covid-19 infects the u.s. economy - csbs...2020/04/07 · jan-67 jan-70 jan-73 jan-76 jan-79 jan-82...
TRANSCRIPT
COVID-19 Infects the U.S. EconomyBy Thomas F. Siems, Ph.D. CSBS Sr Economist & Director of Research
CSBS Economic Insights WebcastApril 7, 2020
COVID-19 Infects the U.S. Economy
How/When did COVID-19 Infect the U.S. Economy?
Are We in a Recession?
What’s Being Done to Help the Economy?
When will this End?
COVID-19 Infects the U.S. Economy
How/When did COVID-19 Infect the U.S. Economy?
Are We in a Recession?
What’s Being Done to Help the Economy?
When will this End?
A Quick Look Back to late 2019
In Conclusion…
• US Economy growing moderately• GDP ~2.0%; Unemployment ~3.6%; Inflation ~1.9%; wages rising ~3.0%
• Recession Ahead?• Manufacturing weaker; Labor quality/trade/global concerns; Yield
curve flat; Depends on consumers, confidence, and BOBs• Banking
• Consolidation continues; Banks appear to be in good shape• The Fed
• Dual mandate success; Interest rate changes are following market expectations
FROM THE CSBS SCOTTSDALE MEETING, DECEMBER 2019
FROM THE CSBS SCOTTSDALE MEETING, DECEMBER 2019In Conclusion…
• US Economy growing moderately• GDP ~2.0%; Unemployment ~3.6%; Inflation ~1.9%; wages rising ~3.0%
• Recession Ahead?• Manufacturing weaker; Labor quality/trade/global concerns; Yield
curve flat; Depends on consumers, confidence, and BOBs• Banking
• Consolidation continues; Banks appear to be in good shape• The Fed
• Dual mandate success; Interest rate changes are following market expectations
BOLTOut of
BLUEthe
COVID-19 Infects the U.S. Economy
How/When did COVID-19 Infect the U.S. Economy?
Are We in a Recession?
What’s Being Done to Help the Economy?
When will this End?
March Madness Cancelled: US Recession BeginsShanghai Disney Closed
NBER Recession Definition--- "a significant decline in economic activity spread across the market, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales"
-5
-3
-1
1
3
5
7
9
1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016Annu
alize
d Pe
rcen
t Cha
nge
U.S. GDP Growth
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
Jan-
67
Jan-
70
Jan-
73
Jan-
76
Jan-
79
Jan-
82
Jan-
85
Jan-
88
Jan-
91
Jan-
94
Jan-
97
Jan-
00
Jan-
03
Jan-
06
Jan-
09
Jan-
12
Jan-
15
Jan-
18
Unemployment Insurance Weekly Claims
Record high before 2020: 695,000 in October 1982
3,307,000 for week ending March 21, 2020
Financial Crisis high: 665,000 in March 2009
Data Source: U.S. Department of Labor
6,648,000 for week ending March 28, 2020
80
85
90
95
100
105
110
115
120
Daily Index of Consumer Sentiment(7-day moving average)
Source: Morning Consulthttps://morningconsult.com/form/econ-intel-global-consumer-confidence-tracking-demo-request/
March Sadness Begins
-5
-4
-3
-2
-1
0
1
2
3
4
5
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20
Weekly Economic Index
March 21, 2020
Data Source: Federal Reserve Bank of New York
Source: Lewis, Mertens and Stock, “Monitoring Real Activity in Real Time: The Weekly Economic Index,” Federal Reserve Bank of New York Liberty Street Economics, March 30, 2020
122 121 123
91
-50
-30
-10
10
30
50
70
Q2 2019 Q3 2019 Q4 2019 Q1 2020
CBSI and Uncertainty
BCu MPu RBu OEu CSu PRu FVu CBSI
Data Source: CSBS
-50
0
50
Q2 2019 Q3 2019 Q4 2019 Q1 2020
Business Conditions
BCp BCn BCi
-50
0
50
Q2 2019 Q3 2019 Q4 2019 Q1 2020
Monetary Policy
MPp MPn MPi
-50
0
50
Q2 2019 Q3 2019 Q4 2019 Q1 2020
Regulatory Burden
RBp RBn RBi
-50
0
50
Q2 2019 Q3 2019 Q4 2019 Q1 2020
Operations Expansion
OEp OEn OEi
-50
0
50
Q2 2019 Q3 2019 Q4 2019 Q1 2020
Capital Spending
CSp CSn CSi
-50
0
50
Q2 2019 Q3 2019 Q4 2019 Q1 2020
Profitability
PRp PRn PRi
-50
0
50
Q2 2019 Q3 2019 Q4 2019 Q1 2020
Franchise Value
FVp FVn FVi
122 121 12391
-50
0
50
Q2 2019 Q3 2019 Q4 2019 Q1 2020
CBSI & Uncertainty
BCu MPu RBu OEu
CSu PRu FVu CBSI
Data Source: CSBS
Data Source: CSBS
117
1811
39
5136
7731
3219
6141
7439
6627
6356
3543
1963
4527
3634
1447
1042
3231
1319
03
2353
320
BC Q4BC Q1
MP Q4MP Q1
RB Q4RB Q1
CS Q4CS Q1
OE Q4OE Q1
PR Q4PR Q1
FV Q4FV Q1
Community Bank Sentiment Index2019 Q4 and 2020 Q1
Positive Neutral Negative Uncertain
Index9760
108
Index
69
7178
138
177128
109
158121
CBSI Q1:12391
IndexIndex
66
IndexIndexIndex
117
CBSI Q4:
-37
-49
-21
+6
-37
-32
-40
-44
Data Source: CSBS
80
90
100
110
120
130
140
Q2 2019 Q3 2019 Q4 2019 Q1 2020
CBSI by CSBS District
Northeast Midwest South Great Plains West
0% 20% 40% 60% 80% 100%
Oil and Gas
Tourism
Restaurants
Retail
Agriculture
Manufacturing
Consumer
Construction
Prof. Services
Health Care
CBSI: Outlook for Economic Segments
Negative (1) Slightly Negative (2) Neutral (3) Slightly Positive (4) Positive (5)
Rating
3.61
3.19
2.31
1.97
2.76
2.41
2.70
3.14
2.49
2.86
Data Source: CSBS
1
2
3
4
2/26 - 3/3 3/4 - 3/10 3/11 - 3/17 3/18 - 3/24 3/25 - 3/31
Aver
age
Wee
kly
Ratin
g (1
=Neg
ativ
e an
d 5=
Post
ive)
Bankers' Outlook on Sector Performance Declined During MarchSource: CSBS Community Bank Sentiment Index (CBSI) for Q1 2020
Health Care
ConsumerManufacturing
Restaurants
Retail
Construction
Agriculture
Oil and Gas
Tourism
Prof Services
Data Source: CSBS
↓ 0.62
↓ 0.16
↓ 1.00
↓ 1.00
↓ 1.17
↓ 1.07↓ 1.65↓ 1.01
↓ 1.58↓ 1.45
Change from first week in March to last week in March
0% 20% 40% 60% 80% 100%
Local Economy
State Economy
National Economy
Global Economy
CBSI: Expected Impact from Coronavirus Outbreak on…
Exteremely Negative (1) Very Negative (2) Somewhat Negative (3)
Not So Negative (4) Not at All Negative (5) Unsure
Rating
3.20
2.93
2.51
2.05
Data Source: CSBS
1
2
3
4
2/26 - 3/3 3/4 - 3/10 3/11 - 3/17 3/18 - 3/24 3/25 - 3/31
Aver
age
Wee
kly
Ratin
g (1
= Ex
trem
ely
Neg
ativ
e an
d 5=
Not
at A
ll N
egat
ive)
Bankers' Outlook on COVID19's Impact on Economic Activity Declined During March
Source: CSBS Community Bank Sentiment Index (CBSI) for Q1 2020
Local Economy
State Economy
US Economy
Global Economy
Data Source: CSBS
↓ 1.26
↓ 1.30
↓ 1.09
↓ 0.85
Change from first week in March to last week in March
COVID-19 Infects the U.S. Economy
How/When did COVID-19 Infect the U.S. Economy?
Are We in a Recession?
What’s Being Done to Help the Economy?
When will this End?
Federal Reserve Interventions• Lowered administered rates• Quantitative easing• Repo market injection • Swap lines with other Central Banks• Facilities to provide liquidity, credit and funding
• Commercial Paper, Primary Dealer, MMMF,
State/Municipals, FIMA Repo
COVID-19 Infects the U.S. Economy
How/When did COVID-19 Infect the U.S. Economy?
Are We in a Recession?
What’s Being Done to Help the Economy?
When will this End?
How/When Does the Pandemic End?• Herd Immunity• Flatten the Curve• Establish Protections• Loosen Restrictions • Rebuild/Remake
Three Economic Scenarios (Conference Board)• v-Shaped Recovery (mild)…May reboot• V-Shaped Recovery (modest)…Summertime comeback• U-Shaped Recovery (severe)…Fall recovery (or beyond)
-2.1
-16.5
10.8
3.4
-5.8
-35.6
20.3
14.8
-3.8
-29.9
-3.3
18.5
-40
-30
-20
-10
0
10
20
30
Q1 Q2 Q3 Q4
GDP Growth Scenarios, Annualized QoQ rates
v-May reboot V-Summer U-Fall
v-May reboot V-Summer U-FallPeak Cases mid-April May June/July
2020 GDP -1.6% -5.5% -6.0%Peak Unemployment 8% 15% 15%
Guide to the Great Unknown• Increased Personal Awareness• The New Patriots • Tech Disruption Alters Work and Play (again)• Bigger Government• Looking Inward
Questions?
44