is the us headed for another economic crisis?
DESCRIPTION
Is the US Headed for Another Economic Crisis?. Specific Topics. 1) Is the Banking Sector Stable? 2) Are State and Local Governments Solvent? 3) How Serious is the Federal Debt Problem? 4) Will the Real Estate Market Recover? 5) What About Consumer Spending? - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/1.jpg)
Is the US Headed for
Another Economic Crisis?
![Page 2: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/2.jpg)
Specific Topics
1) Is the Banking Sector Stable?
2) Are State and Local Governments Solvent?
3) How Serious is the Federal Debt Problem?
4) Will the Real Estate Market Recover?
5) What About Consumer Spending?
6) What Should we Expect Over the
Next 12 Months
![Page 3: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/3.jpg)
1) Is the Banking Sector Stable?
![Page 4: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/4.jpg)
FDIC Bank Closures1990 to 2011
0
100
200
300
400
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
![Page 5: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/5.jpg)
FDIC Problem Banks1990 to 2011
0
200
400
600
800
1000
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
![Page 6: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/6.jpg)
Total Assets for all FDIC Insured Banks:
Approximately $14 Trillion
Total Assets for the 865 Banks on
the FDIC Problem List:
Approximately $400 Billion
(Less Than 3% of the $14 Trillion)
![Page 7: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/7.jpg)
Overall Grade for the
US Banking Sector
![Page 8: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/8.jpg)
Overall Grade for the
US Banking Sector
C
![Page 9: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/9.jpg)
US Banks are Flush with Cash
![Page 10: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/10.jpg)
2) Are State and Local
Governments Solvent?
![Page 11: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/11.jpg)
State and Local Government Revenue and Expenses
![Page 12: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/12.jpg)
Overall Grade for the
Financial Condition of the
Typical State or Local Government
![Page 13: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/13.jpg)
Overall Grade for the
Financial Condition of the
Typical State or Local Government
B -
![Page 14: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/14.jpg)
3) How Serious is the
Federal Debt Problem?
![Page 16: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/16.jpg)
How Big of a Threat is the
Federal Debt Problem for the
General Health of the US Economy?
![Page 17: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/17.jpg)
Analogy to Debt Capacity for a Family
There is a “Tipping Point” Beyond Which
Lenders are Unwilling to Extend Credit
The Level of Interest Expense and the Ability
to Service the Debt are of Greater Concern
Than the Level of Debt per se.
![Page 18: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/18.jpg)
Additional Factor in the Case of US Treasury Debt
The International Transactions Demand for
US Dollars and US Treasury Debt
![Page 19: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/19.jpg)
What the Implication of International Demand for the Tipping Point?
International Demand Clearly Adds to theCapacity for US Debt Relative to the
Level of Debt Capacity for Other Nations.
However, the Full Extent of the IncreaseIn Debt Capacity Had Yet to Be Tested
In Addition, it is too Early to Assess the PotentialEffect of a Nasty Political Debate Over US Debt
![Page 20: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/20.jpg)
US Debt Held by Foreigners
![Page 21: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/21.jpg)
Overall Grade for the
Financial Condition of the
Federal Government
![Page 22: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/22.jpg)
Overall Grade for the
Financial Condition of the
Federal Government
D
![Page 23: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/23.jpg)
4) Will the Real Estate
Market Recover?
![Page 24: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/24.jpg)
Housing Starts
![Page 25: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/25.jpg)
Overall Grade for the
Residential Real Estate Market
![Page 26: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/26.jpg)
Overall Grade for the
Residential Real Estate Market
E
![Page 27: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/27.jpg)
5) What About
Consumer Spending?
![Page 28: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/28.jpg)
Consumer Spending
![Page 29: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/29.jpg)
Overall Grade for the
Consumer Sector
![Page 30: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/30.jpg)
Overall Grade for the
Consumer Sector
A -
![Page 31: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/31.jpg)
6) What Should we Expect
Over the Next 12 Months?
![Page 32: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/32.jpg)
How Strong is (was) the
Economic Recovery?
![Page 33: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/33.jpg)
Real GDP from 2002 to 2011
![Page 34: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/34.jpg)
Real GDP From 1950 to 2011
![Page 36: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/36.jpg)
New Factory Orders
![Page 37: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/37.jpg)
Average Weekly Overtime
![Page 38: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/38.jpg)
If the Economy was Recovering
Then Why Has
The Unemployment RateRemained So High?
![Page 39: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/39.jpg)
Unemployment Rate
![Page 40: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/40.jpg)
Unemployment 101
![Page 41: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/41.jpg)
Unemployment 101
Okun’s Law
![Page 42: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/42.jpg)
Unemployment 101
Okun’s Law
Effects of Recession Severity on Critical Economic Linkages
![Page 43: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/43.jpg)
Unemployment 101
Okun’s Law
Effects of Recession Severity on Critical Economic Linkages
Growth in Labor Productivity
![Page 44: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/44.jpg)
Unemployment 101
Okun’s Law
Effects of Recession Severity on Critical Economic Linkages
Growth in Labor Productivity
Growth in Work Force
![Page 45: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/45.jpg)
Unemployment 101
Okun’s Law
Effects of Recession Severity on Critical Economic Linkages
Growth in Labor Productivity
Growth in Work Force
Mechanics of the Unemployment Measure
![Page 46: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/46.jpg)
An Additional Observation
The Absolute Decrease in Real GDP and the Absolute Increase in Real GDP Might not be the Best Way to Measure the Beginning and End of an Economic Recession.
Most Economists Agree that a Better Measure is the Increase or Decrease in Real GDP Relative to the Long Term Trend in Productive Capacity
![Page 47: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/47.jpg)
Real GDP from 2002 to 2011
![Page 48: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/48.jpg)
The Recession of 1990-91
![Page 49: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/49.jpg)
The Recession of 2001
![Page 50: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/50.jpg)
What Has Been Driving
This Economic Recovery?
![Page 51: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/51.jpg)
Is the Recovery Due toMonetary Stimulus?
![Page 52: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/52.jpg)
Interest Rate on a Conventional30 Year Mortgage
![Page 53: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/53.jpg)
What AboutFiscal Stimulus Programs?
![Page 54: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/54.jpg)
What AboutFiscal Stimulus Programs?
TARP Program in Late 2008: $700 Billion for Investments in Financial Institutions
![Page 55: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/55.jpg)
What AboutFiscal Stimulus Programs?
TARP Program in Late 2008: $700 Billion for Investments in Financial Institutions
ARRA Programs in Late 2009: $300 Billion in Tax Cuts and $500 Billion in Additional Spending
![Page 56: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/56.jpg)
Private Sector Employment
![Page 57: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/57.jpg)
Is There Another Factor
Contributing to
Economic Recovery?
![Page 58: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/58.jpg)
Trade-Weighted Valueof the US Dollar
![Page 59: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/59.jpg)
Trade-Weighted Valueof the US Dollar – A Longer View
![Page 61: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/61.jpg)
Canadian Dollar vs US Dollar
![Page 62: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/62.jpg)
What Effect Does a Decline in theValue of the US Dollar
Have on the US Economy?
![Page 63: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/63.jpg)
The Dual Pricing Effect
Foreign goods and services become more expensive for US consumers
US goods and services become less expensive for non US consumers
![Page 64: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/64.jpg)
By Virtue of a Substantially Lower Value of the US Dollar, You Can Even Expect to
See a Decline in the Rate of International Outsourcing for Parts and Services
![Page 65: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/65.jpg)
Economic Forecastfor the Next 12 Months
![Page 66: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/66.jpg)
Economic Forecastfor the Next 12 Months
Despite Continuing Issues for Many Parts of the US Economy, I Expect to See Modest Growth in
Real GDP at an Annual Rate of 1% or 2%.
![Page 67: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/67.jpg)
Economic Forecastfor the Next 12 Months
Despite Continuing Issues for Many Parts of the US Economy, I Expect to See Modest Growth in
Real GDP at an Annual Rate of 1% or 2%.
I also Think There is a Roughly Equal Chance of Either Modest Decline or Enhanced Growth in
Real GDP During any Given Quarter
![Page 68: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/68.jpg)
And Most Important of All
![Page 69: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/69.jpg)
And Most Important of All
If Any of These Predictions
Turn Out to Be Incorrect,
Please Remember
That my Name is:
![Page 70: Is the US Headed for Another Economic Crisis?](https://reader036.vdocuments.net/reader036/viewer/2022081516/568145bb550346895db2c540/html5/thumbnails/70.jpg)
And Most Important of All
If Any of These Predictions
Turn Out to Be Incorrect,
Please Remember
That my Name is:
Ben Bernanke