presented by harry m. davis, ph.d [email protected] ncba professor of banking and economist...
TRANSCRIPT
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“Should We Be Happy About The U.S. Economy?” N.C. Affordable Housing Conference
Raleigh Convention CenterRaleigh, North Carolina
Presented by
Harry M. Davis, [email protected]
NCBA Professor of Banking and EconomistAppalachian State University
October 29, 2015
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The U.S. Economy
Recovery is almost 6.5 years old
GDP annualized growth of .6% in the first quarter and 3.9% in the second quarter
This recovery is the slowest in the post WWII period
States has been adding much less to GDP than in past
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The U.S. Economy
The FED has over estimated the rate of economic each quarter since the “Great Recession”
The rate of productivity growth is the slowest for a recovery in 60 years
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Consumers
Consumer spending is growing about 2.5% a year
Real per Capita after-tax income and real average weekly earnings were flat in 2012 and 2013
Real median household income was $57,342 in 2008, while in July 2015 the figure was $55,132
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U.S. Economy - Positive
Stock markets are still near record levels - earning continue to surprise on the up side
Corporate profits driven somewhat by lower energy prices
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Housing
Existing home sales have been above 5 million (annualized) for the last 5 months and almost reached 6 million in July
Residential construction is at the highest rate since 2008. Multi-family continue to be above average as a % of total construction but that percentage is dropping
Household formations and millennials
Existing home prices up about 5% y/y
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U.S. Employment - PositiveUnemployment rate for September was 5.1% - the
lowest in over 7 years
Created only 136,000 new jobs in August followed 142,000 in September
Created an average of 260,000 new jobs per month in 2014
The labor participation rate fell to 62.4% a greater than 38 year low in September - 350,000 individuals left the labor force
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Employment
Up until 1999, baby boomers reached adulthood and entered the workforce along with a surge in women working
The labor force grew faster than the adult population – fueled economic growth and per capita income
The labor participation rate (LPR) peaked in 1999
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Employment
Bureau of Labor Statistics estimates 5.8 million jobs unfilled due to lack of qualified workers
Areas include: software engineers, nurses and technicians, welders and machinists, general engineers
Education system and business community need to interact much more
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NC Employment Situation
August unemployment rate of 5.9%
Grew 110,200 nonfarm jobs in last 12 months
Since the “Great Recession” nearly 60% of all new jobs were created in the Charlotte and Raleigh metro areas
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N.C. per capita income as % of U.S.
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Age Does Matter in the U.S.
In 1959 people 65 and older had the highest rate of poverty (35%)
Today that group has the lowest rate at 9.5%
The poorest Americans today are the youngest – those 35 and under
Spending in all categories except healthcare peaks at age 45
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The FEDIn a box
All Central Bankers are looking for one thing which is not around – a 2% rate of inflation
FED should forget about raising rates until the 10-year bond rate rises above 2.4% and stays there for more than 30 days
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Energy
Pump prices lowest in 10 years
Each adult auto owner has received a $800-$1,000 tax free gift from lower gas prices
North America – the center of the energy universe
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What To Do?!
Regulation Czar – moratorium on new regulations
Build Infrastructure – regulations
Immigration reform
Simplify and flatten the tax code for businesses and individuals
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The Outlook
GDP will grow about 2.75% for the year
We are at full employment forgetting the labor participation rate and the number under employed
Income and salary growth will remain tepid - even so, consumer spending growth will increase to 2.75%
U.S. is the pick of the litter - as the growth in numerous countries is slowing
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The Outlook Housing will continue to be a bright spot -
with a slight shift in construction to single family homes
The FED will raise rates very little - not even in 2016
NC’s unemployment rate will drop close to 5% in the next 12 months
The state will create about 100,000 next year, down from the level for 2014 and 2015