u.s. and michigan economic outlook passages through a sea of uncertainty
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U.S. and Michigan Economic Outlook Passages Through a Sea of Uncertainty. Robert A. Dye Chief Economist, Comerica Bank January, 2013. Mare Incognitum…The Sea of Uncertainty. EPUI Explains Persistent Weak Business Confidence. Components of NFIB Survey Employment plans Current job openings - PowerPoint PPT PresentationTRANSCRIPT
U.S. and Michigan Economic Outlook
Passages Through a Sea of Uncertainty
Robert A. DyeChief Economist, Comerica Bank
January, 2013
2
Mare Incognitum…The Sea of Uncertainty
50
100
150
200
250
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12
Economic Policy Uncertainty Index
9/11Treaty of
Accession & 2nd Gulf War
U.S. and European Fiscal Issues
Debt ceiling dispute
Lehman and TARP
Bear Stearns
3
EPUI Explains Persistent Weak Business Confidence
80
85
90
95
100
105
110
50
100
150
200
250
'00 '02 '04 '06 '08 '10 '12
Economic Policy Uncertainty Index and the NFIB Survey
Economic Policy Uncertainty index (L)
NFIB Business Optimism, (R)
Components of NFIB Survey
Employment plansCurrent job openingsCapital outlay plansInventory plansCurrent inventoryExpectations about economyExpectations about salesExpected credit conditionsGood time to expandEarnings
4
The Fiscal Cliff, Happy New Year!
• Obama era payroll tax cut has expired for everyone
• Increased income, capital gains, dividend taxes for the wealthy 1%
• Will add up to about $160 billion in additional revenue in 2013
• RDPI set to fall 3.5-4.0 percent annualized 2013Q1
• Debt ceiling debate still to come
• $110 budget sequester still unresolved
• Long-term entitlement spending still unresolved
5
Recent U.S. Data Is Mixed
• 2012Q3 real GDP 3.1%, Q4 weaker
• Dec. payroll employment +155,000
• Unemployment rate stable at 7.8%
• House sales
• Home prices
• Home construction
• Dec. auto sales 15.4 million unit rate
• Dec. ISM MF Survey 50.7 percent
200300400500600700
3,0003,5004,0004,5005,0005,500
2008 2009 2010 2011 2012
Home Sales Trending Up
Existing, ths (L)
New, ths (R)
6
2012Q4 Helped by Household Sector, Hurt by Uncertainty
• Consumer confidence improving
• Vehicle sales, Sandy
• Housing sector strengthening
• Other credit fueled purchases
• Labor markets
• Asia
• U.S. policy uncertainty
• Europe continues to melt
2030405060708090100110120
89
101112131415161718
2006 2007 2008 2009 2010 2011 2012
Auto Sales and Consumer Confidence
Auto Sales, millions SAAR (L)
Confidence Index (R)
7
Consumer Deleveraging...And Releveraging
15
16
17
18
19
-8
-4
0
4
8
12
16
'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12
Non-revolving Consumer Credit and Financial Obligations Ratio
Non-revolving cons. credit, pchya (L)
Financial Obligations Ratio, (R)
8
Job Creation Is Key to Sustaining the Economy
7.5
8.0
8.5
9.0
9.5
10.0
10.5
11.0
-300
-200
-100
0
100
200
300
J'11
F M A M J J A S O N D J'12
F M A M J J A S O N D
U.S. Payroll Job Growth, ths (L)
U.S. Unemployment Rate (R)
Monthly Job Creation, ths Unemployment Rate, percent
9
Forecast for 2013, Fiscal Tightening Trumps Monetary Easing
(9)(7)(5)(3)(1)135
2008 2009 2010 2011 2012 2013
U.S. Real GDP Growth, annualized rate
History Forecast
10
Interest Rates Face Upward Pressure As Flight to Quality and Financial Repression Eventually Unwind
0.01.02.03.04.05.06.0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Yield, percent
Fed Funds
10-Year Treasury
11
Forecast Risks
Downside Risks• Consumer spending • Job growth• Biz investment• Federal Spending• Eurozone and Asia • More “transitory”
factors/oil prices• Housing market
languishes• Healthcare costs
Upside Risks• QE3 gains traction• Equity markets rally• Jobs! • Construction• Households unleash pent-
up demand• Low interest
rates/investment boom• Energy/manufacturing
renaissance• Technology
Most Michigan Labor Markets Cooled 2012H2
-10
-8
-6
-4
-2
0
2
4
2008 2009 2010 2011 2012
Regional Labor Market Indicators
U.S. Warren Metro Div Lan Kal GR
Payroll Employment, pchya
13
Robert A. Dye
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