the economic outlook mark schniepp director february 24, 2012 the nation, state and the antelope...
TRANSCRIPT
The Economic Outlook
Mark Schniepp Director
February 24, 2012
The Nation, State and
the Antelope Valley
Economic Outlook
Mark Schniepp, Director
February 24, 2012
Not Quite through the tunnel yet
When is the recession over ?
Recent Economic Evidence
• Significant improvement - last 10 weeks- most indicators now rising steadily
Rasmussen Consumer Confidence Index
55
60
65
70
75
80
85
90
95
Feb-08 Aug-08 Feb-09 Aug-09 Feb-10 Aug-10 Feb-11 Aug-11 Feb-12
February 2008 - February 20, 2012
indexOctober 2001=100
350
360
370
380
390
400
410
Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
Real Retail Sales / U.S.billions of 2011 dollars SAAR January 2006 - January 2012
8
9
10
11
12
13
14
Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12
New Auto and Light Truck Sales / U.S.millionsof vehicles January 2009 - January 2012
83
86
89
92
95
98
101
Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12
Index of Industrial Production / index January 2002 - January 2012
Nov-10 Feb-11 May-11 Aug-11 Nov-11 Feb-1210,500
11,000
11,500
12,000
12,500
13,000
Dow Jones Industrial AverageNovember 23, 2010 - February 23, 2012 .
Index
96
99
102
105
108
111
114
117
120
Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12
Index of Leading Indicators / U.S.index2004 = 100 January 2002 - January 2012
3.0
3.5
4.0
4.5
5.0
5.5
Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12
Existing Home Sales / U.S.January 2009 - January 2012
millions of sales, SAAR
0.4
0.7
1.0
1.3
1.6
1.9
2.2
Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12
Housing Starts / U.S.millions of units, SAAR January 2002 - January 2012
Los Angeles Times, February 8, 2012, Page B2
5
10
15
20
25
30
35
40
Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12
NAHB Housing Market Index / U.S.February 2007 - February 2012
index
Recent Economic Evidence
• Significant improvement - last 3 months
- most indicators now rising steadily
• Despite modestly growing GDP, the labor market unimpressed in 2011
• Though the nation created 1.6 million jobs, unemployment remains high
• 25 million Americans seek full time work
• How is the momentum going into 2012 ?
Los Angeles times, January 7, 2012, front page
8.3%
4
5
6
7
8
9
10
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
Unemployment Rate / US .percent
January 2006 - January 2012
seasonally adjusted
-900
-600
-300
0
300
Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12
Private Sector Job Creation / US .month-over-month change (thousands of jobs) December 2009 - Jnuary 2012
23 months = 3.5 million jobs
8.8 million jobs
U.S. Economic Summary
• Consumers are feeling better and spending more
• Factories are producing more goods
• Autos are selling again; U.S. automakers reported their three best months of sales (post recession) in November, December, January
• The stock market has rallied sharply
• Business is hiring more / the u-rate is . . . .
-2
0
2
4
6
Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
U.S. Consumer Price Inflationpercent
January 2006 - January 2012
2.7 %
What about California ?
-120,000
-100,000
-80,000
-60,000
-40,000
-20,000
0
20,000
40,000
60,000
Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11
Job Creation / California .June 2009 - December 2011jobs
seasonally adjusted
327,000 jobs
Recent Evidence / California
• Technology sector leading the charge • Exports were explosive in 2011• Tourism also rising in all major markets• Manufacturing growing again, but slowly• Hiring is picking up, mostly in coastal markets
but recently, inland areas are creating jobs
• Demographics are largely responsible for the abnormally high unemployment rates
• . . . and will also be responsible for the inevitable breakout of the housing market
25
30
35
40
45
50
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Value of Exports / California Ports2001 Q1 - 2011 Q4
billions of dollars
460
480
500
520
540
560
580
Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11
Employment in Technology Services / Californiathousandsof jobs December 2005 - December 2011
Scientific and technical services
37,000
39,000
41,000
43,000
45,000
47,000
49,000
Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11
Employment in Computer Products Manufacturing California
jobsDecember 2005 - December 2011
1,200
1,300
1,400
1,500
Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11
Manufacturing Employment / Californiathousandsof jobs
December 2005 - December 2011
1,450
1,475
1,500
1,525
1,550
1,575
1,600
Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11
Leisure & Hospitality Employment / California thousandsof jobs December 2005 - December 2011
Average Hotel Occupancy Rate / Santa Clara County
53
57
61
65
69
73
Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11
November 2006 - November 2011percent Seasonally Adjusted
Average Hotel Occupancy Rate / Orange County
60
64
68
72
76
Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11
November 2006 - November 2011percent Seasonally Adjusted
9
10
11
12
13
14
15
16
17
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Disneyland Attendance / Anaheim 1991 - 2011
millions of visitors
Los Angels Times, December 17, 2011, B1 Los Angels Times, January 21, 2012, front page
Population Age 18 to 24 / California .
2.5
2.7
2.9
3.1
3.3
3.5
3.7
3.9
4.1
4.3
1970 1975 1980 1985 1990 1995 2000 2005 2010
1970 - 2010millionsof people
0.0
0.5
1.0
1.5
2.0
2.5
88 90 92 94 96 98 00 02 04 06 08 10
Population Growth / California1988 - 2010
percent change
0
4
8
12
16
20
Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11
New Housing Production / CaliforniaNovember 2005 - November 2011
thousands of units permitted
Average Household Size / California
2.80
2.84
2.88
2.92
2.96
3.00
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
personsper house
1989 - 2011
Question?• If the state is still growing, and housing
inventories are low, then why is there no new construction?
• Household formation has dried up- unemployed move in with Mom/Dad- or they never moved out !
• This is an employment induced temporary problem
• … with growing likelihood that a dramatic breakout in housing demand could occur
Summary / California
Technology, Exports, and Tourism are the current engines of growth
Construction and Manufacturing show little recovery to date
Public sector employment in decline Hotel occupancy now at pre-recession
levels Commercial real estate slowly rebounding Inland counties have lagged the recovery
in California but have recently joined with sharp increases in employment since the summer
Cumulative Job Growth by County
-0.5
0.0
0.5
1.0
1.5
2.0
Dec-10 Mar-11 Jun-11 Sep-11 Dec-11
Orange
Los Angeles
Ventura
Inland Empire
San Diego
December 2010 through December 2011percent
Antelope Valley
GrowthIn California
Fastest Growing Counties / California 2008 - 2011
County Population Growth
Placer RiversideImperialAntelope ValleyTulareKernFresnoSan JoaquinContra CostaMerced
5.34.94.74.54.13.53.12.72.72.7
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Population Growth / Antelope Valley1991 - 2011people
(a) 34.3 million
(b) 37.3 million
(c) 40.5 million
(d) Just tell us the answer and get on with it . . . . !
Quiz part I: What is the Population of
California?(census estimate)
Quiz part II: What will be the Population of
California in 2020 ?
(a) 38 million
(b) 40 million
(c) 42.8 million
(d) Who cares?
Where are these 5.4 million people
going to live?(a) Orange County(b) Santa Clara County(c) Coachella Valley(d) Victor Valley(e) Antelope Valley(f) San Joaquin Valley(g) Sacramento Valley
Quiz part III:
Home Price Advantage: Antelope Valley and Southern California Markets
2011
$157,400
$305,955
$387,500$419,873
$514,386
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
AntelopeValley
Los AngelesCounty
Santa ClaritaValley
VenturaCounty
OrangeCounty
dollars
0
50
100
150
200
250
300
350
400
450
500
1990 1995 2000 2005 2010 2015 2020
Population Gain / Southern California1990 - 2020
thousandsof people
150,000 - 250,000people per year
0
20,000
40,000
60,000
80,000
100,000
120,000
1990 1995 2000 2005 2010 2015 2020
New Housing Units / Southern Califonria .unitspermitted 1990 - 2020
• Recent job loss was deep and broad based• Construction, manufacturing, and the retail sector experienced the greatest loss of jobs• Unemployment leaped to an estimated 16 %• Commercial markets weakened in tandem with the labor markets• The retail fallout has been sharp• Home production . . . well, negligible There is good news on the homeowner distress front . . . but conventional sales remain slow
2011 Economic Smmary Antelope Valley
Recent Evidence / Antelope Valley
The regional economy is slowly recovering – like other inland areas of California
Population growth remains positive Job creation has been intermittent Residential entitlements are prolific Home prices have finally stabilized Affordability is extremely high
relative to surrounding communities
Retail spending is rising again
-20
-15
-10
-5
0
5
10
15
1995 1997 1999 2001 2003 2005 2007 2009 2011
Real Retail Sales Growth / Antelope Valley1995 - 2011
percent change
LaborMarkets
Job Creation / Antelope Valley.
-800
-600
-400
-200
0
200
400
600
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11
December 2006 - December 2011
monthly job creation
10 of 24 months= net loss of 100 jobs
-6,000
-4,000
-2,000
0
2,000
4,000
00 01 02 03 04 05 06 07 08 09 10 11
Total Jobs Created / Antelope Valley.
2000 - 2011 .
number of...jobs created..
6,750
7,000
7,250
7,500
7,750
8,000
8,250
8,500
8,750
Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11
Employment in Healthcare / Antelope Valleyjobs September 2006 / September 2011
400
450
500
550
600
650
700
750
800
Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11
Employment in Educational ServicesAntelope Valley
September 2006 - September 2011jobs
2,600
2,700
2,800
2,900
3,000
3,100
3,200
Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11
Financial Activities Employment / Antelope Valley .jobs
September 2006 - September 2011
7,300
7,600
7,900
8,200
8,500
8,800
9,100
Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11
Manufacturing Employment / Antelope Valley .jobs
September 2006 - September 2011 .
3,000
3,500
4,000
4,500
5,000
Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11
Professional and Business Services Employment .Antelope Valleyjobs
September 2006 - September 2011
2,000
3,000
4,000
5,000
6,000
7,000
Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11
Construction Employment / Antelope Valley...
jobs September 2006 - September 2011
0
1,000
2,000
3,000
4,000
5,000
91 93 95 97 99 01 03 05 07 09 11
New Residential Units / Antelope Valleyunits permitted
1991 - 2011
0
20
40
60
80
100
97 99 01 03 05 07 09 11
New Commercial and Industrial InvestmentAntelope Valleymillions
of dollars1997 - 2011
13,250
13,750
14,250
14,750
15,250
Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11
Employment in State and Local Government Antelope Valley. ..
jobs September 2006 - September 2011
ResidentialReal EstateThe most frustrating sector of the economy
200
300
400
500
600
Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11
Existing Home Sales / California thousandsof sales December 2007 - December 2011
200
250
300
350
400
450
Dec-07 Dec-08 Dec-09 Dec-10 Dec-11
Median Home Selling Price / California thousandsof dollars December 2007 - December 2011
Median Home Selling PricesCalifornia Counties December
2011
San DiegoOrangeLos AngelesInland EmpireVenturaAntelope ValleySan Fernando ValleyCalifornia
County Price
$359,930 $484,630 $306,950 $172,430 $391,060 $151,700 $322,000 $285,920
% Change From Peak
-42.2-37.5-51.0-55.7-45.0-61.4-45.6-51.9
-4.2-3.7-7.3-3.3
-11.4-5.8
-10.1-6.2
% change
Median Home Selling Price .
75
125
175
225
275
325
375
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11
December 2006 - December 2011thousands of dollars
Lancaster
Palmdale
2,000
4,000
6,000
8,000
10,000
01 02 03 04 05 06 07 08 09 10 11
Existing Home Sales / Antelope Valley2001 - 2011
sales
Los Angeles Times, February 18, 2011, page B2
Los Angeles Times, April 20, 2011, page B1
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2006 2007 2008 2009 2010 2011
Foreclosures / Californianumber
2006 Q1 - 2011 Q4
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2006 2007 2008 2009 2010 2011
Notices of Default / Californianumber
2006 Q1 - 2011 Q4
Foreclosures / Antelope Valley
0
500
1,000
1,500
2,000
2,500
Oct-08 Mar-09 Aug-09 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12
October 2008 - February 2012number
Palmdale
Lancaster
Los Angeles Times, January 12, 2012, page B3
Housing Summary / California
• Values have stabilized ?• Purchase market held back by credit conditions
and labor markets• Lack of demand along with distressed inventory
keeps housing values from rising• Credit conditions are tight because values have
yet to rebound• Catch 22: prices won’t rise until credit markets
loosen; credit markets won’t loosen until values start rising again
• Distressed inventory will begin to subside in 2013
QuickTime™ and aTIFF (Uncompressed) decompressor
are needed to see this picture.
5 yearOutlook
The Forecast
2012 Antelope Valley Forecast Summary
• 2011 was a transition year: the economic recovery will be more convincing in 2012throughout Southern California
• Though labor markets are already adding jobs, the pace of expansion will accelerate and broaden
• Home sales finally improve in 2012 due to high affordability, and more new jobs
• Job creation, home sales, and consumer spending return to more normal levels in 2013
• Homeowner distress is the wild card
-5
-4
-3
-2
-1
0
1
2
3
4
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Total Job Creation / Antelope Valley .1996 - 2016
thousands of jobs
- 6,700 jobs
4
6
8
10
12
14
16
2000 2002 2004 2006 2008 2010 2012 2014 2016
Unemployment Rate / Antelope Valley .2000 - 2016percent
0
2,000
4,000
6,000
8,000
10,000
12,000
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Population Growth / Antelope Valley1996 - 2016people
-2,000
0
2,000
4,000
6,000
8,000
10,000
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Net Migration / Antelope Valley1996 - 2016
inmigrants minus outmigrants
284
304
356
392
432
270
300
330
360
390
420
1996 2001 2006 2011 2016
Population / Antelope Valley .1996 - 2016
thousandsof persons
40,000
2.5
3.0
3.5
4.0
4.5
5.0
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Professional Services Employment / Antelope Valley1996 - 2016
thousands of jobs
0
1,000
2,000
3,000
4,000
5,000
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
New Housing Production / Antelope Valley .1996 - 2016
homes permitted
10,500
3.20
3.25
3.30
3.35
3.40
3.45
3.50
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Average Household Size / Antelope Valley1996 - 2016
peopleper house
2,000
4,000
6,000
8,000
10,000
2000 2002 2004 2006 2008 2010 2012 2014 2016
Existing Home Sales / Antelope Valley2000 - 2016
sales
50
100
150
200
250
300
350
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Median Home Selling Price / Antelope Valley .1996 - 2016
thousands of dollars
1.7
1.9
2.1
2.3
2.5
2.7
2.9
3.1
3.3
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Real Retail Sales / Antelope Valley
1996 - 2016
billions of constant 2010 dollars
Southern California Forecast Summary
The recovery will lag in the inland areas, but over the long run growth will be stronger
A much stronger expansion of labor markets will occur by 2013, reaching a peak in 2014
The unemployment rate will remain high for years to come as more new workers enter the labor force
Population grows slightly faster, inland areas grow much faster than the coast
Home prices rise in 2012 ? …… or beyond ? Prices rise when distressed properties account for a
smaller share of total transactions Housing production ultimately increases throughout
the forecast to meet the needs of a growing population
The Economic Timeline• U.S. economic expansion underway now• Regional expansion more evident by Q3 or
Q4• Solid job creation sustainable: 2012 Q4• Unemployment rate falling throughout year• Foreclosures subsiding by 2012 Q4• More new housing underway this year,
with breakout in 2013• Fed raises rates: late 2014 / early 2015• Expansionary conditions sustainable: 2012
Q4
Antelope Valley2012 EconomicOutlook