global economic forecast the final push? · 11/30/2012 · feb 14, 2011 ecb pledges unlimited bond...
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Global Economic Forecast
The Final Push?
2012 Real Estate Forum
November 28, 2012
Metro Toronto Convention Centre
Peter Hall
VP and Chief Economist
Gloomy all over again (EU Economic Sentiment Indicator, LT=100)
2
60
70
80
90
100
110
120
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Sources: European Commission
Unusually pervasive pessimism (US Consumer Confidence, 1985=100)
3
0
20
40
60
80
100
120
140
160
78 80 82 84 86 88 90 92 94 96 98 0 2 4 6 8 10 12
Source: Conference Board
Contagion/
Financial
markets
Fiscal
cliffs
Confidence
Debilitating risks?
4
Price
volatility
Emerging
market
slowing
Political
unrest
QE: Alive and well
ECB: new bond purchases
BoJ: renewal of program
Rumoured at BofE
US: $40B/month program
EMs: followers, for now
Euro-Area Recession: Not news! (Euro Area-17 GDP, % SAAR)
6
-12
-10
-8
-6
-4
-2
0
2
4
6
2005 2006 2007 2008 2009 2010 2011 2012
Source: Eudata
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00
04-J
an-2
010
19-J
an-2
010
02-F
eb-2
010
16-F
eb-2
010
02-M
ar-
2010
16-M
ar-
2010
30-M
ar-
2010
15-A
pr-
20
10
29-A
pr-
20
10
17-M
ay-2
010
31-M
ay-2
010
15-J
un-2
010
29-J
un-2
010
13-J
ul-2010
27-J
ul-2010
10-A
ug-2
010
24-A
ug-2
010
07-S
ep-2
010
21-S
ep-2
010
05-O
ct-
20
10
19-O
ct-
20
10
02-N
ov-2
010
16-N
ov-2
010
30-N
ov-2
010
14-D
ec-2
010
28-D
ec-2
010
11-J
an-2
011
25-J
an-2
011
08-F
eb-2
011
22-F
eb-2
011
08-M
ar-
2011
22-M
ar-
2011
05-A
pr-
20
11
19-A
pr-
20
11
04-M
ay-2
011
18-M
ay-2
011
01-J
un-2
011
15-J
un-2
011
29-J
un-2
011
13-J
ul-2011
27-J
ul-2011
10-A
ug-2
011
24-A
ug-2
011
07-S
ep-2
011
21-S
ep-2
011
05-O
ct-
20
11
19-O
ct-
20
11
02-N
ov-2
011
16-N
ov-2
011
30-N
ov-2
011
14-D
ec-2
011
29-D
ec-2
011
12-J
an-2
012
26-J
an-2
012
09-F
eb-2
012
23-F
eb-2
012
08-M
ar-
2012
22-M
ar-
2012
05-A
pr-
20
12
20-A
pr-
20
12
04-M
ay-2
012
18-M
ay-2
012
01-J
un-2
012
15-J
un-2
012
29-J
un-2
012
13-J
ul-2012
27-J
ul-2012
10-A
ug-2
012
24-A
ug-2
012
07-S
ep-2
012
Ireland
Portugal
Spain
Italy
France
Germany
€500B ESM
announced
Feb 14, 2011 ECB pledges
unlimited
bond
purchases
Sept 6, 2012
€1 trillion of
ECB LTRO
Dec 2011,
Feb 2012
Is there a pattern here? (Intervention and 10-year Sovereign Bond Yields)
Source: Financial Times / Haver Analytics
€110B Bailout
of Greece on
May 9, 2010
€109B Bailout
of Greece on
July 21, 2011
Greek
restructuring
agreed on Mar 9,
2012
€85B Bailout of
Ireland on Nov
28, 2010
€68B Bailout
of Portugal
on May 16,
201
Japan: Any Chance? (GDE, chained ¥2005, % SAAR)
8
-8
-6
-4
-2
0
2
4
6
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: Cabinet Office of Japan, Haver Analytics
BRIC Economies Slowing (GDP, % yoy, quarterly SAAR)
9
0
2
4
6
8
10
12
14
2010 2011 2012
China
India
Brazil
Source: Eurostat
Pent-up demand in US housing (Housing starts SAAR, ‘000 units)
10
0
500
1000
1500
2000
2500
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Sources: US Census Bureau, Haver Analytics
Home buyers are active (NAHB Housing Market Index)
11
0
10
20
30
40
50
60
70
80
90
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Sources: NAHB, Haver Analytics
Prices: telling the tale? (NAR Median Price, SA, USD)
12
130000
150000
170000
190000
210000
230000
250000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Sources: National Association of Realtors, Haver Analytics
Home prices: on the rise (Multiple indicators, yoy %)
13
-25
-20
-15
-10
-5
0
5
10
15
20
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Sources: S&P, CoreLogic, FHFA, Haver Analytica
US Housing: Getting back to balance (Surplus units, thousands)
14
-2000
0
2000
4000
6000
8000
10000
2005 2006 2007 2008 2009 2010 2011 2012
Source: EDC Economics
US Consumers: back in the game (Inflation-adjusted retail sales, $M)
15
150000
155000
160000
165000
170000
175000
180000
185000
2005 2006 2007 2008 2009 2010 2011 2012
Source: Federal Reserve Bank of St. Louis
Cash & near-cash, US corporations, $B
0
1000
2000
3000
4000
5000
6000
2005 2006 2007 2008 2009 2010 2011 2012
FI Cash
NF Trade Rec
NF Cash
June 2012
US spare capacity: very close to peak (Utilization of existing industrial capacity, %)
17
60
65
70
75
80
85
90
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Sources: US Federal Reserve Board, Haver Analytics
US spare capacity: very close to peak (Utilization of existing industrial capacity, %)
18
0
10
20
30
40
50
60
70
2006 2007 2008 2009 2010 2011 2012
Sources: US Federal Reserve Board, Haver Analytics
The Story Behind the Story (US GDP, chained $2005, %)
19 Source: Cabinet Office of Japan, Haver Analytics
-4
-3
-2
-1
0
1
2
3
4
5
-4
-3
-2
-1
0
1
2
3
4
5
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Market Share (2011) 2010 2011 2012 (f) 2013 (f)
US 19.1 3.0 1.7 2.3 2.8
Canada 1.8 3.2 2.4 2.0 2.2
Mexico 2.1 5.6 3.9 3.7 3.8
Euro Area 14.2 1.9 1.5 -0.5 0.7
Japan 5.6 4.4 -0.7 2.2 1.5
Emerging Asia 25.1 9.7 7.8 6.8 7.1
China 14.3 10.4 9.2 7.5 7.8
India 5.7 10.8 7.1 5.9 6.7
Latin America 8.7 6.2 4.5 3.1 4.1
Brazil 2.9 7.5 2.7 1.6 4.3
Emerging Europe & Central Asia
7.8 7.2 8.0 3.1 3.5
Russia 3.0 4.3 4.3 3.9 3.8
Middle East & North Africa
4.9 5.1 4.1 5.2 4.2
Industrialized 51.1 3.2 1.6 1.4 2.1
Emerging 48.9 7.5 6.2 5.3 5.6
Total World 100.0 5.3 3.9 3.4 3.9
Conclusions
US-centered rebound underway
Risks exacerbated by pessimism
Trade growth powers Canada
A litany of lucrative projects
Problem: managing growth
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Global Economic Forecast
The Final Push?
2012 Real Estate Forum
November 28, 2012
Metro Toronto Convention Centre
Peter Hall
VP and Chief Economist