the u s economic outlookthe u.s. economic outlook

The U S Economic OutlookThe U.S. Economic Outlook

Charts presented by William C DudleyCharts presented by William C. DudleyPresident and Chief Executive OfficerFederal Reserve Bank of New YorkWashington and Lee University

H. Parker Willis Lecture in Political EconomicsLexington, VAApril 1, 2010

2 2Percent Percent

Current Account Balance as a Percent of GDP

0 0

-2 -2

-4

2

-4

2

6

-4

6

-4

8

-6

8

-6

-81970 1976 1982 1988 1994 2000 2006

-8

Source: Bureau of Economic AnalysisNote: Shading represents NBER recessions, vertical line

represents 2007Q4 business cycle peak.1

130 130

Real Broad Trade Weighted Value of the US DollarIndex Index

120

130

120

130

110

120

110

120

100

110

100

110

90

100

90

100

80

90

80

90

801980 1985 1990 1995 2000 2005 2010

80

Source: Federal Reserve Board2Note: Shading represents NBER recessions, vertical line

represents 2007Q4 business cycle peak.

20 20

10-Year Treasury Note Yield at Constant MaturityPercent Percent

16 16

12 12

8 8

4

8

4

8

0

4

0

4

01980 1985 1990 1995 2000 2005 2010

0



% Change – Year to Year % Change Year - Year

Net Stock: Private Residential, Nonresidential Structures, and Equipment and Software

10 10

Equipment and Software

8 8

6 6

4 4

Residential

2 2

Nonresidential Structures

01960 1966 1972 1978 1984 1990 1996 2002 2008

0

Source: Bureau of Economic Analysis4Note: Shading represents NBER recessions, vertical line


Total Balance by Credit Score QuintileBillions of Dollars

Median Credit Score

of Quintile Percent of Percent of

Percent Change

from Previous Percent of

Percent Change

from Previous

2005-Q1 2008-Q3 2009-Q3

(2005-Q1) Total Debt Total Total Debt Total Period Total Debt Total Period

807 2020.0 22.2% 2290.0 18.7% 13.4% 2190.0 18.8% -4.4%

767 2330 0 25 6% 3110 0 25 5% 33 5% 3010 0 25 8% -3 2%767 2330.0 25.6% 3110.0 25.5% 33.5% 3010.0 25.8% -3.2%

708 2360.0 26.0% 3450.0 28.2% 46.2% 3300.0 28.3% -4.3%

631 1450.0 16.0% 2280.0 18.7% 57.2% 2130.0 18.3% -6.6%

538 928.0 10.2% 1090.0 8.9% 17.5% 1040.0 8.9% -4.6%

Total 9088.0 100.0% 12220.0 100.0% 34.5% 11670.0 100.0% -4.5%Source: FRBNY Equifax Panel Datasetq

5

70 70Percent Percent

Homeownership Rate

68 68

66 66

64 64

62 62621970 1976 1982 1988 1994 2000 2006

62

Source: Census Bureau6Note: Shading represents NBER recessions, vertical line


72 15

Consumption and Personal SavingPercent Percent

70

72

12

15

Consumption as Personal

68

9

12pShare of GDP

(left axis)

Personal Saving Rate (right axis)

66

6

9

64

3

6

60

62

0

3

601960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

0

Source: Bureau of Economic Activity7Note: Shading represents NBER recessions, vertical line


240 240

Index IndexLoan Performance House Price Index & Commercial

Real Estate Price Index240 240

200 200Loan Performance:

HPI

160 160Commercial Real Estate

120 120

802000 2003 2006 2009

80

Source: Loan Performance and MIT Real Estate Center8Note: Shading represents NBER recessions, vertical line


5 0 5 0

First Mortgages: 90+ Day Delinquency RatesRatio Ratio(Series set to 1.0 at 4Q prior to NBER peak)

4 0

5.0

4 0

5.0% of number of loans% of number of loans Q4 ‘09Q4 ‘09

3.0

4.0

3.0

4.0

Current Cycle

2.0 2.02001 Cycle

1.0 1.0

2001 Cycle

0.08 6 4 2 0 2 4 6 8 10 12

0.0

1990-1991 Cycle 1981-1982 Cycle1974-1975 Cycle

-8 -6 -4 -2 0 2 4 6 8 10 12

Quarters Since 4Q Prior to NBER Peak

Source: Mortgage Bankers Association9

Percent of 90+ days Late Mortgage Balance Owned by Multiple Home Owners

40

45

40

453+ home owners 2 home owners

Percent Percent

30

35

40

30

35

40

20

25

30

20

25

30

15

20

15

20

5

10

5

10

0004Q1 05Q1 06Q1 07Q1 08Q1 09Q1 10

Source: Equifax, FRBNY


Household Liabilities as a Percent of Net Worth

25 25

20 20

15 15

10 10101970 1976 1982 1988 1994 2000 2006

10



Ratio Ratio(Series Set to 1.0 at NBER Peak)

Real GDP

1.10 1.10

1.05 1.05

1973 Cycle1981 Cycle

1.00 1.00

0.954 2 0 2 4 6 8 10 12

0.95

Current Cycle

-4 -2 0 2 4 6 8 10 12Quarters Since NBER Peak

Source: Bureau of Economic Analysis12

Difference Difference(Series Set to 0.0 at NBER Peak)Unemployment Rate

5.0

6.0

5.0

6.0

Current Cycle

4.0 4.0

1973 Cycle

2.0

3.0

2.0

3.01973 Cycle

1.0 1.01981 Cycle

-1.0

0.0

4 2 0 2 4 6 8 10 12-1.0

0.0


Source: Bureau of Labor Statistics13

68 36.0

Labor Force Participation Rate and Average Weekly HoursPercent – 3 Month Moving Average Hours – 3 Month Moving Average

67

68

35.5

36.0

Participation Rate (left axis)

66

67

34.5

35.0

65

66

34.0

A W kl H65

33.0

33.5Average Weekly Hours (right axis)

64

32.5

631980 1985 1990 1995 2000 2005 2010

32.0

Source: Bureau of Labor Statistics14Note: Shading represents NBER recessions, vertical line


Ratio Ratio(Series Set to 1.0 at NBER Peak)

Nonfarm Business Sector: Hours Worked

1.05

1.10

1.05

1.10

1981 C l

1.00 1.00

1981 Cycle

0.95 0.951973 Cycle

0 85

0.90

0 85

0.90Current Cycle

0.80

0.85

4 2 0 2 4 6 8 10 120.80

0.85



6 6

Total and Core CPI% Change - Year to Year % Change - Year to Year

5

6

5

6

Total CPI

3

4

3

4

2 2

C CPI

0

1

0

1Core CPI

-2

-1

-2

-1

-21998 2000 2002 2004 2006 2008 2010

-2



6-Month % Change - Annualized

Exports and Industrial Production6-Month % Change - Annualized

20

30

10

15

Exports (left axis)

10

0

5

-10

0

-5Industrial Production: Manufacturing

(right axis)

-20-15

-10(right axis)

-40

-30

-25

-20

-401995 1997 1999 2001 2003 2005 2007 2009

-25

Source: Federal Reserve Board and Census Bureau

17Note: Shading represents NBER recessions, vertical line


Net Worth over Disposable Personal IncomePercent Percent

650

700

650

700

600

650

600

650Net Worth/DPI

550 550

500 500

400

450

400

450

4001960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

400




Household Liabilities as a Percent of Net Worth

25 25

A

20 20

Average over last 10 years

15 15

10 10101970 1976 1982 1988 1994 2000 2006

10



MBA Purchase Mortgage Applications and Existing Home SalesIndex Thousands

450

500 8000Purchase Loan

Applications (left axis)

400

450

7000

(left axis)

350 6000

300

5000

Existing Home Sales (right axis)

200

250

40002001999 2001 2003 2005 2007 2009

4000

Source: Mortgage Bankers Association, National Association of Realtors

20Note: Shading represents NBER recessions, vertical line


3.5 12

Percent PercentVacancy Rates

3.0

2.5

10

Rental Vacancy Rate (right axis)

2.0 8

1.5

6Homeowner Vacancy

0 5

1.0

4

Rate (left axis)

0.51970 1976 1982 1988 1994 2000 2006

4

Source: Census Bureau21Note: Shading represents NBER recessions, vertical line


Total Receipts of State and Local Governments% Change – Year to Year % Change – Year to Year

20

30

20

30

Federal C t

10 10

Federal Grants

Current Receipts

0 0

-10 -10Receipts Less Grants

-20 -20

-301985 1991 1997 2003 2009

-30



30 302-qtr % Change - Annualized 2-qtr % Change - Annualized

Real Imports and Exports

20 20E t

10 10

Imports Exports

0 0

-10 -10

30

-20

30

-20

-301999 2001 2003 2005 2007 2009

-30



0.14 0.14Ratio Ratio

Corporate Profits as a Fraction of National Income

0.12 0.12

0.10 0.10

0.08 0.08

0 06 0 060.061960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

0.06



0.12 0.12Ratio RatioCorporate Net Cash Flow as a Fraction of Nominal GDP

0.10 0.10

0.08 0.08

0 06 0 060.061960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

0.06



Manufacturing Capacity Utilization RatePercent Percent

85 85

80 80

75 75

70 70

60

65

60

65

601999 2001 2003 2005 2007 2009

60

Source: Federal Reserve BoardNote: Shading represents NBER recessions, vertical line


26

5 0 5 0

Rent Inflation% Change - Year to Year % Change - Year to Year

4 0

4.5

5.0

4 0

4.5

5.0

3 0

3.5

4.0

3 0

3.5

4.0Tenant Rent (8%)

2 0

2.5

3.0

2 0

2.5

3.0

Owners'

1 0

1.5

2.0

1 0

1.5

2.0Equivalent Rent

(31%)

0.0

0.5

1.0

0.0

0.5

1.0

0.01996 1998 2000 2002 2004 2006 2008 2010

0.0


Note: Shading represents NBER recessions, vertical line represents 2007Q4 business cycle peak.

Numbers in parentheses represent share of core CPI.

1003Productivity, Compensation, and Unit Labor CostsNonfarm Business Sector

% Change - Year to Year% Change - Year to Year

8

10

8

10

4

6

4

6Compensation per Hour

2

4

2

4

-2

0

-2

0Output per Hour

-4 -4Unit Labor Costs

-61999 2001 2003 2005 2007 2009

-6



4 0 4 0

TIPS Implied Inflation Compensation: 2-3, 4-5, 5-10 Year HorizonsPercent Percent

3 0

3.5

4.0

3 0

3.5

4.0

5-10 YearMar 30:

2.92

2 0

2.5

3.0

2 0

2.5

3.0

4-5 YearMar 30:

2 57

1 0

1.5

2.0

1 0

1.5

2.02-3 Year

2.57Mar 30:

1.92

0 0

0.5

1.0

0 0

0.5

1.0

1 0

-0.5

0.0

1 0

-0.5

0.0

-1.0Jun-07 Aug-07 Nov-07 Feb-08 May-08 Jul-08 Oct-08 Jan-09 Apr-09 Jun-09 Sep-09 Dec-09 Mar-10

-1.0

Source: Federal Reserve Board Note: Carry Adjusted.29

the u s economic outlookthe u.s. economic outlook

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