Oct
Jul
Apr
Jan-05
U.S. Monthly
New Home Inventory
(Seasonally Adjusted)
16
January 2009
12.4 Months Supply
December 2014
4.7 Months Supply
10
8
6
4
2
Monthly
Federal Funds Rate 1996-2013
7
6
5
4
3
2
1
0
Current Rate
0 - .25%
Percentage Changes
in CPI 1949-2013
15
Annual Increases
13
11
9
7
5
3
1
-1
2009
2010
2011
2012
2013
-0.4%
1.6%
3.0%
1.7%
1.5%
20
5
1/1/1980
10/1/1980
7/1/1981
4/1/1982
1/1/1983
10/1/1983
7/1/1984
4/1/1985
1/1/1986
10/1/1986
7/1/1987
4/1/1988
1/1/1989
10/1/1989
7/1/1990
4/1/1991
1/1/1992
10/1/1992
7/1/1993
4/1/1994
1/1/1995
10/1/1995
7/1/1996
4/1/1997
1/1/1998
10/1/1998
7/1/1999
4/1/2000
1/1/2001
10/1/2001
7/1/2002
4/1/2003
1/1/2004
10/1/2004
7/1/2005
4/1/2006
1/1/2007
10/1/2007
7/1/2008
4/1/2009
1/1/2010
10/1/2010
7/1/2011
4/1/2012
1/1/2013
1980-2013 U.S.
Household Debt
Payments as a Percent of Income
Peak 2007 III 13.18%
15
10
Current 9.93%
0
Consumer Confidence
120
•October 1992
54.6
112.6
•March 2009
25.0
•January 2014
81.7
95.2
100
81.5 81.7
80
70.4
63.3
62.8
56.9
60
47.4
44.9
51.0
46.0
64.9
59.2
57.7
54.1
69.6
65.4
53.5
40.8
38.0
40
25.0
13-Dec
Feb 13
Aug 12
Jan 12
Jul 11
Mar 11
Aug 10
Apr 10
Jan 10
May 09
Dec 08
Sep 08
Jul 07
0
Apr 08
20
2000-2013
Dollar Price of Euro
1.7
1.5
1.3
$1.36
1.1
0.9
0.7
0.5
$0.87
February
January
December 2013
3.42
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
3.38 3.39
May 2013
3.74 3.78
April 2013
March 2013
3.81
February 2013
January 2013
3.50
3.52
December 2012
3.91
November 2012
3.78
October 2012
September 2012
3.79
August 2012
3.44
3.60
July 2012
3.64
June 2012
3.91 3.96
May 2012
April 2012
March 2012
4.00
February
January
Monthly Gas Prices
2012-2014
5.00
3.64 3.68 3.69 3.66 3.64
3.60
3.43
3.32 3.36 3.39
3.00
2.00
1.00
0.00
Effect of Energy
Price Increase on U.S. Economy
• Annual Transportation Usage
– 187 billion gallons per year
• Annual Total Usage
– 288 billion gallons per year
• Effect of a $.50 increase in price
– Transportation
– Total
$93.5 billion per year
$144.0 billion per year
1980 – 2023
U.S. Budget Deficit
1000
2013 Budget Deficit
$672 billion
2015 Budget Deficit
$388 billion
500
0
-500
-1000
2023 f
2021 f
2019 f
2017 f
2015 f
2013 f
2011
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
Year
-1500
Negative Indicators
• Excess Reserves
• Trade Deficit
• Tax Increases
2600
2400
2200
2000
1800
1600
1400
1200
1000
800
600
400
200
0
1/1/2008
3/1/2008
5/1/2008
7/1/2008
9/1/2008
11/1/2008
1/1/2009
3/1/2009
5/1/2009
7/1/2009
9/1/2009
11/1/2009
1/1/2010
3/1/2020
5/1/2010
7/1/2010
9/1/2010
11/1/2010
1/1/2011
3/1/2011
5/1/2011
7/1/2011
9/1/2011
11/1/2011
1/1/2012
3/1/2012
5/1/2012
7/1/2012
9/1/2012
11/1/2012
1/1/2013
3/1/2013
5/1/2013
7/1/2013
9/1/2013
11/1/2013
1/1/2014
2008 – 2014
Banking System Excess Reserves
February Excess Reserves
$2,517 billion
1992-2013
U.S. Trade Deficits
0
-100000
2009 Trade Deficit
$382 Billion
-200000
-300000
-400000
2008 Trade Deficit
$681 Billion
-500000
-600000
2013TradeDeficit
$475 Billion
2006Trade Deficit
$799 Billion
-700000
-800000
22
21
20
19
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
-900000
Spending Cuts
2014 - 2015
• Fiscal Year 2014
• Original Sequestration
– $100 billion
• New Sequestration
– $50 billion
• Fiscal Year 2015
• Original Sequestration
– $100 billion
• New Sequestration
– $75 billion
North Carolina Forecast
2014
Quarterly
Growth Rates in
Forecasted RGSP
3.5
4
2.9
3
2.8
2.1
2
1
0
2014 I
2014 II
2014 III
2014 IV
2014
Sector Analysis
0.9
0.0
3.7
3.2
Total Real GSP Growth 3.0 %
9.1
Durables 2.9
10.7
Percent of Total Real GSP
Agriculture 11.9
Mining 1.9
TWU 3.4
Construction 4.2
Nondurables 2.5
5.0
Wholesale Trade 3.6
5.8
Retail Trade 2.4
3.6
Information 2.1
21.8
FIRE 3.3
10.5
B&P Services 1.8
7.2
E&H Services 2.2
3.1
2.0
H&L Services 1.7
Other Services 4.1
Government 3.8
13.4
Percent of Real Sector Growth
Percent of Total Employment
Total Employment Growth 1.5%
0.1
3.2
4.2
5.8
Mining -4.4
TWU 3.3
Construction 3.7
5.0
Nondurables 0.3
11.5
Retail Trade 1.8
2014 Year-End
Employment
Trends
Durables 1.7
Wholesale Trade 3.2
Information 0.7
FIRE 0.1
4.4
1.8
5.0
13.8
B&P Services 1.7
13.8
E&H Services 1.7
10.7
L&H Services 1.8
3.5
Other Services 2.3
17.2
Government 0.0
Percent Employment Growth
60,000 Net
Jobs
2013-2014
North Carolina
Unemployment Rate
11
10
9
December Rate 6.9%
8
7
6
5
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
NC Seasonally Adjusted
NC Seasonally Adjusted Forecast
US Seasonally Adjusted
Employment Picture
2007-2013
United States
Payroll Employment
• Employment Decline:
• Employment Gain:
• Percent Recovered:
-8,736,000
7,557,000
86.5%
2007-2013
North Carolina
Payroll Employment
• Employment Decline:
• Employment Gain:
• Percent Recovered:
-334,600
243,900
72.9%
What’s the Target?
3,000,000 Jobs per Year
250,000 Jobs per Month
US Job Growth 2012
2,193,000 jobs
182,750 per month
(Second Largest Job Growth Since 1999)
US Job Growth 2013
2,186,000 jobs
182,150 per month
(Third Largest Job Growth Since 1999)
U.S. Job Growth
1990 - 2013
3,844
4,000
2,810
2,810
3,000
3,391
3,170
3,014
2,157
2,000
2,019
1,944
2,484
2,071
1,168
2,103
1,022
1,115
1,000
2,193
2,186
62
0
-1,000
-532
-848
-2,000
-1,757
-3,000
-3,617
-4,000
-5,000
-5,052
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
-6,000
NC Job Growth
1990 - 2013
153.4
92.6
116.3 108.6
95.8
115.4
102.4
80.7
87.1
83.8
89.9
73.4
65.2
-10.9
64.5
45.8 50.4
30.2
-22.4-24.9
-83.2
-117.6
-204.2
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
-300
NC Job Growth 2012
89,900 jobs
7,490 per month
(Second Largest Job Growth Since 1998)
NC Job Growth 2013
64,500 jobs
5,375 per month
(Sixth Largest Job Growth Since 1998)
July 2013
Unemployment Rates
State
NEVADA
ILLINOIS
NORTH CAROLINA
RHODE ISLAND
GEORGIA
MICHIGAN
CALIFORNIA
NEW JERSEY
MISSISSIPPI
TENNESSEE
Rate
9.5
9.2
8.9
8.9
8.8
8.8
8.7
8.6
8.5
8.5
December 2013
Unemployment Rates
State
RHODE ISLAND
NEVADA
ILLINOIS
CALIFORNIA
MICHIGAN
KENTUCKY
MISSISSIPPI
TENNESSEE
ARIZONA
ARKANSAS
CONNECTICUT
GEORGIA
NEW JERSEY
MASSACHUSETTS
OHIO
OREGON
NEW YORK
NORTH CAROLINA
INDIANA
PENNSYLVANIA
WASHINGTON
SOUTH CAROLINA
Rate
9.3
9.0
8.9
8.3
8.3
7.9
7.8
7.7
7.6
7.4
7.4
7.4
7.2
7.1
7.1
7.1
7.0
6.9
6.8
6.8
6.7
6.6
2013
North Carolina
Labor Force
4,800,000
4,780,000
4,760,000
4,740,000
4,720,000
4,700,000
4,680,000
4,660,000
4,640,000
4,620,000
4,600,000
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2013
North Carolina
Unemployment
440,000
420,000
400,000
380,000
360,000
340,000
320,000
300,000
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2013
North Carolina
Employment
4,400,000
4,390,000
4,380,000
4,370,000
4,360,000
4,350,000
4,340,000
4,330,000
4,320,000
4,310,000
4,300,000
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
NC Number of
Unemployed per Job Opening
(Not Seasonally Adjusted)
5
January 2010
3.97 Persons per Job Opening
4
December 2013
1.56 Persons per Job Opening
3
2
70
67
64
61
58
55
52
49
46
43
40
37
34
31
28
25
22
19
16
10
7
4
1
0
13
January 2008
1.21 Persons per Job Opening
1
Regional Perspective
MSA Jobs
Gained
Geography
Jobs Gained
Percentage
256.6
0.77
Charlotte-Gastonia-Rock Hill NC-SC MSA
93.5
1.29
Raleigh-Cary MSA
47.8
1.44
Durham-Chapel Hill MSA
20.5
1.45
Greensboro-High Point MSA
14.0
0.38
Asheville MSA
8.4
0.76
Wilmington MSA
7.4
0.55
Winston-Salem MSA
7.2
0.43
Greenville MSA
5.3
1.23
Burlington MSA
3.4
0.52
Hickory-Lenoir-Morganton MSA
2.5
0.13
Fayetteville MSA
2.5
1.92
Goldsboro MSA
1.0
0.32
-1.5
-0.21
North Carolina
Rocky Mount MSA
MSA Jobs
Percentage
Geography
Jobs Gained
Percentage
256.6
0.77
2.5
1.92
Durham-Chapel Hill MSA
20.5
1.45
Raleigh-Cary MSA
47.8
1.44
Charlotte-Gastonia-Rock Hill NC-SC MSA
93.5
1.29
Greenville MSA
5.3
1.23
Asheville MSA
8.4
0.76
Wilmington MSA
7.4
0.55
Burlington MSA
3.4
0.52
Winston-Salem MSA
7.2
0.43
Greensboro-High Point MSA
14
0.38
Goldsboro MSA
1.0
0.32
Hickory-Lenoir-Morganton MSA
2.5
0.13
-1.5
-0.21
North Carolina
Fayetteville MSA
Rocky Mount MSA
MSA
Number of Unemployed
Number of Unemployed (not seasonally-adjusted)
January 2008
Area Name
December 2013
Number of Unemployed
Number of Unemployed
Asheville, NC Metropolitan Statistical Area, NC
9,204
10,682
Burlington, NC Metropolitan Statistical Area, NC
3,886
4,601
Charlotte-Gastonia-Concord, NC-SC Metropolitan Statistical A, NC
45,910
60,303
Durham-Chapel Hill, NC Metropolitan Statistical Area, NC
10,931
13,287
Fayetteville, NC Metropolitan Statistical Area, NC
8,560
12,464
Goldsboro, NC Metropolitan Statistical Area, NC
2,648
3,588
20,140
25,011
4,794
6,398
11,584
11,718
Jacksonville, NC Metropolitan Statistical Area, NC
3,137
4,359
Raleigh-Cary, NC Metropolitan Statistical Area, NC
22,717
30,963
Rocky Mount, NC Metropolitan Statistical Area, NC
4,970
6,363
Wilmington, NC Metropolitan Statistical Area, NC
9,225
12,669
11,981
14,403
Greensboro-High Point, NC Metropolitan Statistical Area, NC
Greenville, NC Metropolitan Statistical Area, NC
Hickory-Lenoir-Morganton, NC Metropolitan Statistical Area, NC
Winston-Salem, NC Metropolitan Statistical Area, NC
MSA
Number of Job Openings
Number of Job Openings
January 2008
Area Name
December 2013
Number of Job Openings
Number of Job Openings
Asheville, NC Metropolitan Statistical Area, NC
7,082
9,961
Burlington, NC Metropolitan Statistical Area, NC
2,173
2,558
Charlotte-Gastonia-Concord, NC-SC Metropolitan Statistical A, NC
54,910
49,251
Durham-Chapel Hill, NC Metropolitan Statistical Area, NC
19,724
15,268
Fayetteville, NC Metropolitan Statistical Area, NC
7,487
7,795
Goldsboro, NC Metropolitan Statistical Area, NC
1,875
1,538
Greensboro-High Point, NC Metropolitan Statistical Area, NC
8,673
17,695
Greenville, NC Metropolitan Statistical Area, NC
5,315
4,619
Hickory-Lenoir-Morganton, NC Metropolitan Statistical Area, NC
4,861
5,151
Jacksonville, NC Metropolitan Statistical Area, NC
2,122
2,893
Raleigh-Cary, NC Metropolitan Statistical Area, NC
34,937
33,956
Rocky Mount, NC Metropolitan Statistical Area, NC
2,119
2,274
Wilmington, NC Metropolitan Statistical Area, NC
6,717
7,868
Winston-Salem, NC Metropolitan Statistical Area, NC
9,369
8,072
MSA
Job Supply and Demand
Number of Unemployed to Number of Job Openings
January 2008
Area Name
December 2013
Number of Unemployed per Job Opening
Number of Unemployed per Job Opening
Asheville, NC Metropolitan Statistical Area, NC
1.30
1.07
Burlington, NC Metropolitan Statistical Area, NC
1.79
1.80
Charlotte-Gastonia-Concord, NC-SC Metropolitan Statistical A, NC
0.84
1.22
Durham-Chapel Hill, NC Metropolitan Statistical Area, NC
0.55
0.87
Fayetteville, NC Metropolitan Statistical Area, NC
1.14
1.60
Goldsboro, NC Metropolitan Statistical Area, NC
1.41
2.33
Greensboro-High Point, NC Metropolitan Statistical Area, NC
2.32
1.41
Greenville, NC Metropolitan Statistical Area, NC
0.90
1.39
Hickory-Lenoir-Morganton, NC Metropolitan Statistical Area, NC
2.38
2.27
Jacksonville, NC Metropolitan Statistical Area, NC
1.48
1.51
Raleigh-Cary, NC Metropolitan Statistical Area, NC
0.65
0.91
Rocky Mount, NC Metropolitan Statistical Area, NC
2.35
2.80
Wilmington, NC Metropolitan Statistical Area, NC
1.37
1.61
Winston-Salem, NC Metropolitan Statistical Area, NC
1.28
1.78
Housing in 2013
US Residential
Construction (NIPA) 2007-2013
800
749.3
717.3
700
671.7
616.4
600
565.5
532.6
531
IV
507.4
III
538.4
513.2
490.3
500
468.8
452.1
443.7
405.5
392
376.3
400
395.2 383.1 400.8
418.4 425.7
365.6 374.7
377.1 381
386.8
398.1
300
200
100
2007
2008
2009
2010
2011
2012
II
I
IV
III
II
I
IV
III
II
I
IV
III
II
I
IV
III
II
I
IV
III
II
I
IV
III
II
I
0
2013
US Residential
Building Permits
Year
Total Permits
Single Family Permits
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
948.8
1,094.9
1,199.1
1,371.6
1,332.5
1,425.6
1,441.1
1,612.3
1,663.5
1,592.3
1,636.7
1,747.7
1,889.2
2,070.1
2,155.3
1,838.9
1,398.4
905.4
583.0
604.6
624.1
753.5
910.7
986.5
1,068.5
997.3
1,069.5
1,062.4
1,187.6
1,246.7
1,198.1
1,235.6
1,332.6
1,460.9
1,613.4
1,682.0
1,378.2
979.9
575.6
441.1
447.3
418.5
2012
829.7
518.7
2013
957.0
608.5
NC Residential
Building Permits
Year
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013*
Total Permits
79,824
79,226
93,077
97,910
99,979
85,777
54,652
33,800
33,889
32,804
48,692
50,510
* Based on 11 months of data
Single Family Permits
66,400
66,883
77,147
84,975
82,672
70,339
39,082
25,388
26,047
24,863
29,945
35,399
0
Oct
Jul
Apr
Jan-13
Oct
Jul
Apr
12
Jan-12
January 2009
12.4 Months Supply
Oct
Jul
Apr
Jan-11
Oct
Jul
Apr
Jan-10
Oct
Jul
Apr
Jan-09
Oct
Jul
Apr
Jan-08
14
Oct
Jul
Apr
Jan-07
Oct
Jul
Apr
Jan-06
Oct
Jul
Apr
Jan-05
U.S. Monthly
New Home Inventory
(Seasonally Adjusted)
16
November 2013
4.3 Months Supply
10
8
6
4
2
US Case Schiller
Housing Price Index
(Composite 20)
Month
Index
Condition
Percent Change
January 2000
100.00
Base
July 2006
206.52
Peak
106.5%
March 2012
134.07
Trough
-35.1%
December 2012
146.08
December 2013
165.69
9.0%
Current
13.4%
Charlotte Case Schiller
Housing Price Index
Month
Index
Condition
Percent Change
January 2000
100.00
Base
July 2007
135.61
Peak
35.6%
January 2012
108.39
Trough
-20.1%
December 2012
115.05
December 2013
124.07
6.1%
Current
7.8%
Keys to Watch
•
•
•
•
•
•
Consumer Confidence
Consumer Debt
Housing Prices
Excess Reserves
US Monthly Job Growth (1st Friday)
Gasoline Prices
Babson Capital/UNC Charlotte
Economic Forecast
March 11, 2014
Current
Expansion
• Began July 2009
• 54 months
• 7th longest of 33 total expansions since
December 1854
1980
1969 1948 1953
1974 1960 1957 1981 1990
2001
2007
Updated Sept 2013